Business: we have hope for a constructive dialogue with the Government on amendments to the Law on Land

Seimas deleted from its today‘s agenda the question of the adoption of a draft law of the amendment of the Articles 9 and 24 and addition by the Article 91 to the Law on Land No. I-446. Amendments to the law, called inadequate by business communities and municipalities, have been returned for more detailed reasoning.

“Such a step of Seimas can be considered as a reasonable expectation that the Government has heard the motives and may finally tend to delve into the impact of the changes on the urban economy, urban planning and business conditions in them, if the amendments to the law would be approved by the current wording. We want to emphasize that business is in no way opposed to the taxation of leased state-owned land on which the development is taking place. The state’s desire to benefit in this case is logical and justified. We are talking about adequate, debated, and gradually implemented and economically weighted regulation of such taxation,” says Mindaugas Statulevičius, President of the Lithuanian Real Estate Development Association (LREDA).

By the way, the head of LREDA points out that there is a very irresponsible positive and erroneous opinion that no real benefit is currently obtained from leased state-owned land plots:

  • Businesses (and residents) pay an annual state land lease. Almost 32 million Euros for lease have been collected in the last three years in the five largest cities of Lithuania;
  • Due to the activities carried out, the purpose of the change and the new objects being implemented, the values ​​of the plot and the adjacent areas increase, which means that the amount of the paid annual fee increases proportionally;
  • When the state (or its companies) privatizes or sells buildings on leased land, the value of the plot (i.e. location) is also inseparably assessed. Therefore, once the fee is introduced, the same plot will de facto be paid twice.

Calling the responsible authorities for a constructive dialogue on the economic and social feasibility of the amendments to the Law on Land, LREDA and business associations, together with municipalities, propose a reasonable maximum taxation of up to 50 percent and a transitional period of several years in order to allow the market to adapt and that the price spike would be amortized. It is also requested that the new requirements not apply to existing leases. The changes are requested to be applied in the future.