RANGOON — The Department of Internal Revenue announced Monday that it would improve tax collection on income earned from rent rates across Burma and warned property owners to submit their earnings from rent soon.
The announcement comes at a time of skyrocketing rent rates in the country’s commercial capital Rangoon, which has seen companies and UN aid agencies pay up to $1 million per year to the owners of offices and villas.
Local revenue department officials said they were taking steps to address tax evasion by landlords, which has been commonplace in Burma, but they offered few details on how the tougher approach was going to work or whether harsher punishments would be enforced for those found evading taxes.
Monday’s announcement in state-run media said the department would inform property owners of the need to submit their income from rent, adding that the department will subsequently work with the Yangon City Development Committee and the police to catch those evading taxes.
“This project is aimed at more strictly levying taxes … First, [landlords] are warned by the government to provide their income tax information, then we will assess taxes, and after that we will check who are evading taxes township by township,” said anofficer of the Rangoon Division Internal Revenue Department.
The officer, who asked not be named as he was not authorized to speak to the media, said that “more than 80 percent” of property owners in Rangoon have been evading taxes on income earned from rent for many years, including those who own villas and luxury residences in the upmarket neighborhoods in Bahan, Mayangone and Kamaryut townships.
“Most of them are evading income tax, that’s why we’re going to strictly assess their income tax,” he said, adding that income gained from renting out land, real estate, factories, condominiums and other property would be taxed.
According to the Revenue Law, tax rates vary from 5 percent for landlords earning between US$2,000 and $5,000 per year, to 25 percent tax for those earning more than $30,000 in annual rent.
Rangoon’s property market has boomed since President Thein Sein’s nominally-civilian government announced political and economic reforms in 2011. Rent rates in the city, where high-quality housing and office space remain scarce, have soared and foreign companies and UN aid agencies are paying exorbitant rates for their offices.
The Irrawaddy revealed in May that Unicef paid $87,000 per month for a compounded villa in Golden Valley, one of Rangoon’s most expensive neighborhoods, a property owned by a former military regime general. The World Health Organization said it paid $79,000 per month for its office on Pyay Road in Mayangone Township.
The rates caused a public backlash—in particular as some of the properties are owned by business cronies and former junta members—and there were calls for improving the tax collection on the properties in order to ensure that public revenues are gained from the booming property market.
Internal Revenue Department officials said they were aware of the media attention on the high rent rates, but said it had not informed their decision to improve tax collection on rents.
In Bahan Township, the site of Golden Valley, some 200 property owners had recently submitted their income from rent, a local township revenue department officer told The Irrawaddy.
“As far as I know, the owner of the Unicef office has already submitted their income information, but I can’t go into more detail,” said the officer, who declined to be named.
Kyee Myint of the Myanmar Lawyers’ Network said it remains to be seen whether the department’s new approach will reduce rampant tax evasion on income earned from property, as punishments for evasion are light.
“They only have to pay a fine that represents 10 percent of their total taxes,” he said, adding that the department should be open about whether it is successful or not in improving tax collection.
“The department of internal revenue has a responsibility to show to the public how much tax they collect… If they really collect [more tax] it could go to education and health care,” Kyee Myint said.