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Should property tax be calculated on unused fixed assets?
Should property tax be calculated on unused fixed assets?
Are fixed assets that have not been put into operation and remain in storage at the end of the reporting period taken into account when calculating property tax? Is property tax calculated on fixed assets that were put into operation but, during the current period, were subsequently taken out of use and returned to storage? In other words, should the above-mentioned assets, in their current condition, be classified as fixed assets recorded on the company’s balance sheet and be subject to property tax?
The State Tax Service under the Ministry of Economy stated that, in accordance with Article 13.2.17 of the Tax Code, fixed assets are tangible assets with a useful life of more than one year, a value exceeding 500 manats, and subject to depreciation.
According to Article 198.2 of the Tax Code, enterprises pay property tax at a rate of 1 percent on the value of fixed assets determined in accordance with Article 202 of this Code.
In response to the inquiry, it was noted that conserved fixed assets (fixed assets previously used by the taxpayer in the income-generating process but later withdrawn from use and stored in a warehouse), as well as fixed assets that have not been put into operation and remain in storage, are not subject to depreciation. Therefore, since they are not considered fixed assets, property tax is not calculated on them.
Legal basis: Articles 13.2.17, 114.2.7, 114.2.10, and 202 of the Tax Code.
Are fixed assets that have not been put into operation and remain in storage at the end of the reporting period taken into account when calculating property tax? Is property tax calculated on fixed assets that were put into operation but, during the current period, were subsequently taken out of use and returned to storage? In other words, should the above-mentioned assets, in their current condition, be classified as fixed assets recorded on the company’s balance sheet and be subject to property tax?
The State Tax Service under the Ministry of Economy stated that, in accordance with Article 13.2.17 of the Tax Code, fixed assets are tangible assets with a useful life of more than one year, a value exceeding 500 manats, and subject to depreciation.
According to Article 198.2 of the Tax Code, enterprises pay property tax at a rate of 1 percent on the value of fixed assets determined in accordance with Article 202 of this Code.
In response to the inquiry, it was noted that conserved fixed assets (fixed assets previously used by the taxpayer in the income-generating process but later withdrawn from use and stored in a warehouse), as well as fixed assets that have not been put into operation and remain in storage, are not subject to depreciation. Therefore, since they are not considered fixed assets, property tax is not calculated on them.
Legal basis: Articles 13.2.17, 114.2.7, 114.2.10, and 202 of the Tax Code.