The Ministry of Finance in 2022 evaluated residential properties based on the market value, resulting in an increase in the tax.

The ministry on January 24 announced that during the evaluation of residential properties, the Property Tax Department had set a price per m2 for buildings and land based on the market value.

“The general evaluation was carried out based on the market value, in which case the Property Tax Department uses the following data: sales contracts for residential properties (not older than 3 years); interviews with real estate agents; surveys of property owners; interviews with bank officials regarding property values used as collateral; values of properties that have been expropriated; rental data; and data from construction companies,” the announcement said.

The ministry also emphasized that all residential, commercial, industrial and forest lands are now taxed at 100 per cent of the assessed value, unlike last year, when a general discount of 20 per cent was applied, so they were taxed at 80 per cent of the assessed value. 

Minister of Finance Hekuran Murati on Friday declared that the tax is collected by the municipalities and is municipal revenue, adding that this  evaluation is not carried out for the central government’s benefit.

Murati emphasized that the government is currently drafting a new Law on properties, which will apply a progressive tax on properties.

“The idea with this law is to have a progressive tax. In other words, for those who own 100,000 euros in property, those who own 50,000, and for those who own 5 million euros in property, municipalities at the moment set a flat tax rate, and this should change,” Murati stated.

Murati said that, with the new law, the tax for primary properties or primary residential housing will be increased.

“There should be progressivity,  for those who have many properties, such as 10 apartments that they keep unused, on the other hand, the prices are high because there is no offer in the market. Someone decides to keep them unused as it does not cost them anything – this should not continue,” the minister said.

Murati added that since the increase has caused dissatisfaction among citizens, the Ministry of Finance and the government are willing to listen to the proposals of municipalities to reduce, or to take over, payment of part of the property tax for citizens. 

Regarding the dissatisfaction of many citizens with tax increase, the Mayor of Prishtina, Përparim Rama, said that the increase was not a decision of the municipality, but a result of the re-valuation of properties done by the Ministry of Finance.

“The Ministry of Finance, Labor and Transfers is the competent authority for the evaluation of properties, while the capital, according to the same Law, sets the property tax percentage based on the evaluation of the Ministry. 

“The capital has set the lowest possible property tax rate. The lowest allowed rate is 0.15 per cent of the amount determined by the Ministry of Finance. This increase came as a result of the re-evaluation of the properties by the Ministry of Finance,” said Rama.

The Association of Kosovo Municipalities also came out with a clarification regarding the reaction of the citizens, which also emphasized that the tax increase does not come from the municipalities.

“The value of the property per square meter (m/2)  is determined by the Ministry of Finance, while the tax rate is determined by the municipalities. The municipalities have not raised the tax rate, but the properties have been reassessed by the relevant Department of the Ministry of Finance and Transfers, and in this case the value of the properties has increased based on market prices. So, the price of the Property Tax invoice is calculated by multiplying the value of the property by the tax rate,” it said.

The issue of property tax has become a topic of discussion, following the reactions of many citizens on social networks, who say their property tax bills have sometimes increased by over 50 per cent compared with previous years.