Rangoon merchants face tax bill two years in advance

Thursday, 08 July 2010 12:21 Salai Tun

New Delhi (Mizzima) – Rangoon’s city authority and the Internal Revenue Department has ordered small and medium businesses to pay taxes two years in advance if they want to renew their business licences.

Previously these taxes were collected quarterly but the Internal Revenue Department and Rangoon City Development Committee ordered that taxes be paid in advance for the fiscal years 2011 and 2012.

Businesses affected by the new scheme include retail shops, beauty parlours, copy shops, photo studios, hair salons, pharmacies, restaurants, tea shops, grocery stores, lathe machine shops, printing shops and cottage industries.

“The township municipal committee told us we have to pay taxes for two years in advance by the end of the month”, a beauty-parlour owner in Latha Township said.

The copy shops, photo studios, beauty parlours, hair salons, lathe machine shops, workshops, printing businesses and cottage industries have to pay profit taxes only.

Stores, pharmacies, restaurants, tea shops and grocery stores have to pay both profit taxes and sale taxes. Previously tea shops and restaurants had only to pay profit tax.

The deadlines vary according to location. In Insein Township, it was May 12, as confirmed by a tea shop owner from Sawbwagyigone Ward, who said that he had already paid his taxes for two years.

“We had no other option as we have no alternative businesses. So we accumulated all our resources to pay these taxes”, he said.

Under the Income Tax Act 1976, shops run with the proper rooms have to pay 10 per cent of their net income if their income exceeds 10,000 Kyats per month.

Sales tax is collected on goods or services delivered by restaurants, tea shops and stores and customers have to pay these taxes at the same rate of 10 per cent.

But all three sectors namely state, co-operative and private sectors have to pay the goods and services tax enacted in 1990. Local manufacturers of products, importers and service providers or those who run service businesses also have to pay this goods and services tax.

Mizzima contacted Rangoon city and Internal Revenue Department staff to inquire about the new taxation scheme but they declined to answer any questions.

Business owners have to submit their tax payments at local Myanmar Economic Bank branches in accordance with the amount prescribed under the tax laws. They must then take the cash receipts given by the bank to the local municipal office to renew their business licences.

A restaurant owner in Kyauktada Township said it was difficult to collect enough working capital this monsoon season amid sluggish sales and after paying taxes for two years in advance.

“Sales are so poor during this season. We are in cash crunch. It’s better to close our business rather than being bullied by them [tax officials],”, he said.

According to figures released by the city authority, about 50 billion Kyats a year are collected from Rangoon residents and businesses.

There are five types of taxes collected in Burma; profit tax, trade tax, income tax, stamp duties and the state lottery tax.