Revenue Dept to Improve Tax Collection from Soaring Rent Rates

 Myanmar tax collection, Myanmar real estate

The gate of Unicef’s office in Golden Valley, in Rangoon’s Bahan Township, which costs $87,000 per month to rent. (Photo: Hein Htet / The Irrawaddy)

RANGOON — The Department of Internal Revenue announced Monday that it would improve tax collection on income earned from rent rates across Burma and warned property owners to submit their earnings from rent soon.

The announcement comes at a time of skyrocketing rent rates in the country’s commercial capital Rangoon, which has seen companies and UN aid agencies pay up to $1 million per year to the owners of offices and villas.

Local revenue department officials said they were taking steps to address tax evasion by landlords, which has been commonplace in Burma, but they offered few details on how the tougher approach was going to work or whether harsher punishments would be enforced for those found evading taxes.

Monday’s announcement in state-run media said the department would inform property owners of the need to submit their income from rent, adding that the department will subsequently work with the Yangon City Development Committee and the police to catch those evading taxes.

“This project is aimed at more strictly levying taxes … First, [landlords] are warned by the government to provide their income tax information, then we will assess taxes, and after that we will check who are evading taxes township by township,” said anofficer of the Rangoon Division Internal Revenue Department.

The officer, who asked not be named as he was not authorized to speak to the media, said that “more than 80 percent” of property owners in Rangoon have been evading taxes on income earned from rent for many years, including those who own villas and luxury residences in the upmarket neighborhoods in Bahan, Mayangone and Kamaryut townships.

“Most of them are evading income tax, that’s why we’re going to strictly assess their income tax,” he said, adding that income gained from renting out land, real estate, factories, condominiums and other property would be taxed.

According to the Revenue Law, tax rates vary from 5 percent for landlords earning between US$2,000 and $5,000 per year, to 25 percent tax for those earning more than $30,000 in annual rent.

Rangoon’s property market has boomed since President Thein Sein’s nominally-civilian government announced political and economic reforms in 2011. Rent rates in the city, where high-quality housing and office space remain scarce, have soared and foreign companies and UN aid agencies are paying exorbitant rates for their offices.

The Irrawaddy revealed in May that Unicef paid $87,000 per month for a compounded villa in Golden Valley, one of Rangoon’s most expensive neighborhoods, a property owned by a former military regime general. The World Health Organization said it paid $79,000 per month for its office on Pyay Road in Mayangone Township.

The rates caused a public backlash—in particular as some of the properties are owned by business cronies and former junta members—and there were calls for improving the tax collection on the properties in order to ensure that public revenues are gained from the booming property market.

Internal Revenue Department officials said they were aware of the media attention on the high rent rates, but said it had not informed their decision to improve tax collection on rents.

In Bahan Township, the site of Golden Valley, some 200 property owners had recently submitted their income from rent, a local township revenue department officer told The Irrawaddy.

“As far as I know, the owner of the Unicef office has already submitted their income information, but I can’t go into more detail,” said the officer, who declined to be named.

Kyee Myint of the Myanmar Lawyers’ Network said it remains to be seen whether the department’s new approach will reduce rampant tax evasion on income earned from property, as punishments for evasion are light.

“They only have to pay a fine that represents 10 percent of their total taxes,” he said, adding that the department should be open about whether it is successful or not in improving tax collection.

“The department of internal revenue has a responsibility to show to the public how much tax they collect… If they really collect [more tax] it could go to education and health care,” Kyee Myint said.

2 Responses to Revenue Dept to Improve Tax Collection from Soaring Rent Rates

  1. The more important thing is to investigate how soldiers make huge money to buy these kinds of expensive houses. There is no way their legal salaries may never be enough even if they work for Defense Ministry for 100 years. So, extortion or laundering government funds was their way of becoming rich. Their crime is now just started to reveal it to the public.

  2. Here it proves it is not so much that the general ( s) wrong doing nede to be looked at and treated by law at first place,,, it will sure piss them off already as an famous woman highlighted to ensure only that from now on 20 % tax is paid on all these ” Nonsense ” rental fees and that so at least 25 % of the Myanmar peoples money comes back to the people even considering 20 % of that goes back exactly back to the army which through some person rents these places.
    As at same time all know in Myanmar if at Golden Valley over 200 rich announced the tax payment for the rentals already ahead of investigation that is in Myanmar a clear indicator of a ” Clear Fake and Corruption reduction ” .
    Right take it all from the wrong situation and charge from there, – but than charge. A big Hello and Cheerio to the former UK Ambassador , a pity that the present is as tooth less as most other EU Ambassadors just as the German which has only one interest ” selling Football TV rights ” , into his own pocket ??? difficult to say but talk of town…….under Vietnam influence …….

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