YANGON — YANGON Division’s Internal Revenue Department plans to conduct an annual evaluation of real estate prices as part of its new property sales tax system, a department official said on Tuesday.
Aung Kyaw Tint, deputy head of YANGON Division’s Internal Revenue Department, said that in October valuation of properties in the division’s 33 townships would take place in order to get an updated picture of the real estate market.
“We’re planning to carry out property valuation to collect tax every year. This system began last year, so we’re going to introduce new valuation estimates this year,” he said, adding that officials would value property street by street.
He said he expected real estate value will have risen in most areas, a development that would result in higher tax rates for property sales.
“For example, the lowest value you can find is in North Dagon Township, where it is 10,000 kyat [about US$10] per square feet. We fixed the valuation at that rate last year, so it will probably have increased to 15,000 kyat per square feet this year,” Aung Kyaw Tint said.
He added that the plan to carry out an annual update of property valuation would still have to be approved by the union government.
In October 2013, the government introduced an improved property valuation method in order to estimate the value of sales on YANGON’s booming property market and tighten tax controls.
The government also reformed and lowered its property sales tax in order to encourage more buyers and sellers to register transactions. Previously, many buyers and sellers agreed not to register the change of property ownership to avoid taxes.
The new system, introduced on April 1, sets a 3 percent tax rate for buyers of property valued at less than 50 million kyat (about US$51,000), 10 percent for properties under 150 million kyat and a 30 percent tax rate for real estate worth more than 300 million kyat (about $306,000). Sellers of property pay a flat 10 percent tax rate.
In addition, property sales in Myanmar are subject to so-called stamp duty for buyers, set at 5 percent of value in YANGON, Mandalay and Naypyidaw, and 3 percent in other cities.
As a result of the improved property tax system, YANGON’s booming property market has cooled significantly and sales have dropped in recent months, while lower-value property sales are increasingly getting registered.
Aung Kyaw Tint said the number of property sales being registered with his department had sharply increased following the introduction of the new tax system, adding that between 250 and 300 property sales were being registered weekly.
“We’re trying to control estate prices in YANGON as much as we can, we believe that we can keep control on such soaring prices in the future,” he said.
Zaw Zaw, a manager at Unity real estate agency, said although the market had cooled off because of the new tax system, real estate prices had not fallen. He said demand on the rental market had become stronger following the tax measures, adding, “The rental market is bigger than high-end properties sales at the moment because of the tax system.”
The value of properties, especially high-end properties, has been skyrocketing prices across YANGON, Myanmar’s commercial capital, since President Thein Sein introduced a raft of reform measures and after international sanctions against Myanmar were dropped.
Last year, the revenue department estimated that the highest property rates are in YANGON’s Bahan Township—known locally as the Golden Valley, where many wealthy Burmese own homes—with an average value of 325,000 kyat ($331) per square foot.
Source: THE IRRAWADDY
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