Tax & Revenue

Parliament mulls Maintaining Tax Rates to Offset Forex Pressure

Date: 20 August 2018; Type: Legal News; Source: Myanmar Times

The Pyidaungsu Hluttaw public accounts joint committee has suggested experimenting with different strategies to raise tax revenues without changing current rates.

“As the dollar exchange rate is rising, we would suggest that tax rates not be raised so as not to further burden struggling businesses,” U Khin Cho, member of the public accounts joint committee, told The Myanmar Times on August 19.

“Even though tax revenues have increased, there are opportunities to further maximise collections with better strategies without raising rates,” said U Khin Cho.

These include raising tariffs at the border and strictly enforcing commercial tax and special commodities tax.

He added that tax revenues will rise by simply making it easier for residents to pay their taxes, providing more information and rewarding tax payers with more incentives.

The government is now inviting qualified service providers including the banks and mobile money service operators to submit Expressions of Interest (EOI) to develop an Information and Communications Technology (ICT) system enabling taxpayers to use mobile banking to pay their monthly commercial and special goods taxes as well as quarterly income taxes.

Budget deficit

The suggestion to leave tax rates unchanged was made despite a widening budget deficit, which is expected to hit K4.9 trillion in 2018-19, or around 5 percent of GDP. In 2017-18, the budget deficit was K4.1 trillion.

The government is expecting tax collections to remain flat in the coming fiscal year despite a higher level of projected growth for the economy. Meanwhile, it also expects the economy to grow by around 7pc in 2018-19 compared to 6.8pc as projected by the World Bank in 2017-18.

Myanmar’s tax take is currently the lowest in the region. Its tax to GDP ratio is projected at around 7pc for 2018-19. In Cambodia and Laos, the ratio is currently 8pc and 10.8pc, respectively. In the rest of Asean, the ratio is above 10pc.

Thailand and Malaysia are the two most efficient tax collectors, with tax takes of 17pc and 15.5pc, respectively, according to official data.

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