On the Issue of Business Property Taxation

Abstract

The article explores changes in the definition of taxable objects, the tax base, and the dates when property taxes from legal entities are due. There is a brief overview of the history of origin of property taxes, their formation and development. The authors looked into the order of accounting of taxation objects related to the property of organizations, including real estate and vehicles; analyzed property tax revenues to the budget system of the Russian Federation; and considered some issues of identifying objects of taxation and transitioning to calculation of the business property tax based on the cadastral value of real estate, as well as difficulties of determining whether certain property could be attributed to real estate objects. Real estate becomes subject to taxation only if it is registered in the Unified State Register of Real Estate (EGRN). In practice, however, organizations could own property that is not required by law to be registered in the EGRND, thus the taxpayer could be at risk of failing to pay a true tax liability. In this regard, it is mandatory to take into account taxation of not only real estate, but also movable property. This practice was used in the Soviet Union, when calculating fees for production assets, and in the Russian Federation as well. Such a change will increase revenues to the regional and local budgets and solve the problem of taxation of real estate objects that do not have cadastral value.