Sunday, August 20, 2017

IRD eyes income tax from property rentals

Yangon aims to increase the number of people paying taxes on income generated from rental properties, according to Ministry of Finance Internal Revenue Department (IRD) spokesperson U Hla Htay Oo.

Government coffers are missing out on revenue, as only about 10 percent of landlords currently pay taxes, he said.

“It’s really rare that owners who rent out apartments, condos, houses and land pay taxes to the department when they rent out their property,” he said.

The Internal Revenue Department is planning to better enforce tax collection on rental income, in an effort to generate more state income.

The Income Tax Law stipulates that landlords must pay taxes when their rental income is above K2 million a year, said IRD Director U Kyaw Kyaw

Property income for Myanmar citizens is taxed starting at 2 percent and increases progressively to 25pc, with top rates charged on income above K30 million, according to U Kyaw Kyaw. Income from an undisclosed source is also taxed at 30pc.

Many landlords are unfamiliar with the law and with the requirement to pay taxes, says Ko Htun Htun, owner of Phoenix real estate agency. “Some landlords avoid tax by residing overseas,” he said.

Recent government moves to increase awareness of tax obligations would likely improve tax collection efforts, he added.

People engaged in property transactions already have to pay agent and contract fees, so are not much inclined to pay tax as well, said Daw Moh Moh Aung, general secretary of Myanmar Real Estate Service Association.

Myanmar has also pursued a number of initiatives in the last year to attempt to improve collection of property tax transactions, aiming to generate more state income and slow what some describe as an overheated property market.