The fixed real estate tax is more effective for community development than the share contribution, which was abolished by Law No. 132-IX for projects that began construction after January 1, 2021, Olena Shulyak, chairwoman of the Parliamentary Committee on the Organization of State Power, Local Self-Government, Regional Development and Urban Planning, told Interfax-Ukraine.
Shulyak, one of the authors of Law No. 132-IX, emphasized that communities already had a compensatory alternative at the stage of abolishing share contributions, namely a fixed real estate tax. This tool has a much higher potential for solving infrastructure problems, is easier to administer, and has much lower corruption risks than the share contribution.
“In fact, the share of equity participation in local budget revenues was very small – about 1%. These funds were not used for the construction of new kindergartens, schools and other infrastructure, and their intended purpose was not controlled. So, we have a real estate tax. I won’t say that it is a universal compensator, but now we see that it is already many times higher,” Shulyak said.
According to her, in 2020, local budgets received UAH 5.7 billion from this tax, in 2021 – UAH 7.8 billion, in 2022 – UAH 7.1 billion, despite the war, in 2023 – UAH 9.1 billion, in 2024 – UAH 10.7 billion, in 2025 (as of now) – UAH 4.3 billion.
“Regarding share contributions, we see the following figures: in 2020, the share participation funds amounted to UAH 1.4 billion, in 2021 – UAH 572 million, in 2022 – UAH 134 million, in 2023 – UAH 134 million again, in 2024 – UAH 199 million, and this year (as of now) – UAH 159 million,” the committee chairman cites the data for comparison.
Shulyak noted that equity participation as a tool has long been ineffective, and that is why it was abolished by law. However, according to her, this does not mean that communities do not have the right to defend their interests in court when it comes to cases that fall under the old legislation.
“Indeed, some communities, in particular Kyiv, remain active in legal disputes over equity participation. We are talking about situations where facilities received permits before 2020 but were completed later. In such cases, the legal basis for the claims is most often Article 1212 of the Civil Code of Ukraine – on unjustifiably retained property. As for other communities, we do not yet have centralized statistics on the number of lawsuits,” she said.
At the same time, in her opinion, if the agreement on the payment of equity participation was not concluded before the law on its abolition came into force, such charges are groundless.
Speaking about projects where the participants have changed during this time, Shulyak noted that if the new construction customer carries out construction in accordance with the construction permit issued to the previous customer before January 1, 2021, there are no grounds for non-payment of the share participation. However, if the construction permit was issued later than this date, the share participation is not paid.
“If the construction customer is implementing a completely new project – in terms of functionality, etc. – then in this case it is more expedient to terminate the previous permit and obtain a new one. Thus, the new permit will be obtained after January 1, 2021, and the construction customer will not have any obligations to pay the equity participation,” Shulyak recommends.
