Parliament to Discuss Postponing Mobile ‘Top-Up Tax’

By San Yamin Aung 22 May 2015

RANGOON — Parliament has agreed to discuss delaying a tax on Burma’s mobile phone users that is due to go into effect on June 1, after a lawmaker from the ruling Union Solidarity and Development Party (USDP) asked the legislature to reconsider the plan.

The government announced on Monday that subscribers of Burma’s three telecommunications providers—state-owned Myanmar Posts and Telecommunications (MPT), Ooredoo and Telenor—would need to pay a commercial tax of 5 percent on all cellphone usage, including phone calls, text messages and mobile data. The tax will be applied to the so-called “top-up” cards that mobile users purchase to add balance to their phone credit, and resulted from an amendment to the Union Tax Law passed on April 1.

The announcement sparked criticism among a public that for years had to pay exorbitant sums for a SIM card due their limited release by MPT, which until last year had a monopoly on Burma’s mobile network, spawning a black market trade that has only fully disappeared in the last few months.

Parliament agreed to discuss the issue on Thursday, after Lower House USDP lawmaker Thein Tun Oo submitted an urgent proposal to the legislature, asking the government to submit an amended Union Tax Law that would postpone enactment of the 5 percent levy until at least the end of the fiscal year on March 31, 2016.

“It happened on something we did not clearly understand,” Thein Tun Oo told The Irrawaddy on Thursday, explaining that the new tax resulted from taking information and technology services off a list of exemptions to the commercial services sales tax of 5 percent.

The lawmaker questioned the decision to tax cellphone users, which until a few years ago included only the wealthiest or most well-connected in Burma, now that SIM cards are available to the masses. As late as mid-2013, SIM cards sold on the black market for about US$200 and at one point could sell for 10 times as much, but are now available for 1,500 kyats ($1.40).

“It is still only a very short time that Burmese people have been able to use mobile phones widely. Mobile phone users were unhappy when they heard the notice from the Ministry of Communications and Information Technology to add the 5 percent tax on mobile phone top-up cards starting from June 1. So, I asked for an exemption in this fiscal year,” he said, adding that lawmakers could then debate whether to apply it in the tax code from April 1, 2016.

Parliament must pass a Union Tax Law, with amendments or not, annually.

“I think it is OK to collect after some time, when the country’s economy develops. But now … we must consider whether we should collect the tax from the pockets of low-income people or from the rich people,” Thein Tun Oo said.