An Enquiry on Tax



We have been seeing more than our share of deaths and destruc­tion within this beautiful country of ours, so let’s spare a little time to lighten up the mood by dwell­ing on the tax system and some of its stats. Spoiler alert: you be surprised!


The five typical features of a good tax system are fairness, adequacy, simplicity, transparen­cy, and administrative ease. Let’s bring all these down to earth in Myanmar. We have spoken to IRD (Internal Revenue Department) to get ourselves updated on cur­rent issues of the day.


The good features are all here?

Fairness refers to the tax sys­tem treating all taxpayers equal­ly and consistently. People and businesses would pay their fair share of tax, and income should be subject to tax only once. Yet fairness as defined by whom? Some businesses and individuals in states and regions outside of central government control end up paying some sort of protection money to EAOs, rebels or NNCP terrorist groups. Some restau­rants in major towns and cities are still evading the payment of five per cent commercial tax by either refusing to issue receipts or asking patrons to fork out extra for the shop, having to stick stamps onto receipts.


Among the three siblings of regressive, proportion and pro­gressive taxes, most of Myan­mar’s taxes are not progressive in nature yet, resulting from the inability to assess one’s income or wealth accurately.

Tax collections are not ade­quate either at present. We are running budget deficits for four­teen out of the past fifteen years. The country is grossly short on infrastructure to supply basic services.


Simplicity is one area that the Myanmar tax system can be proud of. That could be a result of a lack of advancement in the economy and the financial sys­tem. For instance, most taxes on transactions, such as properties or cars, are based on the value of the property and apply a fixed percentage of tax. The value of the property is also only officially de­termined for tax purposes. There is also no centralized transaction register either. There is fat hope for those wanting to do a valu­ation report of any property here.


Transparency refers to tax­payers’ and citizens’ ability to learn how the money collected from them was distributed. Tax­payers being clear on exemp­tions, deductions, tax credits, etc. Since 2021, the transparency has somewhat decreased, based on the disclosure of spending and allocations by the central govern­ment. At the ground level, we also need transparency, as the lack of it encourages corruption across all civil services. A good example would be the change of ownership titles for farmland. Without open­ness and publicity thereof on fee structure, citizens ended up hav­ing to cough up whatever amount demanded by civil servants work­ing in these departments, just for the latter to do the job they get paid for by the government.


The last of the lot, the admin­istrative ease, refers to both the collectors and taxpayers. The sys­tem itself cannot be cumbersome or expensive. At present, due to different registration require­ments of various government departments, citizens, business owners and companies are given a run around having to register at different places, go to different de­partments, etc. There is also the issue of frequent changes of tax collectors and assessors, requir­ing the taxpayers to restart the whole process from the beginning.


Here comes interesting stats

In terms of evasion of com­mercial tax, the government has taken action at least 884 times in the last financial year. Fines have been imposed depending on the frequency of the offence, a total of K980 million. Yet, it still repre­sented only 0.03 per cent of the total commercial tax collections of the year.

Out of 283 branches of IRD across the country, only four per cent fall under SAS (Self-Assess­ment System). Yet collection-wise, offices under SAS collected 80 per cent of the taxes. The moral of the story seems to be to trust the taxpayer instead of the tax collectors. Most countries have also done away with OAS (Officer Assessment System), too.


There are many hotlines, branches and emails to ask for details on the taxes and clarify things. Yet, disagreement with the assessment can only be via written correspondence to the director-general of IRD.


The surprising finding in our inquiries was the fact that there has not been any reduction in tax revenues collected after 2021. Yes, there was a reduction during the COVID period, but not after that. We were saved by the SAS, per­haps.


Legal systems, integration issues, and high-level pushes are lacking to ensure that Myanmar has one unique ID number for every individual and entity that could be used for ALL govern­ment departments. This central­ized registration system is still not in place yet.


Last but not least, the issue of Facebook getting all ad rev­enues out of Myanmar-based companies, targeting Myanmar consumers and not paying any income tax here, is unlikely to be addressed at any time soon. Meanwhile, Myanmar continues to lose out on its share of tax rev­enues from the number one social media platform.