‘The Union of Myanmar Economic Holdings Also Has to Pay’
By Nyein Pyae Sone 12 July 2013
Tax reform is under way in Burma, with a government-backed committee now reviewing the tax system and offering suggestions in a country rampant with corruption and tax evasion. The Board of Scrutinizing and Monitoring of Tax Collection formed in May, and among its members is Maw Than, an economics scholar and a patron of President Thein Sein’s National Economic and Social Advisory Council. In an exclusive interview with The Irrawaddy, Maw Than, who was once a rector at the Institute of Economics in Rangoon, discusses how Burma’s tax system is set for some major changes—with military-backed companies now paying taxes for the first time in decades.
Question: What is the role of the Board of Scrutinizing and Monitoring of Tax Collection?
Answer: The board scrutinizes whether taxes are collected properly. It also scrutinizes tax collection in terms of service, trade and production in the country. It reports its findings on tax collection to the union minister for finance and revenue, and offers suggestions to ensure that the current tax system meets international standards. These are the main functions of the board.
Announcements have to be made to let people know they are also subject to paying taxes. Burma [the government] currently receives only 4 percent of the taxes that it should receive. Taxpayers don’t declare their true assets so they can avoid paying a lot of taxes. Now everyone needs to declare their income and pay taxes. The taxation system is going to change, starting this year. It’s a long-term project. If someone’s income is suspiciously small, it will be checked by the department of tax administration. If irregularities are found, he or she will be subject to punishment.
Q: What kind of punishment will be imposed on someone who lies about their taxable income?
A: If someone is found guilty of tax evasion for a large amount of taxes, he or she will be prosecuted.
Q: How will you investigate to know clearly that someone is trying to evade taxes?
A: It’s easy. I told the union minister about it when I met him at a meeting. The taxes collected from vendors are small—we don’t target them. We target big businesses. Most of them are either in Rangoon or Mandalay. We can know any kind of business located in Rangoon and Mandalay easily by looking at the Yellow Pages. There aren’t Yellow Pages for other towns. For them, we will work closely with the department of tax administration. By doing so, tax evasion is not possible any more.
Q: During the former military regime, military-owned businesses such as the Union of Myanmar Economic Holdings Limited (UMEHL) were exempt from taxes. How about now?
A: Taxes have been collected ever since the present government was in power. Formerly, businesses related with state-owned businesses were exempt from taxes. For example, the Union of Myanmar Economic Holdings Limited—now it also has to pay taxes. Since the end of last March [the end of the last fiscal year], taxes are being collected from UMEHL. State-owned businesses are subject to taxes, too.
Q: Is the tax board being pragmatic? Will you succeed in your goals?
A: It will succeed. It must succeed because the situation of our country is not like the past any more. The state can have money to use only if it succeeds. Yes, it is certain to succeed. We collect taxes by order of the government and the state. We’re not robbing people. We’ll try to achieve our aims. I presume it will take three years [to make the board function well]. I can say so because the amount of taxes collected has jumped three or four times [compared to the past] since the board formed.
Q: By paying taxes properly, what advantages can the public and businesspeople enjoy?
A: Some say, ‘Look! The roads are always in a really bad condition, no matter how much we pay in taxes.’ I would like them to know that we have to use the money from taxes to pay the police, who are responsible for the security of the public. … So if people pay taxes, it means the public can live peacefully. … Taxes will also help improve roads and bridges. It’s just like a family that has good income can take care of its family member in a nice way.
Q: There have been some demands to reduce taxes on domestic products. If taxes for domestic products are reduced, they can compete with products from other countries. What do you think of this? What will the government arrange to do in this regard?
A: The taxes for some products are quite low. As a result, people can buy them for cheap prices. However, products like cigarettes and alcohol are hazardous to health. So taxes are not going to be reduced for these kinds of products. … For some products that don’t bring any bad effect to the public, we should reduce the taxes for them.