By Resolution No. 138 dated May 8, the Cabinet of Ministers amended the “Regulations on the Standard Value of State-Owned Land Plots Occupied by Privatized State Enterprises and Facilities, as well as Enterprises and Facilities Constructed by Legal and Natural Persons”. Preferential coefficients will be applied to the annual lease payments for state-owned land plots occupied by privatized state enterprises and facilities, as well as enterprises and facilities constructed by legal and natural persons.

The main purpose of the amendment is to reduce the financial burden on entrepreneurs and investors when leasing large-scale state-owned land plots, expand the investment environment, and particularly encourage the integration of large state-owned land areas into economic circulation.

It should be noted that the existing base approach is retained under the new mechanism. Accordingly, the lease payment rate is set at 3 percent of the market value of the land in Baku, and 2 percent in other cities and districts across the country.

In addition, decreasing coefficients are applied to large-scale land plots depending on their size. Under the amendment, a coefficient of 1.0 is applied to land plots of up to 5,000 sq.m (including 5,000 sq.m). A coefficient of 0.8 applies to the portion of the land plot ranging from 5,000 sq.m to 10,000 sq.m (including 10,000 sq.m), 0.7 to the portion ranging from 10,000 sq.m to 50,000 sq.m (including 50,000 sq.m), and 0.5 to the portion exceeding 50,000 sq.m.

As can be seen, the larger the land plot, the lower the applicable coefficient, which in turn reduces the lease amount. For example, under the new regulation mechanism, the annual lease payment for a 10-hectare land plot in the Lankaran district, which previously amounted to 10,000 manats, will decrease to 6,200 manats.

As a result of the coefficients to be applied, both the number and total area of leased land plots are expected to increase, making it easier to attract large-scale land plots for lease. At the same time, the amendments will contribute to the more efficient use of state-owned lands, the integration of unused or inefficiently used areas into economic circulation, and increased budget revenues through the expansion of the leased land portfolio.