Shanghai will stop imposing the land-use fee starting next year, the local government said yesterday.

The fee, levied on companies which have gained land-use rights through bidding, auctioning or an agreement, was first introduced in the city in 2001 and was set at 1 yuan (14 US cents) per square meter a year for all state-owned land parcels.

Details of the revised policy are available on www.shanghai.gov.cn, the official Website of the municipality.

"The new policy can be regarded as a move by the local government to relieve companies' burden though the total amount involved might be rather trivial," Yin Kunhua, a researcher and professor at the Shanghai University of Finance and Economics, said yesterday. "The land-use fee should be scrapped while a land-use tax is currently imposed."

China enforced a land-use tax last year as it tried to cool the then overheated real estate market. According to the State Administration of Taxation, the land-use tax was initiated in 1988 and imposed on developers and based on the size of the land and locations. For example, it is set at 1.50 yuan to 30 yuan per square meter a year in big cities and 1.20 yuan to 24 yuan in medium and small cities.

(Shanghai Daily December 10, 2008)