Realtors are expecting the reduced income tax under the 2018 Union Tax Law to stimulate the real estate market, which has been cool for the last three years.
The new law will come into force from 1 April 2018.
“The real estate market will become buoyant from late April. Though the market will not rise significantly, it will grow gradually. The prices of property will remain unchanged for six months to one year. After one year, the real estate market will look up,” said U Khin Maung Than, chairman of Myanmar Real Estate Services Association.
Earlier, an income tax of 15 to 30 per cent had to be paid on the trading value of property. 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.
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 in previous years to pay tax and make changes in ownership.
Entrepreneurs are satisfied with the reduction in tax, as the real estate market has been cool since 2014.
“We are glad about the slash in tax by the government. This is a great move by the elected government for the real estate industry. The sector will see more money. It will help raise the GDP,” said U Khin Maung Than.
U Than Oo, managing director of Mandine Real Estate Agency, said that tax cuts will result in better real estate deals and a possible decrease in real estate prices.
The real estate market is likely to grow on account of a decrease in the income tax. However, the stock market, automobile market, 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, he said.
Tax cuts will provide opportunities to foreign investors observing the local real estate market. In addition to this, related businesses in the construction sector will also do well.
Yangon Region Chief Minister U Phyo Min Thein noted that there will be many projects which will be implemented within three years, such as low-cost apartment projects in Yangon Region, a new city project in Kyimyintdine Township, and the Yangon Special Economic Zone, which will be developed in Kungyangon Township, among others. Property prices are likely to drop in the future. As a consequence, home ownership rates will increase. U Khin Maung Than pointed out that such activities are a driving force for the growth of the real estate market.
“The Yangon Region Chief Minister considers this as an effort towards economic development activities in the currency, gold and real estate markets, along with the new tax system,” he noted during a meeting with entrepreneurs from the construction industry held on 17 February.
Property prices have dropped by 30 per cent to 65 per cent depending on their location in the past three years. Investors have therefore turned to banking operations.
By May Thet Hnin