Reforming Land Valuation and Taxation in Ukraine : A Path towards greater Sustainability Fairness, and Transparency

The shift from administrative to market-based valuation of assets is a key part of Ukraine’s transition from a planned to a market economy. This shift will improve the functioning of financial markets and the ability of local governments to obtain revenue effectively for local service provision. This paper describes the rationale and evolution of Ukraine’s regulatory framework for market-based valuation. The analysis uses prices and publicly available parcel attributes for the nearly 200,000 agricultural land sale transactions during 2021–24 to estimate a land price model that is then used to predict prices for the roughly 20 million hectares of commercial agricultural land in the country. Mean predicted prices that are 25 to 33 percent above current valuations hide vast interregional differences. Given their proximity to active conflict, predicted prices in the East and South are close to or even below the normative value, but they are 80 percent above it in the West of the country. A transition to market-based valuation is thus a precondition for fair and equitable taxation and incentives for productive land use. By aligning with globally accepted standards for banking regulation and improving credit access in areas where land values have increased, the transition could also affect the speed and quality of reconstruction. The paper discusses legislative steps to move in this direction.