OREANDA-NEWS. April 26, 2012. At its cabinet meeting the government decided to compensate local governments for tax revenue to be foregone when the land tax exemption for homeowners is implemented by increasing the share of income tax received by municipalities.

Besides exempting homeowners’ land from taxes, it was decided to exempt land under government buildings from land tax. The compensation – about 13 million euros – will come in the form of 0.17 percent increase in local governments’ share of income tax by 0.17 percentage point in 2013 (11.40% to 11.57%) and by 0.03 percentage point in 2014 (11.57% to 11.60%).

Local governments will also receive a lump sum of 990,000 euros in compensation in 2013 through the state budget support fund for expenses related to implementation of the land tax exemption. The costs of improving supplementing the data set that will allow the land tax information system to be established will be covered from the property reform reserve fund.

The Minister of Finance will submit the draft legislation to the Government of the Republic by May 2012.