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Real estate tax as a negative factor in “quick reforms”

Today, we are sadly forced to state that the implementation of the tax reform in December 2014 and the introduction of the corresponding amendments as a whole package only negatively affected the quality of the final law. New norms cannot be applied separately from existing ones, especially when it comes to a single law.

And in this aspect, the duty of the legislator is to predict how the rule will act in conjunction with others. It can hardly be said that the provision on real estate tax, which is different from the land, is thought out and unambiguous.

The authors of the reform did not take into account some general norms, not to mention the existing clerical errors. The deadlines for filing a tax return are already running out, and the tax authorities have not yet explained how they interpret certain taxation provisions for this tax. Therefore, if you encounter significant difficulties in the process of communicating with officials, take advantage of the opportunity to receive online legal support, which is offered by legal experts involved in the Ukrainian legal knowledge system Uteka.Ua.

In fact, today the conceptual question is, how legitimate is the administration of such a tax in 2015 for non-residential real estate.

So, until 01/01/2015, the Tax Code of Ukraine provided for the levy of a tax on real estate, other than a land plot, only from residential real estate. In connection with the entry into force of the Law of Ukraine dated December 28, 2014 No. 71-VIII “On Amending the Tax Code of Ukraine and Some Legislative Acts of Ukraine Concerning the Tax Reform”, the editors of the Tax Code of Ukraine are effective from 01.01.2015, according to which non-residential property is also taxed.

At the same time, the accrual and payment of tax on real estate other than a land plot from non-residential property is possible, in our opinion, only from 01.01.2016, taking into account the general provisions of the Tax Code of Ukraine. Such arguments support this conclusion.

According to paragraph 265.1 of Art. 265 and clause 10.1 of article 10 of the Tax Code of Ukraine (hereinafter – TCU), property tax, which constitutes real estate tax other than a land plot, is a local tax. The specificity of local taxes lies in the fact that they are set by local councils (rural, township or city) in accordance with the requirements and within the limits determined by the TCU.

If the local council decides to establish a specific tax or change its elements, such a decision shall enter into force in accordance with the requirements provided for in the Tax Code of Ukraine.

So, in accordance with paragraphs. 12.4.3 Art. 12 NKU, the powers of rural, township, city councils regarding taxes and fees refers to the beginning of the next budget period for the decision on the establishment of local taxes and fees, the change in their rates, the object of taxation, the procedure for collecting or providing tax benefits that entails a change in tax obligations taxpayers and which comes into force from the beginning of the budget period.

According to paragraphs. 12.3.4 Art. 12 NKU decisions on the establishment of local taxes and fees are officially made public by the relevant local government body until July 15 of the year preceding the budget period in which the application of established local taxes and fees or changes is planned (planning period). Otherwise, the norms of the relevant decisions are applied no earlier than the beginning of the budget period following the planning period.

That is, the Tax Code of Ukraine does not empower local governments to establish new taxes in the middle of the fiscal year and change their rates.

In addition, paragraphs. 4.1.9 Art. 4 TCU provides for the principle of stability of tax legislation, which means that changes to any elements of taxes and fees cannot be made later than six months before the start of a new budget period in which new rules and rates will apply. Taxes and fees, their rates, as well as tax benefits cannot be changed during the fiscal year.

The budget period, in accordance with Part 1 of Art. 3 of the Budget Code of Ukraine, is one calendar year, which begins on January 1 of each year and ends on December 31 of the same year.

So, the general provisions of the Tax Code of Ukraine give a clear answer that the establishment of a property tax on real estate tax other than a land plot, as well as changes in its elements, if the relevant decision of the local council is adopted and made public by 07/01/2015. They can come into force only from 01.01.2016.

At the same time, the problem with taxation of non-residential real estate is due to the norm contained in paragraph 33 of subsection 10 of section XX “Transitional Provisions” of the Tax Code, which stipulates that by 2015 tax rates for non-residential real estate owned by individuals and legal entities .

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