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UMFCCI proposes delay in tax regulation changes to ease business conditions

A proposal to delay changes to the 2020 Union Tax Bill has been submitted to the government on behalf of local businesses, said U Aye Win, General
Secretary of the Union of Myanmar Federation Chamber of Commerce and Industry (UMFCCI).

The changes include repealing a tax amnesty for Myanmar citizens with unassessed sources of income. The government wants to reinstate a 30 percent tax rate on all
unassessed sources of income, saying this could boost coffers by up to K280 billion to around K2.8 trillion in fiscal 2020-21.

Businesses have also asked the authorities to reconsider higher taxes on special goods like cigarettes and alcohol in the new tax bill.
“Demand for these goods dropped sharply during the COVID-19 pandemic and increasing the tax rates will increase the burden on businesses at this time. That’s
why we have proposed that rates remain the same as in fiscal 2019-20,” U Aye Win said.

He added that the tax amnesty should be maintained for another year or that the government should at least consider lower taxes on unassessed sources of income.
“Most businesses have suffered various degrees of damage, while some cannot even operate under current conditions,” he said.

The existing 2019 Union Tax Law provides that tax rates will be as low as 3pc for unassessed income up to K100 million, 5pc for income between K100 million to
K300 million, 10pc for income between K300 million to K1 billion, 15pc of income between K1 billion to K3 billion, and 30pc for income exceeding K3 billion.
Prior to the introduction of the 2019 Union Tax Law, unassessed sources of income was taxed between 15pc and 30pc. The tax is payable by citizens who cannot
show the source of their income that was used for buying, constructing, or obtaining any assets, and establishing a new business.

UMFCCI will also propose a reduction in capital gains tax for reinvestments, U Aye Win said. He added that “instead of increasing taxes on existing taxpayers, the
government can expand the tax base on the informal business sector. The government should focus on these areas to increase national tax income.”
But the Union Tax Law for fiscal 2020-21 also includes provisions supportive of small and medium-size enterprises (SMEs) in Myanmar, including incentives aimed
at reducing tax burdens as well as simplifying compliance procedures, Deputy Minister for Planning, Finance and Industry U Maung Maung Win said upon
submission of the bill at the Pyidaungsu Hluttaw (Assembly of the Union) for discussion on July 17.

Some of the provisions under the new tax bill include allowing SMEs to deduct certain expenses, such as depreciation, in full, granting income tax exemptions to
businesses with earnings of up to K100 million for up to three years and stipulating a compulsory three-year period for book keeping.
The tax carryover period, which allows taxpayers to carry forward a tax loss to offset against future profits to reduce tax payments for that year, will be extended to five years from the current three. Meanwhile, businesses could also be permitted to state their financial year and choose between three methods of depreciation, depending on the type of asset, as this will provide businesses with more flexibility to adjust for tax payable, U Maung Maung Win said.
All these changes are being proposed at a time when the budget deficit is expected to widen to K6.8 trillion in fiscal 2020-21, or 5.4pc of GDP, according to
President U Win Myint, who heads Myanmar’s Finance Commission.

For the first six months of the fiscal year of 2019-20, Myanmar collected more than K4 trillion in tax revenues, exceeding the government’s own estimates. “We
originally expected K3.2 trillion, but actual receipts totalled K4.1 trillion,” said U Maung Maung Win. – Translated

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Source : Myanmar Times

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