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Corrupt risks of free conversion not taken into account

Amendments to the Law on Planning and Construction carry a high corruption risk because the state is giving up potential public revenues in favour of individual companies and, at the same time, threatens legal certainty and equality before the law.

The amendments provide for the free conversion of the "right of use" into the "right of ownership" of construction land. At the same time, no information has been published on the benefits that the cancellation of the conversion fee will bring to individual companies.

In support of the abolition of the conversion, the Government presented an argument of 5,000 locations where about 15 million square meters of residential and commercial space will be built.

This argument indicates that a significant part of those locations and their owners are already known to the Government or that it is a lump sum assessment whose goal is to prove at all costs that the changes will positively affect public revenues. However, information about the "main winners" of the proposed abolition of the fee was not announced by the relevant Ministry and the Government, so the information about the possible hidden effects of the changes in the law, which have huge consequences for public resources, remains unknown.

Waiver of the potential fee for the conversion, which the Government itself estimated at 287 billion dinars, is justified by long-term income on various grounds (taxes for future buildings, real estate sales tax, company profit, salary tax, etc.). The reasoning ignores the fact that indirect revenues would have been generated even with the paid conversion fee. The Government also stated that the previous conversion did not bring the expected effects since only about 3.6 billion dinars were collected. However, the problem with this argument is that many owners probably didn't even want to expose themselves to the expense of going through the conversion process, expecting to get it done for free.

Additionally, this "regulation" of conversion violates legal certainty and equality under the law because it expressly excludes the right to refund already paid fees to those companies that believed the state would respect the established rules.

The particular problem is that MPs debated these critical changes with 30 other acts, so there was no time, and apparently, no will, to discuss all disputed issues thoroughly. Similarly, the public hearing was organized only a day before the beginning of the parliamentary debate, where the limited time prevented all interested parties from asking questions and getting answers.

In their opinion, the Anti-Corruption Council pointed out the corruption risks in the amendments to the Law on Planning and Construction. Numerous participants in the public discussion and parliamentary debate also emphasized the same problem, while the opinion of the Agency for the Prevention of Corruption was apparently not even requested.