Transaction taxes on Yangon property will become harder to avoid beginning October 1st as authorities complete a city-wide assessment of neighbourhood values, according to Yangon Regional Revenue Department officials.
The moves comes in an attempt to combat buyers claiming an artificially low value for their home purchases in order to avoid paying a transaction tax that can run as high as 37 percent, said an department official who requested anonymity.
“The government thought that it would assess land prices, as it will then make tax paying more fair and equitable,” he said.
Currently there is little to stop a buyer of, for instance, a K10 billion (US$51 million) property from recording the price to an arbitrary low figure such as K50 million at the Appraisal Department, he said.
The department has had challenges creating an appraisal system because of the wide disparity between property values even within the same neighbourhood.
“We have now assessed land prices depend on the local situation so people can pay fair taxes based on the value of the property,” he said.
The official added that many might mistake the tax assessment value with a government-imposed fixed value for the land, but he stressed the government will not regulate buying and selling prices in the market.
Government teams visited Yangon’s neighbourhoods to determine maximum and minimum values for property. The finished report was sent to the Union government, then the Ministry of Finance and Revenue, who signed off on the assessments.
Realtors and businesspeople said they were split on the move to assess values to determine property taxes, with some claiming the system is a more equitable way of sharing the tax burden, but others saying it has scared off investment in property.
Daw Ei Khine, a broker in Yangon’s East Dagon township, said rumours tied to the move had scared off potential buyers who must now pay the full transaction taxes.
“Before the information came out [regarding the tax] I had customers every day, but now I get customers once a week,” she said.
But Ko Htun Htun, owner of Phoenix real estate agency, said buyers do not need to pay the majority of the transaction tax if they can show the source of the income they are using to buy the property.
“I think the move won’t disturb the property market because most big businessmen can show clean money,” he said, adding that even people who could not show clean money and therefore avoid the full tax were still keen to get a piece of the rising property market.
Myanmar Real Estate Services Association general secretary Daw Moh Moh Aung said the current market has slowed particularly in the outskirts because of rumours surrounding the assessment efforts.
“The market has already recovered after the rules were clarified, and my guess is the Myanmar property market will be strong until 2015,” she said.
U Win Sein, owner of a medium-sized farming sector business, said he would have to pay the full tax for Yangon realty investments, as he could not show evidence on paper for the source of capital for his planned property investment. He added the situation is not unusual for businesspeople operating in Myanmar.
To see the official property price list used by the Myanmar Inland Revenue department for assessing property tax see article to Yangon Land Price List
Source: Myanmar Times
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