Small and medium-sized entrepreneurs in Moscow who specialise in trade are concerned that their tax costs may rise by more than 30% in 2019. That will happen if the mayor's office does not agree to freeze the property-tax rate. In that case it will rise automatically from the present 1.5% to 2%.
A letter from Opora Rossii to Sergei Sobyanin has come into the possession of Kommersant. It asks that in 2019 the rate for owners who pay property tax by reference to cadastral value be kept at this year's level, 1.5%. The letter says that, against a rise in VAT to 20% and general instability in the economy, an increase in property tax may become an unbearable burden for business.
"For business the situation will be critical. Rents, and the cost of leasing, will rise because the owners of commercial property will pay more tax. That will push up the prices of goods and services and, in a fall in consumption, will weigh on the wider picture," explains Sergei Seliverstov, deputy head of the Moscow branch of Opora Rossii.
According to him, every entrepreneur engaged in trade will be at risk, and that is about 40% of their total number.
The Moscow authorities must set the property-tax rate for 2019 before the end of this year. The law provides for a gradual increase in the rate: no more than 1.5% in 2014, up to 1.7% in 2015, and up to 2% in 2016 and thereafter.
Each constituent entity of the Russian Federation sets its own rate within those limits. If it does not, the rates provided for in the Tax Code apply,
says Sergei Pivovarchik, managing partner of Consul Group.
He stresses that the mayor's office could have set the property-tax rate at 2% two years ago. The city authorities instead raised it gradually, from 0.9% in 2014 to 1.5% for the current year.
If the rate is 2%, entrepreneurs' expenditure on property tax will rise by 33%,
Sergei Pivovarchik calculated.
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