Tax dodgers are being warned that authorities will begin a crackdown later this month.
An anti-tax avoidance campaign will be launched in August and announced in state-run newspapers in a bid to increase the Ministry of Finance’s revenue generation by 20 percent for the 2014-15 fiscal year, said Internal Revenue Department director of the Companies Circle Tax Office U Tin Tun Naing.
“The action plan calls for severe charges [for dodgers] following the public announcements,” he said.
A tax advisory board recently found 20 percent of Yangon’s enterprises in industrial areas – or 400 of the total 2000 enterprises – paid no tax last year, while many others are thought to have paid less than they actually owed.
Tax authorities in Yangon Region will work with the Yangon City Development Committee – who handle local business registrations – and Ministry of Home Affairs to launch the crackdown and chase tax avoiders, according to a notice.
At the most severe end, tax dodgers who still claim innocence despite being convicted could be sent to prison from three to seven years, and have their businesses closed.
U Tin Tun Naing said tax policies formerly were designed to levy penalties of 10pc for those who unintentionally failed to pay taxes and 50pc on those who failed intentionally, but the increased measures are warranted to deal with the problem. Some businesspeople had been taking advantage of IRD’s flexibility, and its weakness in staff capacity and technology, he added.
“IRD has compassion for people who make little revenue, but now we are going to imitate international practices,” he said. “Reforming the laws is not the main way to raise revenues – but a serious action plan will be effective.”
About 8200 of 20,000 registered firms nationwide did not pay tax in the 2013-14 fiscal year, though many of those are simply inactive, he said. However, others are used for social stature.
“If someone’s son wants to get married, and they want to put ‘managing director’ on the name in the invitation cards, they register a company that doesn’t do anything,” he said.
Proof that taxes are paid are part of requirements to extend business registration, but often companies negotiate with township authorities to avoid paying much of their taxes, using methods such as showing artificially low profits on their financial statements.
Businesspeople told The Myanmar Times that there are lots of tax avoidance methods, though there are some solutions as well.
U Soe Tun, a rice exporter and managing director of Farmer Auto Sales Centre, said traders cannot easily avoid paying taxes if they use banks for all of their activities.
“We want everyone to follow the rules and pay taxes,” he said.
U Soe Tun added that tax officers should actively visit companies in the pursuit of tax dodgers, in a similar manner to sales and marketing shops.
Source: MYANMAR TIMES