Authorities grapple with restaurants cheating on tax

A Scheme for tax labels to be affixed to local restaurant receipts is running up against widespread cheating, according to insiders. While some restaurants have taken to assiduously placing the stickers on each receipt, many others leave them off and avoid paying the taxes.

“Different restaurants are taking different approaches,” said one 31-year-old resident of Kyauktada township. “Some restaurants attach a K500 label when it really should be K1000, while others pretend to forget about it or claim they’ve just run out of labels.”

The labels were introduced in Yangon Region last year in an effort to force local restaurants to pay a 5 percent commercial tax on the bill. They are purchased from the Internal Revenue Department and come in a range of denominations.

The system had been in an “educational period” until May 1, with no fines handed out to those contravening the law. However, now that the period has ended, some restaurants have been fined for transgressions.

One of the first to draw the Internal Revenue Department’s ire is a location of South Korean restaurant chain Lotteria in Bahan township, which local media says has been fined after failure to follow the rules. Lotteria officials declined to comment on the issue.

The townships have incentivised customers to report on restaurants breaking the rules, saying they can receive 10pc of the penalties.

First-time transgressors are to be fined K200,000, with fines of K500,000 for the second incident and K700,000 to K1 million for further transgressions.

U Nay Lin, deputy chair of the Myanmar Restaurants Association, said some customers cheat to take advantage of the incentive.

“I don’t mean all customers do this, but some peel labels away on receipts and try to claim rewards from the tax office,” he said.

To combat the problem, labels ought to be more adhesive, while the Internal Revenue Department could look to other countries’ best practices for other solutions.
U Nay Lin said the tax plan is also confusing in that it does not apply to all restaurants. Small-scale, roadside tea shops and restaurants are generally exempt, particularly as they do not issue receipts.

The number of staff is not yet enough to enforce the program in all of Yangon’s townships, according to Yangon Region Internal Revenue Department deputy director U Tin Tun.

“The policy is new and we have to try to make the habit more ingrained and familiar,” he said.

“We are finding the best solution, but it will take time to work.”

U Tin Tun added one measure it is attempting is to make the tax label more secure.

Not all Yangon residents are convinced that the cheating will stop, though.

A source at the Internal Revenue Department said it has cut restaurant’s commercial tax to 5pc partly in an effort to encourage more tax contributions. Lotteria in Bahan,

Source: Myanmar Times

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