The Kazakh City Duma adopted a package of tax preferences for builders of multi-level parking lots

Deputies of the Kazan City Duma approved the benefits promised to parking lot builders - the burden on their business in terms of property and profit taxes, as well as land tax, was reduced by a total of 30%. Experts say that this is the maximum that the Tatarstan authorities could do within the framework of federal legislation. However, they believe, this will not be enough to turn the construction of parking lots into an attractive business.

Deputies of the Kazan City Duma yesterday unanimously approved a reduction in the tax burden for builders of underground and multi-level parking lots. The land tax for them was reduced from 0.6 to 0.0001% of the cadastral value, and the unified tax on imputed income (UTII) - from 15 to 1%.

In addition, it became known that today the Ministry of Finance of Tatarstan should consider a bill establishing a property tax of 1% for parking lot builders and 13.5% on profit. Income tax for payers working under the simplified taxation system (STS) will be 5%. Benefits adopted at the ministry level will apply to the entire republic. All benefits are valid for 15 years, until 2026. Builders of parking lots with a capacity of at least 150 cars, put into operation from January 1, 2011 to July 1, 2013, can apply for them. Individual entrepreneurs cannot take advantage of the benefits yet. Kazan Mayor Ilsur Metshin said yesterday that the list of people entitled to benefits could be expanded at the next session. “But for now it remains in this form,” he added.

Such operational decisions to support parking lot builders were made on the direct orders of the President of Tatarstan Rustam Minnikhanov. Recently, at a meeting, the president instructed the government to develop a package of “unprecedented conditions” for builders of multi-level parking lots in Kazan. “Super preferential conditions should be available for those who undertake to build parking lots before 2013. We will also provide benefits to those who will build later, but not the same,” the president said then (see Kommersant on April 19).

Kazan is only 50% provided with parking, and in the center the situation is much worse than on the outskirts. Today the city requires about 150 thousand parking spaces. According to the Kazan executive committee, the number of cars in the city exceeds 300 thousand, and in the center 10.5 thousand cars are parked on the roadside every day. Currently, city authorities have allocated over 40 sites in all areas of the city for the construction of multi-level parking lots. 12 sites with 9.5 thousand parking spaces in the central part of the city and in the area near the Tatneft Arena ice sports palace have been identified as priority construction sites.

Experts say that the Tatarstan government has done everything possible to reduce tax benefits for parking lot builders, but this is not enough to increase the attractiveness of the parking business. “The approved tax rates are minimal - federal legislation does not allow the republic to make them even lower. In general, we are talking about reducing the tax burden for these taxes by an average of 30%,” Zahid Mamishov, a lawyer at the Consul legal agency, assessed the actions of the authorities. He believes that "these initiatives will have some positive results, but will not be decisive." “It is necessary that significant tax breaks for this activity be adopted at the level of federal legislation,” Mr. Mamishov told Kommersant. “A more effective action in this matter would be to provide land plots for the construction of such facilities at a minimum price and provide them with engineering infrastructure for budget account." Let us note that the issue of free connection of builders to utility networks was discussed by the government of Tatarstan, but was not included in the final package of “unprecedented benefits”.

“Undoubtedly, the positive point is that the reduced tax rates are being introduced with a retroactive effect; they will apply to relationships from January 1, 2011,” says Marina Emelyantseva, a lawyer at the Nalogovik law firm. “But these rates will only apply to organizations providing storage services for motor vehicles. And while such parking lots are being built, neither builders nor investors (future business owners) will receive any special benefits, since benefits can only be provided to those who have already put the facility into operation.”

“These are pennies, taking into account the difficulties that parking lot builders will face when operating their facilities,” executive director of the Moscow Association of Builders of Mechanized Parking Sergei Abolin assessed the benefits. He admitted that the authorities’ actions are “an excellent initiative,” but he is convinced that benefits will not be decisive for investors. “You can invest, but how can you recoup your investment? How to force drivers to pay for parking spaces? This is the main problem,” the expert doubts.

Elena Ivanova

Preferential parking rules