Russian tax authorities claimed that the buildings located on the land plots with the permitted use allowing placement of objects of trade, public catering and (or) consumer services (independently of their real purpose), should be assimilated to shopping centers and, thus, their property tax basis should be determined as their cadastral value. The Constitutional Court of Russia concluded in favor of the taxpayers that collection of property tax based on the cadastral value of real estate objects, solely based on the types of permitted use of the land plot on which the taxable object is located, regardless of the purpose and actual use of this object itself, shall not be justified from constitutional and legal standpoint. This results into imposing an increased tax burden on the taxpayer without sustainable economic grounds and unreasonably deprives him of the right to determine the property tax basis assessed on the average annual value of the property.
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NAZALI TAX & LEGAL |