Real estate tax in Iran is considered as one of the good sources of sustainable income provision for municipalities, which requires special consideration by the national and local governments and the share of this type of income among other types of income sources in the municipality should be increased.

In the meantime, in order to obtain these types of dues, there are some problems that must be negotiated and presented by the municipality and the government:

The first problem is the implementation of Article 64 of the Direct Tax Code regarding the determination of the value of real estate transactions (land and buildings), which requires as much as possible strengthened databases to estimate the actual value of the property. Therefore, the main attention is paid to the Real Estate Calendar Commission, which needs to be coordinated among the members of the commission in this regard, and should use the capacity of the member organizations of this commission to determine the value of the property.

The second problem is to determine the rate of renovation costs that are set in the state budget law. This rate is 0.5% according to the urban renovation plan in 1968, in table 16 of row 38 of the single article, and the large tables of resources and expenditures of budget 2016 are set at 1.5%, and the staggering growth of this rate is the main cause of the shortage of sustainable municipal revenues. The property tax rate should be in accordance with the needs of the municipality for sustainable incomes; not inappropriately and contingently. Hence, the determination of this rate by the Organization for Management and Planning, as well as the Cabinet of Ministers and the government body, will be crucial.

The third problem is the collection of these dues, which goes back to the performance of the municipality and effective organizations in accordance with the law of urban renewal and development. At present, according to the Tehran Municipal Finance Facility, the rate of Tehran citizens’ participation in the payment of taxes is only 40%, which is considered as a very weak point in the management of tax processes. Article 12 of the City Development and Reform Act explicitly states that municipalities are obliged to submit a list of obligors who transfer funds from refusals to electricity and gas organizations, and these organizations should, after a two-month deadline, cut off electricity and gas pipelines; while there is no co-ordination between the municipal management bodies for the implementation of this article.

The reduction in the share of sustainable incomes, such as the cost of renovation, which has been named as a successful experience in other countries, such as real estate, property, or housing taxes, has forced municipalities to make more use of unsustainable incomes and changes. This approach will be effective in the long term in the wake of municipal budget fluctuations, the urban ugly city, the deterioration of the respiratory organs of the city, and the deterioration of living conditions in cities, especially in metropolitan areas, and that measures must be taken to prevent this happening.