2018 Union Tax Law, a turning point to dramatic change for higher economic growth

  • By Ye Htut Naing
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It is intriguing news that the 2018 Union Tax Bill will be submitted to the Union Parliament, because it is presumably the first step to boost the economic environment of the country.
The Union Government made the preparations and will submit it to the Union Parliament for the first phase. One of the interesting things is that the government is going to remove all forms of withholding taxes starting on 1 April, 2018. The government aims at improving the socio-economic standards of all citizens and it is regarded as a good sign towards moving forward to high economic growth.
According to the new bill, the union government is trying to improve the tax system to be more effective and ensure that taxes are efficiently and systematically collected. Therefore, action needs to be taken against tax avoidances in accordance with existing rules and regulations.

Fitting the current economic development
The 2018 Union Tax Bill was drafted in order to fit the current economic development while giving tax exemptions relief to taxpayers. Arrangements should be made not to become a burden for the taxpayers and it will come into effect for money and assets both in and outside the country, which were legally obtained. Both citizens and taxpayers in the country must pay 3 per cent tax for the first six months, and 5 per cent for the next six months. In the old Union Tax Law 2017, there was a clause that allowed paying tax for money that escaped assessment, but it was removed in the bill.

The 2018 Union Tax Law
According to the new 2018 Union Tax Law, taxpayers will have to pay only 3 per cent on the trading value within the first six months, from April to September, while those paying income tax in the second half have to pay 5 per cent. Earlier, an income tax of 15 to 30 per cent had to be paid on the trading value of property.
Buyers and sellers will have to pay only 7 to 9 per cent tax, including 3 or 5 per cent income tax, and 4 per cent stamp duty.
The reduction in tax is likely to persuade traders who evaded tax, by making transactions with general power and soft power of attorney, and some deal working on the previous contract term, to pay tax and make changes in ownership. Consequently, people are satisfied with the reduction in tax and because of the booming of real estate market.
Moreover, tax cuts will result in better real estate deals and a possible decrease in real estate prices. Real estate deals are likely to grow on account of a decrease in the income tax. However, the stock market, the automobile market, the gold export/import market and banking operations are also competitive investment options. As there are many markets that can catch the investor’s eye, price manipulation will not be seen significantly in the real estate market.

Shaping stable economic development
In shaping the stable economic development of a country, sustainable provision of supports for the development of small businesses from the private sector is essential. Also, small productive industries and economic enterprises play an important role in increasing per capita income.
There are various kinds of economic spheres for Myanmar. It is essential to constantly monitor conditions of small businesses from the public economic sector and to encourage them at the same time. It is because a nation’s economic development is directly proportional to the development of SMEs.

Fostering economic reforms
Compared to other ASEAN nations, Myanmar has low levels of tax yield with a ballooning budget deficit. It is high time for the country to foster economic reforms and increase the effectiveness of tax collection. The country’s total tax revenues have made up less than 5 per cent of the gross domestic product. Moreover, the development of the country depends upon the private sector. The lawmakers and members of parliament should urge the government to encourage the businesses and all citizens to take pride in paying taxes as dutiful citizens. In fact, taxation reform is vital for scaling up the economic and social reforms of the country, thereby creating job employment opportunities for the citizens. In fact, tax collecting is not intended to get money for the government’s expenditure, but to implement the objectives of the state.

Emergence of the acceleration effect
According to the reports released by Asian Development Bank, industry growth of the country continues to accelerate with higher investment, both public and private, in garments and other light manufacturing, while services are getting a boost from tourism and expansion in the nascent telecommunications industry.

Utilisation of taxation
State Counsellor Daw Aung San Suu Kyi stressed the importance of collecting tax in her speech. Taxation is an important issue for a country which loses a lot of tax revenue mainly due to privileged people, a monopolised economy and corruption. As for the government, it is needed to fight against corruption and bribery issues as a first priority in order to have tax revenues from taxpayers in line with rules and regulations. In doing so, the government will have tax revenues which could be used effectively for the welfare and interest of the country.

Creating tax-paying culture
She said the government was striving to improve the tax system and passport applications. But changing practices and systems in a way that is fair to everyone was very challenging. “For establishment of a tax culture, a country needs to collect taxes. Even a rich country like Japan collects taxes from its citizens. If we don’t collect taxes, how can the government function? We need to collect taxes to allow the government to function.
“First the government needs to educate the public. Some people don’t even know how much tax they pay as some tax laws are very complicated. We need to change the system and should make strenuous efforts to enhance the transparency of the use of tax revenues. I guarantee that the government would use cash aid effectively and transparently,” she said. Therefore it is of paramount importance to develop tax-paying culture among the citizens.

Crucial points of taxation
The next crucial point of taxation is that people are satisfied with the attempts made by revenue authorities to draft a new bill which is related to the formation of a body that solves taxation problems. The 2018 tax system should be agreeable to both government and taxpayers so that the government can make the tax collection system more effective while citizens must pay their taxes as dutiful citizens.

Translated by Win Ko Ko Aung

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