Business

Tax Revenues Expected to Rise to $4Bln: Official

By Kyaw Hsu Mon 27 October 2014

RANGOON — Burma’s Internal Revenue Department said it expected to collect approximately 4,000 billion kyats, or about US $4 billion, in taxes this year, a senior official said on Monday, adding that tax revenues have continued to rise year on year since 2011.

The expected tax revenues fall short, however, of the most recent International Monetary Fund (IMF) projections for tax collection by the Burmese government.

“The income tax represents the largest amount among these taxes, and the total amount of taxes is increasing annually,” said Tin Htwe, assistant director of the Internal Revenue Department.

He said his department had collected about $1.9 billion in the first seven months of this year, adding that about $1 billion was collected from income and property tax, about $900 million from commercial tax, $37 million in so-called stamp duty tax for those buying property, and about $16 million from lottery tax.

In 2013-2014, the revenue department said it collected 3,852 billion kyats, a little under $4 billion against last year’s exchange rate, while a year earlier it collected 2,710 billion kyats, or about $3.1 billion.

Since President Thein Sein’s reformist cabinet took office in 2011, the government has been trying to raise tax revenues in order to expand public spending.

Tax collection has improved after township level tax committees were formed and tax officials received training and international technical support from international financial institutions, such as the IMF.

Over the past year, the government introduced a new property tax with some success. It reformed and lowered its property sales tax in order to encourage more buyers and sellers to register transactions. Previously, many buyers and sellers agreed not to register the change of property ownership in order to avoid taxes.

The revenue department is also trying to levy income taxes on the rapidly rising rent rates in Rangoon.

Tax evasion remains common, however, in particular for property sales tax and commercial taxes levied on businesses. A Rangoon Division Internal Revenue official estimated earlier this year that “more than 80 percent” of property transactions on Rangoon’s booming real estate market go unregistered and untaxed, especially when it involves expensive properties in upmarket neighborhoods.

The IMF said in a recent statement on a consultation with the Burmese government that it expected Naypyidaw to collect about $4.7 billion in tax revenues in 2014-2015, well above the figure cited by Internal Revenue Department officials.

It commended the government on its economic and fiscal policies, which have led to low debt levels, a small fiscal deficit, a growth in foreign investment and strong growth of gross domestic product at around 8.25 percent this year.

It noted, however, that “Additional efforts to mobilize revenues are also necessary to allow increases in social spending and public investment. Priority should be given to cutting back exemptions, strengthening tax administration, and preparing for the introduction of a [value-added tax].”

Additional reporting by Paul Vrieze.

Loading