New Tax Law to Increase Burden on Private Sector

Burmese banknotes are shown with US dollars. (Photo: AP)

Changes in Burma's tax laws will add to the burden on private-sector companies and their employees while sparing state-run and military-owned corporations, creating conditions that will increase the risk of future economic problems, according to experts and private entrepreneurs.

The changes, which come into effect next month, are part of an overhaul of tax policy designed to put it in line with Burma's 2008 Constitution, which abolished the Profit Tax Law that previously applied to private-sector companies.


Under the new rules, private companies and their employees who earn more than 30,001 kyat (US $38) annually will now have to pay the same income taxes as public companies. In practice, however, few state- or military-owned companies actually pay these taxes.

Privately owned companies, on the other hand, will be required to file tax returns and provide annual salary statements for each of their employees to local township revenue offices, as part of an effort to improve enforcement of tax laws.

The rate of taxation will also be higher. For example, a company or individual earning 300,000 kyat ($384) a year must now pay 30 percent in income tax, whereas under the Profit Tax Law, they only paid 20 percent.

“It is hard to call this a tax reform,” said Han Tun, a writer who focuses on tax-related issues. He said that it will be especially difficult for small enterprise to meet the new requirements.

Not only the State run newspaper New Light of Myanmar announced the procedure but also respective Township internal revenue department call meeting and urged all taxpayer to filled-in and signed in the file the return of income form and sent it to respective revenue department before June 30.

Observer said taxpayer potentially to pay more tax to the government to cover their loss because Thein Sein center government transferred 19 categories of tax to collect Region and State government.

Entrepreneurs looking forward government to enact appropriate tax for them and thought that they have to pay for tax more than previous year according to restaurant owner from Sagaing.

“I have to pay 40,000 kyats for tax. But this year I have to attach details of my income. Everybody have to pay tax because one year income is exceed than 300,000 kyats ($38.68). So it is likely that government will receive more tax and taxpayer have to pay more income tax,” said Photographer from Kyonpyaw Township from Irrawaddy division.

In the military regime tax have been collect without proper monitoring but now authorities will more concentrate on the tax and strictly enforce tax laws because of changing to democracy said official from Ministry of Finance and Revenue.

“How government arrange our health and education after taxpayer paid their tax? The collect the tax in accordance with democracy and should take responsible in accordance with democracy. So what they said democracy will be in shape,” said Tun Tun, IT shop owner from Rangoon.

“Paying the tax to our country is our duties. But government should decide appropriate tax for taxpayer,” he added.

In 1972, due to government new administration Internal Revenue Department was formed and Income Tax law has been introduce in 1974. In 1976 tax from Company, Co-operative society and state own enterprise are supervise by Income Tax law and the rest have been collect under the Profit Tax Law.

“The form from the internal revenue is very detail not like previous. It seems like they[government] don't got tax from company and more restriction on collection tax. Entrepreneur, who wish to reinvest their profit, reluctant to give their profit as a tax,” said owner of Travel and Tour agency from Bahan Township in Rangoon.

Some entrepreneur negotiated with the official from revenue department to pay the profit tax lower than actually cost are also watching the situation how to deal with the process said business man.

Rangoon based The Voice weekly journal reported top ten tax payer business group that Kanbawza Bank business group paid the highest tax in the financial year 2010- 2011. The other leading groups run by regime's back Tayza of Htoo and Zaw Zaw of Max Myanmar are not listed in the list.

One of the company, who paid tax with foreign currency which is twice than KBZ complain about the news to the official from revenue department replied that the tax they paid in dollar have been change with 6 kyats per dollar.

Burma’s Internal Revenue Department has announced a new law targeting companies for tax on Jan, however, the military-owned Union of Myanmar Economic Holdings Ltd (UMEHL) and several other government enterprises are still exempt from the regulation.

Source:http://irrawaddy.org/article.php?art_id=21517