RANGOON — Deputy Finance Minister Lin Aung urged Parliament on Thursday to revise the property tax paid by some buyers, despite criticism within the real estate industry.
The proposal would boost the tax imposed by the government on buyers who are unable to declare their source of income. Specifically, it would levy a 15-percent tax on declarations up to 30 million kyats (US$23,000), a 20-percent tax on declarations between 30 and 100 million kyats, and a 30-percent tax on all higher declarations.
Just last April, the government had set the rate for this particular income bracket at 3 percent for up to 100 million kyats.
Than Oo, vice chairman of the Myanmar Real Estate Association, said that while such a tax increase might not immediately impact the real estate market, more dramatic effects would likely kick in once the market was back on a track to full health.
“You can’t compare this to income and sales tax rates, the latter of which depends on the market. I don’t think the market will be able to support a tax increase,” Than Oo said.
Demand for high-end property in commercial centers such as Rangoon has seen a steep decline in recent years, even though prices have remained high. At least in part, this can be attributed to the wait-and-see attitude many landowners have adopted toward Burma’s political situation.
“After a new government has been formed, the property market might change. And at that time, we’ll see harm done to the market due to the tax increase on property buyers,” Than Oo said.
Zaw Zaw, senior manager of Unity Real Estate Agency, echoed the warning, adding that he did not think it a good idea to collect tax from property investors based other people’s income tax.
“As we all know, Burma’s property market is in decline right now. How can the government try to collect tax without any real demand in the market?” he said.
Zaw Zaw added that there is only demand in Rangoon in suburb areas, including North Dagon, South Dagon and small townships, where property is worth less than 100 million kyats. Rangoon’s highest value properties are located in six downtown townships, Lanmadaw, Latha, Pabedan, Kyauktada, Pazundaung and Botahtaung, as well as along main roads.
“We wouldn’t see an immediate impact because of a tax hike. I think the impact would be felt in the long run,” he said.
“Prices aren’t falling, and on top of that, demand is significantly down.”
