Sunday, August 20, 2017

Tax exemptions on diamonds, emeralds and gold approved

The Pyidaungsu Hluttaw agreed on Tuesday to stop levying special commodity tax on diamonds and emeralds, as well as commercial tax on gold nuggets.

A sales person displays diamond jewellery. Kaung Htet/The Myanmar TimesA sales person displays diamond jewellery. Kaung Htet/The Myanmar Times

“As those items should be exempted from taxes, Hluttaw agreed to it.” Public Account Joint Committee Member and Kayin State, Hlaing Bwe constituency MP U Khin Cho said.

Previously, 30 percent customs duty, 5pc commercial tax and 10pc special commodity tax , totaling 45pc tax, were levied on the price of imported diamonds and emeralds but now it is only 35pc without 10pc special commodity tax.

High tax rates can make importers avoid legal route and thus tax revenues would decline, U Maung Maung Win said.

“Low tax rates can encourage import via legal route. The State will get 30pc customs duty and 5pc commercial tax.” Deputy Minister for Planning and Finance U Maung Maung Win said.

When diamonds and emeralds, which are not produced locally, can be imported with low tax rates, benefits will include employment in processing of raw gems, international market access by better attractive designs, more export of processed gemstones that would ultimately help in reducing trade deficit, he explained.

Similarly, the 5pc commercial tax exemption on gold nuggets which can be used as hard currency will create more opportunities for investment, it is learnt. This could result to high liquidity of gold nuggets; varying sizes from 1 pe (one sixteenth of a tical) can be bought. It can also lead to a strong market as there is no decrement and no service charges, U Maung Maung Win explained.

“Previously, only immovable assets can be placed as collateral to get loans. Now, gold nuggets and vehicles can be used as collateral for bank loans. So, gold nuggets can be used as collateral.” he said.

If 5pc commercial tax is levied on gold nuggets, it can create losses to the sellers. Moreover, instead of buying gold nuggets, people may invest in other high-liquidity items and it may lead to inflation and high commodity prices.

The 2017 Union Tax Law, granted tax exemption for 86 basic commodities like rice, cooking oil, beans and turmeric. If necessary, the Hluttaw can grant exemption to more items. Therefore, special commodity tax exemption on diamonds, emeralds and commercial tax exemption on gold nuggets were submitted by President to the Hluttaw for approval.