04 September 2003 07:41
ECONOMICS MINISTRY SUBMITS BILLS ON BUYING LAND UNDER PRIVATIZED
ORGANIZATIONS
Russia's Economic Development and Trade Ministry has submitted for the government's consideration law bills
concerning changes to the Land Code, privatization law and mortgage law. It aims at reducing the purchase prices for
land under privatized enterprises to complete the formation of a property complex in Russia, First Deputy Economic
Development and Trade Minister Andrei Sharonov announced at a Wednesday press conference.
We have gotten materials from 41 of Russia's constituent regions,
and this is not an estimate, this is a precise calculation, that in
The Land Code currently has enterprise owners having to buy land in the period up to January 1 next year. In this
regard, representatives of the Russian Union of Industrialists and Entrepreneurs have more than once spoken of the basic
impracticability of the Code requirements. They maintain that the overall cost of land plots as valued by existing
methods is $106 billion, 25.86% of Russia's GDP in 2003 (not counting Moscow).
According to the new purchase method, he said, the aggregate cost
of plots drops to 4.6% of GDP for 2003, factoring in land in the
these regions the purchase cost is $34.8 billion. It is obvious that this amount is out of reach for enterprises,
bearing in mind their current turnover, Sharonov said.
Sharonov announced that the new method for cost determination
envisions a base rate differentiated according to the size of a
The proposals include pushing back the termless use of land until January 1, 2007, he noted.
Sharonov pointed out that the bills should be passed this year, otherwise, entrepreneurs will find themselves in a
legally untenable situation if the old method of land purchase, envisioning mandatory land purchase by January 1, 2004,
is still in force.
100,000 (3.75 rubles), from 20,000 to 50,000 (3.32 rubles), ad the
lowest rate would be for areas with up to 20,000 inhabitants (1.93
country's capital, he said.
populated area. There will also be applied a coefficient figuring the tax potential of a given region, its size and
the number of its people.
10, in populated areas in the third group 7 (Tatarstan and Samara
region), and further by reduction increments of 0.5 to 1 in the 12th
The highest base rate would be for towns with more than 3 million residents (9.07 rubles per square meter), that for
areas with from 1 million to 3 million inhabitants (6.06 rubles/sqm), from 500,000 to 1 million residents (5.31 rubles),
from 250,000 to 500,000 inhabitants (4.52 rubles), from 100,000 to 250,000 (4.1 rubles), from 50,000 to
rubles).
A coefficient differentiated by twelve territorial groups would be applied to the base rate. In Moscow that would be
20, in St. Petersburg
group (Kamchatka, Magadan, Chechnya and Yakutia).
Sharonov went on to say that the heads of constituent regions and municipalities could reduce the cost of buying land
plots to 5% of the size of the base rate depending on town-planning value of plots with the necessary foundation for
this valuation.
Plans call for Moscow to get four zones. Land in the Garden Ring area would cost 7,838.2 rubles per square meter,
between the Ring and the third transportation ring 2,799.4 rubles, from the third ring to the Moscow 'beltway'
559.9 rubles, and beyond 279.9 rubles, Sharonov said. However, he noted, The Moscow administration has not yet seen
these proposals.
Sharonov also noted that the proposals imply the possibility of
deferred payments for land by five years, but in that case the
If payment for land is to be transferred in accordance with which form of property the privatized enterprise
was-federal or regional-then the Economic Development and Trade Ministry suggests that all payments be transferred to
municipal budgets or municipal budgets together with regional budgets. The point is to stimulate the process of land
privatization and regions' interest in it, he said.
He also said that enterprise owners that do not want to buy land will be able to clinch rental agreements to a
maximum of 49 years. The term would be set by an enterprise owner, without whose say-so a land owner cannot set it at
less than 49 years.
The rental cost will be calculated on the basis of a fixed 13% of the cost of buying housing plus the size of annual
current taxes on the specific plot, Sharonov said. The Property Ministry suggests putting into this formula 30% of the
cost of buying the housing.
enterprise owner would have to pay an annual one-third of the Central Bank rate as a form of interest.
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