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Agrarian land use in Ukraine will become much more expensive

MyLand - 30/09/2011:


First Deputy Head of the Ministry of Agrarian Policy and Food of Ukraine Mr Bezuglyy said during press-conference on September 30, 2011 that normative value of arable land in Ukraine in 2012 will be multiplied by 1.7. This value is used for taxation purposes as well as for calculation of the rent. Simultaneously tax on arable land will be multiplied by 10 times and increased from 0.1% up to 1%. That means that the sum of land tax for agrarian businesses will grow by 17 times, from UAH 12 (USD 1.5) up to UAH 209 (USD 26).

The officials also expect the growth of rent paid by businesses to land owners. They estimate that the average rent which is today is UAH 316 (USD  40) will reach teh level of UAH 600 (USD 75).

Among other expectations of the authorities is a prospect of improvement of the situtation of local budgets which will benefit from the increase of land tax as well as from the increase of income tax paid by landowners from bigger rent. In total locval budgets will collect additional UAH 10 billion (USD 1.25 billion), Mr Bezuglyy said.

At the same time private experts (Dragon Capital) expect more prominent growth of the rent. In contrast to offificals, they link this growth to the opening of the land market and not to administrative measures like revision of land value and increase of the tax. Dragon Capital reported yesterday that currently average rent makes up USD 40-50, while some companies are already paying premium prices of USD 60-70 in order to make landowners more loyal and establish stable long-term relations. The expected level of the rent upon opening of the market is USD 100. At the same time experts of Dragon Capital say that upon lifting of the moratorium the demand for land will be limited, and most businesses will operate on the basis of long-term leases (concluded for the period of 10-15 years). Further prospects of the rent are very optimistic for landowners as soon as experts consider the fair level of rent to be USD 250-300.



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