The Ministry of Economic Development of the Russian Federation presentend amendments to the article 396 of the Tax Code of the RF. It is suggested to increase the land tax fivefold if the proprietor didn’t build a house within 10 years of the date of land provision for private housing construction (PHC). The authorities explain that there is a big amount of undeveloped sites. It leads to inefficient use of localities’ lands and reduction of property tax levy. 

The position of the state is clear – to get an additional income, to involve the land into the turnover, to activate construction and investment activity. In some cases the land is acquired as a mean of long-term deposit and there is often a barren land  between the existing buildings as the land proprietors are not going to build anything there. 

At the same time, the question is whether it is legal to prejudice the rights of the people that use the land they possess in the way the State doesn’t expect them to.

The initiative of the regional authorities to give 1 ha of land for free to those who want to move to or to live in the Russian Far East, endorsed by the President V.V. Putin this week, will again depend on not only investment component, but also on the taxation. Whereas the underdevelopment infrastructure, the low quality of agroclimatic resources and expensive credit resources will essentially complicate the introduction of the lands into the turnover even if they have owners.

From the 1st January 2015 the legislative act on tax holidays for individual entrepreneurs has come into force. The law acts for those individual entrepreneurs, who carry out its activity in the industrial, social and scientific spheres and is registered for the first time after the law became operative. The regional authorities are appointed to be the persons in charge.

According to the adopted law, the meaning of the tax holidays is a zero tax rate. The law covers the period from the 1st January 2015 till the 1st January 2021. Types of activity, related to privileges, are set on the basis of the All-Russian Classifier of Services Rendered to the Public.

Thus, regions are granted the right to impose restrictions, including limiting the size of the income of sole traders and an average number of employees. The violations of the set restrictions could be the reason for the cancellation of a zero rate. In such case entrepreneurs will be required to pay a tax according to the relevant base rates for that tax period, in which the violation has occurred.

Besides the law set that the share of income from the sale of goods, works and services, concerning to which the zero rate was applied, shouldn't be less than 70% in a total amount of the income by the results of the tax period. 

Worth reminding that in December 2014 within the message to the Federal Assembly the President proposed to freeze the growth of taxes for four years and to enter supervising holidays for a period of three years for small business.