RANGOON — In an effort to tighten up Burma’s loosely enforced tax system, nearly 200 domestic companies will be de-registered for evasion, officials announced on Wednesday.
The Directorate of Investment and Company Administration (DICA) said a total of 197 firms in Karen State, Tennasserim and Pegu divisions will lose their legal standing as of Feb. 28 after several years of skirting payments.
The announcement, published on the directorate’s website, did not specify what sectors dominated the list. Those companies set to be delisted were instructed to contact the Myanmar Investment Commission before the end of the month to settle outstanding debts and re-register.
Section 247 of the Myanmar Company Act grants the directorate authority to revoke business licenses for tax evasion, though it has never before been publicly accountable for implementing the procedure.
DICA collaborates with the Internal Revenue Department (IRD) by reporting the total number of companies that applied for business licenses throughout the fiscal year. The IRD then calculates the disparity between total businesses and corporate taxpayers.
Saw Swe, assistant director of the Rangoon Division IRD corporate tax collection department, said the city alone has 4,913 companies that have yet to pay their taxes as the registration deadline nears. Some of those companies haven’t paid in as many as three years.
“We’ve been contacting those companies about making tax payments, but those are just the ones in Yangon [Rangoon],” he said, explaining that the companies delisted on Wednesday were located in other states and divisions making them difficult to contact. Tax assessments are made by state and divisional departments of DICA and the IRD.
Tax evasion is a chronic problem for Burma’s revenue department, which claims a total of 10,670 companies nationwide did not pay duties for the 2012 fiscal year. DICA’s current roster of registered licensed companies suggests there could be more than 30,000, which would mean less than two-thirds of companies paid up.
Taxpayer data are not yet available for the 2013 fiscal year. An IRD inspector told The Irrawaddy that the number of active companies with outstanding tax balances won’t be calculated until all companies seeking to renew their licenses are checked against the IRD’s annual records.
The IRD was formed in 1972 and falls under Burma’s Ministry of Finance. The department is responsible for the collection of income tax, commercial tax, stamp duties and lottery tax, which is expected to bring in roughly 4 trillion kyats (US$4 billion) in the coming year.
In the first half of the current fiscal year, nearly $2 billion was collected: $1 billion in income and property tax; $900 million in commercial tax; $37 million in stamp duties; and $16 million in lottery tax.
In late December 2014, the department published a list of the top 1,000 corporate taxpayers, headed by Kanbawza Group of Companies’ $17 million in payments. Myawaddy Trading Co Ltd and Dagon Beverages Co Ltd topped the sales tax list, each paying upwards of $10 million.