Ministry of Finance, Ministry of Land and Resources and People's Bank of China, Circular on Issues Concerning Revising the Policy on Land Use Fees on Newly-added Construction Land and other Issues

Issued: November 7 2006
Applicability: Newly-added construction land refers to construction land converted from agricultural land or unutilized land.
Land use fees on newly-added construction land shall be collected from: newly-added construction land (including that in villages and market towns) within the scope of construction land in cities (including towns established according to an administrative regime) determined under the master land-use plan; newly-added construction land outside the scope of construction land in cities (including towns established according to an administrative regime), villages and market towns determined under the master land-use plan that is independently sited and obtained lawfully by means of using with consideration such as granting; and, in the case of water conservancy and hydroelectric projects, approved newly-added construction land of cities (including towns established according to an administrative regime) occupied for the relocation of residents that exceeds the original construction land area determined under the master land use plan.
Land use fees on newly-added construction land shall also be paid in the case of construction land that is actually newly added as a result of unlawful approval or occupation (Article 1).

Main contents: The Circular aims to further protect arable land, promote the use of land in an economical and intensive way, reinforce the control measures for land and curb excessive growth in fixed asset investment. According to the Circular, land use fees on newly-added construction land approved as of January 1 2007 will be doubled (Article 2). The new fee rates have 15 classes, with the highest class at Rmb140 per square metre and the lowest at Rmb10 per square metre. The land use fees collected will still be divided between the central and local governments in the proportion of 30% and 70%, respectively. Starting from January 1 2007, local governments shall turn over their 70% portion in full to the provincial-level treasury.
Related legislation: Decision on Intensifying Reform and Strict Land Administration, 2004 and Circular on Issues Relevant to the Strengthening of the Regulation and Control over Land, 2006