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Old July 5th, 2009, 01:31 PM
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Question Low-income housing

Investors in low-income housing will enjoy a spate of incentives including land use/lease charge and value added tax (VAT) exemptions under a prime ministerial decision that took effect on June 10.

The decision is expected to promote housing projects for people with low incomes nationwide and expedite construction of ongoing projects in several localities.

The document stipulates incentive policies for investors, construction requirements for low-income apartment blocks, as well as criteria for beneficiaries.

Those who invest in these projects will also enjoy corporate income tax exemption for the first four years and a 12.5 percent rate for the next five, after which the rate goes up to 10 percent later on. The normal rate is currently 25 percent.

Investors will also be eligible for low-interest loans or interest-free loans if endorsed by provincial administrations.

The government will be expected to invest in infrastructure around the project sites including power and water supply, roads and other projects.

Low-income housing investors will also be offered free designs and advanced technology to reduce input costs.

The decision defines low-income housing as an apartment with a maximum area of 70 square meters. However, the proportion of housing area on project sites has been expanded by 1.5 times that allowed by current regulations, and there is no limit on the number of stories that can be built.

These apartments will have to be sold or leased out for a maximum profit of 10 percent over input costs.


The Ministry of Construction has reported 20 low-income housing projects nationwide will break ground this month, and several others in the third quarter of the year that are expected to be completed in late 2010.

The ministry has also said it would issue six circulars this month to make the construction of these projects more effective. Local authorities may be allowed to appoint contractors instead of going through the bidding process in order to cut investment costs and time.
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