SHANGHAI, Dec. 10 – The Shanghai government has announced that it would scrap land-use fee for companies beginning next year.

The land-use fee is levied on companies which have gained rights to use state-owned land through bidding, auctioning or agreement.The policy was first introduced in Shanghai in 2001 at RMB1 yuan per square meter annually.

“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 told China Daily. “The land-use fee should be scrapped while a land-use tax is currently imposed.”

Last year, China enforced a land-use tax to manage the overheating 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.