In order to increase the incentive for landlord to participate in urban renewal procedure, the Ministry of the Interior (MOI) issued a letter of interpretation on November 18, 2019, indicating that regarding the urban renewal cases whose business plan had been applied for before the amendment of the Urban Renewal Act, as long as the construction permit is applied for within the prescribed time limit and the construction is completed within the construction period, they may also enjoy the benefits that the house tax reduction by half after renewal may be extended for 10 years and the tax relief for joint construction by agreement. Renewals not completed before the expiration of the preferential period may still enjoy the tax relief benefits for house tax and joint construction by agreement.
Pursuant to Section 3 Article 67 of the Urban Renewal Act: “[T]he taxes of the lands and buildings within the renewal unit are reduced/exempted in accordance with the following regulations: […]3. if legal building owners before renewal in a redevelopment zone acquire buildings after renewal and the properties are not transferred within two years during the two-year period of house tax reduction by half, the competent authority of the municipality or county (city) may extend the house tax reduction by half for up to ten years depending on the status of development of the area and whether the financial situation allows. The regulation shall not apply to buildings for which the two-year period of house tax reduction by half already expired before enforcement of the amended provisions of this Act on Dec. 28, 2018.”
In order to ensure that the owner of the land(s) and legal building(s) within the scope of urban renewal project applied for before the law amendment may also enjoy the relief benefits after the new amendment, MOI made a clear explanation that the abovementioned regulation regarding the tax relief for house tax and joint construction by agreement shall apply in urban renewal cases that had been applied for or had been approved for renewal but not yet completed before the amended Urban Renewal Act took effect. However, despite the scope for applying for tax reduction provided in Urban Renewal Act has been extend as an incentive to encourage the participation of urban renewal, there are still several urban renewal cases that cannot be solved merely by tax benefit. For instance, recent “holdout” (or “nail household” in Chinese neologism) in Taipei City who owns merely 6 square meters of land within the urban renewal project but asks for NTD 4 billion compensation. In such case, land tax of such property is so minor that reduction of land tax can barely constitute any incentive for the landlord to consent the expropriation. Therefore, apart from tax reduction, the competent authority shall come up with other amendments or solutions to solve all kinds of urban renewal dilemmas.
