The Latvian Ministry of Finance has approved amendments to the Law on Real Estate Tax, stipulating that municipalities can choose to apply a 1.5% tax rate on certain properties.
In case municipalities do not want to accept the new procedure, they can stick to the old one and apply 0.2%, 0.4% and 0.6% tax rates depending on the cadastral value.
An even bigger rate than 1.5% can be imposed on real estate, which is not being taken care of in accordance with statutory procedures. They include slums, which degrade the environment and threaten public safety. This also applies to fallow agricultural land.
Starting from 2013, administration of property tax will be fully handed over to municipalities, which can determine the rates depending on local objectives and needs.
When deciding on the tax rate, the Finance Ministry suggests following four mandatory principles:
- Groups of taxpayers and tax objects. Groups of taxpayers ? natural persons and legal entities. Tax objects ? houses, industrial and commercial facilities, etc.
- Effectiveness. Tax administration spending weighed against tax revenues.
- Responsible budgeting. Municipalities match their obligations with the necessary funds, so that taxpayers can be sure that next year all of their apartments are not imposed the rate of 1.5%.
- Predictability and stability. The tax rate is fixed for at least two taxable-year period.
The Ministry also lays down three voluntary principles:
- Business support.
- Social responsibility.
- Landscaping and development.
Ref: 103.105.105.2537
Source: http://bnn-news.com/property-tax-administration-handed-municipalities-75653
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