The measure aims to help the government-owned mortgage lender to increase its capital and subsequently boost lending capability.
As per the provisions of Note 8 of the budget bill, Bank Maskan’s debt to the Central Bank of Iran (up to 50 trillion rials) will be transferred to the government and considered as capital increase.
According to the parliamentary news website ICANA, the debt is part of CBI loans to Maskan to help fund the massive Mehr Housing Project (aka Maskan Mehr). The huge low-cost housing project, initiated by former president Mahmoud Ahmadinejad, drained CBI money to the tune of 450 trillion rials ($3.5 billion now but much higher at exchange rates during borrowing time). The money transfusion is said to be the largest of its kind by the government after the 1979 revolution, according to Financial Tribune.
As per the provisions of the budget bill, Bank Maskan is obliged to lend to complete the long pending Mehr Housing Project, complete urban renewal projects, help renovate worn-out urban texture, lend for structural and infrastructure expansion projects and the new housing project known as the Social Housing Scheme – building homes for low-income groups.
In addition, the Ministry of Roads and Urban Development is allowed to use its internal sources and income secured through selling and bartering property owned by the ministry to fund the Mehr housing project to the ceiling 15 trillion rials ($116 million) in the next fiscal.
According to the proposed budget, the ministry can secures resources by selling and bartering land owned by the New Towns Development Company and National Land and Housing Organization - two housing and development organizations affiliated to the ministry - through auctions.
Lawmakers allowed the abovementioned housing organizations to secure up to 30 trillion rials ($230 million) in the coming calendar year by borrowing from agent banks and housing finance funds.
The budget bill stipulates that the companies can put up their property as collateral with agent banks and financing funds to be eligible for the new funds for completing their (housing) projects. They may reimburse their debts by selling the housing units.
Tax Decisions
Lawmakers extended the pilot enforcement of Value Added Tax law for the next fiscal. According to a VAT Act passed in 2008, all goods and services including import and export are subject to tax.
However, the Iranian National Tax Administration grants tax exemptions to selective items such as unprocessed agricultural products, flour, paper and books, medicine, goods brought into the country by passengers for personal use, among other things. The rate is frequently adjusted depending on the budget laws. The overall VAT rate is 9%.
The tax exemption doesn’t cover earnings from exporting goods and services in the current and next fiscal if they are not repatriated to the economic cycle of the country as per CBI rules.
In addition, the chamber did not vote on the part of the bill that allows tax holiday for manufacturing units in less-developed areas. The proposal refers to provisions of the Fifth Five-Year Economic Development Plan, which allows tax exemption for industrial and mining units in the poor regions during the five-year period.