Slow-acting tax: Armenians expect sharp increase in property tax
YEREVAN, January 13. /ARKA/. Citizens of Armenia are expected to face a sharp increase in property taxes by the end of next year.
On June 25, 2020, the Armenian parliament approved amendments to the Tax Code, establishing an updated mechanism for property taxation.
Over the following years, due to a series of political events, this issue faded into the background and only resurfaced at the beginning of this year, when citizens realized that their property taxes would increase by 50% this year alone.
The Essence of the New Tax
The project eliminated the previous tax-exempt threshold of 3 million drams, which resulted in an additional 560,000 housing units being subject to taxation four years ago. The property tax itself will now be calculated based on a price closer to the real market value, rather than the cadastral value.
The changes are being implemented gradually over six years. In 2021, citizens paid 25% of the tax, in 2022 it was 30%, in 2023 it was 35%, in 2024 it was 50%, and in 2025, citizens will be required to pay 75%. By 2026, they will have to pay 100% of the tax, calculated using the new methodology.
Anticipated Revenues
"Considering that new buildings are being constructed and old ones demolished, the tax base is quite dynamic. If I am not mistaken, the collections in 2026 will total approximately 47 billion drams. Therefore, in 2025, the property tax revenues will amount to about 75% of this figure," said Suren Tovmasyan, head of the Cadastre Committee.
Where Will the Money Be Spent?
Tovmasyan also noted that the funds collected from this tax will not go into the state budget but will be directed to local community budgets.
"Citizens will see the results of these funds in infrastructure projects, such as schools, kindergartens, roads, and water systems, which are being built as part of various subsidy programs. Perhaps this change was necessary to stimulate infrastructure development," he explained.
Citizens' Confusion
The sharp increase in property taxes has caught many citizens by surprise. People have expressed their dissatisfaction and confusion both in personal conversations and on social media.
"It is unclear how the tax will be calculated. On what basis will the market value be determined? How will the condition of the building, the presence of repairs, or its location be factored in? I will have to pay more, but what will I get in return as an owner of an apartment in an apartment building?" commented one resident of central Yerevan on social media.
What Do Experts Think?
Tatul Manaseryan, a doctor of economics, professor, and head of the "Alternative" research center, criticized the project in an interview with ARKA news agency.
"I don’t see anyone in the government capable of presenting detailed and substantiated calculations. Moreover, the government's intention is obvious, as the Prime Minister openly stated, to encourage pensioners to leave the center of Yerevan, particularly Mashtots Avenue. Let them rent out their apartments and move somewhere else. This is a clear violation of human rights and amounts to forcing people to leave their homes simply because they are elderly or socially vulnerable," said Manaseryan.
He considers the situation illegal, adding that he himself might be forced to leave his own home in the center of the capital if he is unable to pay the taxes.
"We need to consider the social issues arising from this decision. I have strong suspicions that this is being done so that new oligarchs can buy real estate in the center at a very low price and then profit from it. In no other country would you see such a drastic increase in property taxes," the expert emphasized.
