Real estate tax and real estate tax reform

At the moment, the question of how to calculate the real estate tax is debatable. The order of payment of property tax has a distinctive feature that allows it to stand out against the background of other payments to the budget. This difference is manifested in the discrepancy between the object of taxation and the source of payment.

So, according to the current legislation, the object of taxation is the residual value of buildings and facilities of the enterprise, but the property tax itself is paid from the profit earned by the organization in the reporting period. This actually leads to the fact that for some enterprises that have a high profit, paying a property tax does not pose a threat to be (become) unprofitable. Having even a large number of expensive buildings and facilities, for one business entity, it is sufficient to earn enough money to pay off the specified payment, and for another to charge and pay a property tax means to become (unprofitable) unprofitable. This is the negative impact of the property tax on the amount of profit that remains with the business entity after payment. Sometimes this is one of the factors of loss of business.

At a constant value of the profit of the reporting period, the effect on the parameters of profit, which remains, is affected by the change in the value of the property tax rather than the profit tax. The amount of income tax depends on the amount of profit of the reporting period. Since it is constant in this case, the amount of this tax will not change, and therefore, influence the profit remaining at the disposal. In this case, it is advisable to apply a single tax on real estate. In the event of an increase in the residual value of objects, the value of the property tax will increase, that is, a new property tax will be formed, which will reduce the size of the remaining profit. Based on the above, to improve the taxation of real estate offered instead of the existing, fundamentally new methodology for calculating the tax on real estate, which involves the use of a system of flexible tax rates. It is based on the principle of profit sufficiency and for the reporting period.

In practice, it is advisable to reduce the property tax and its rate with a multiple increase in the residual value relative to the profit of the reporting period. This factor will also affect the accrual of depreciation on real estate. But we must bear in mind that the method of accelerated depreciation in the first years increases depreciation charges, and hence the cost price. Loss-making organizations can not afford this. For such organizations it is better to use a productive method. This will allow them to regulate their costs, especially during periods of lack of stable use of production capacity. Non-linear method is more suitable for profitable enterprises, which, however, lack resources to expand fixed assets.

The new methodology will ensure that not only the fiscal function of the real estate tax is implemented, but also stimulating, which is especially important in the context of implementing a strategy for sustainable development and improving the existing economic structure.

The strategy of the business entity should be aimed at maximizing the value of real estate. In connection with the developing world crisis trends, organizations should revise the content of depreciation policy, where today the most popular is the linear method. The amortization policy should be based on the goals pursued by the organization at a particular stage of its economic activity.