YANGON — Leading developers say a proposed tax cut in the union Tax Bill for the 2018-19 fiscal year will provide much-needed breathing room for the struggling construction industry.
Developers met with the government on Saturday in Yangon to explain the difficulties facing the industry.
The 2017-18 Tax Law prescribed a 15- to 30-percent tax rate on property transactions based on the value of the property for those who did not pay income tax. The 2018-19 Tax Bill proposes a tax rate of only 3 to 5 percent.
Developers hope the reduced tax rate will encourage sales in a sluggish property market and attract investors.
“We want the bill to come into law as soon as possible. The sooner the better. I think nearly half or a third of developers may come back into operation,” said developer U Maung Weik.
The property market saw its worst year in 2017 since political and economic changes took effect in 2011, according to developers.
The market started to struggle in 2016 after the NLD-led government imposed a 30-percent tax rate on property transactions and tightened regulations on money laundering, noting that property prices had increased exorbitantly because large sums of money were being laundered through the property market.
Many developers have gone into debt as a result and suspended building projects, causing employment uncertainty for many construction workers and prompting developers to ask the government for meetings to discuss their problems.
Developers in Mandalay presented their concerns to regional government officials on Jan. 26.
During both meetings, developers called for a reduction in the tax rate on property transactions from 30 percent to 5 percent for two years, bank loans for construction projects with repayment periods of three to 10 years, and a reduction of the interest rate on bank loans from 13 percent to 9 percent.
They also called on the government to provide home mortgages with 15- to 20-year terms.
At Saturday’s meeting, Yangon Chief Minister U Phyo Min Thein said: “When we took office, the construction industry bubble was about to burst, and there was a need to review the regulations of the construction industry. We have made changes, and in the future you will see the healthy development of the property market.”
The deputy minister of national planning and finance, U Maung Muang Win, shared the 2018-19 Tax Bill with the union Parliament on Feb. 13. The union Parliament’s Joint Bill Committee will share its findings on Feb 23. Lawmakers will then debate the bill before voting on it on April 1.
Translated from Burmese by Thet Ko Ko.