An ongoing clean-up of the company registry will make it easier for tax collectors, as it will allow them to more accurately keep track of which companies hae paid their taxes.
The Directorate of Investment and Company Administration (DICA) had required every Myanmar company to confirm in writing that it was still in business by September 14, which officials said was an effort to rid the company registry of those that had ceased operating.
The Directorate of Investment and Company Administration (DICA) had required every Myanmar company to confirm in writing that it was still in business by September 14, which officials said was an effort to rid the company registry of those that had ceased operating.
Yesterday, the deadline was extended to October 16, as some had said the time frame – initially about two weeks – was too short for every company to submit a confirmation.
U Tet Htut Aung, director and head of the Medium Taxpayer Office 2 under the Internal Revenue Department, said some firms were founded as shell companies, without any immediate intention to run a business. Others are operating businesses that have fallen out of touch with officials.
“Some companies said they didn’t know they had to keep in touch. We have a large number of that kind of company around the country,” he said.
Company registrations must be extended every five years, and ensuring that taxes have been paid is part of the extension process. DICA has relaxed the rule a few years ago – formerly companies had to receive an extension every three years.
DICA circulated a notice in late August stating all companies, whether holding current or expired registration certificates, had to inform DICA’s main or branch offices by September 14 whether they were still operating.
The deadline was later extended to October 16, according to an announcement in state media. It added that any company failing to provide a notification may be struck from the company register.
The move comes as Myanmar tries to improve its tax take, which was about 8pc of GDP in 2014-15, among the lowest in the region. Finance Minister U Win Shein said previously that the government is targeting 10pc this year.
U Tet Htut Aung said the tax offices will discuss with DICA its list of companies that had been in contact. “Then it will be easy to trim down the volume of companies,” he said, referring to those no longer in business.
The Internal Revenue Department has consistently struggled with few companies reporting on time. It has changed the rules so that all late filers or tax dodgers must pay a 10pc penalty, whereas before it was up to 10pc, meaning negotiations could take place to lower the payment.
U Tet Htut Aung said there are plans to amend the Union Tax Law once a year to keep it in line with foreign practices as more foreign direct investment enters.
“The tax policy will have more restrictions on dodgers,” said U Kyaw Lwin Oo, deputy director of the Internal Revenue Department. The department is currently drawing up a Tax Administration Procedure Law with the assistance of the International Monetary Fund.
The new law will define more legal tools for penalties, and it will function independently, he said.
Tax policies are now focused on raising awareness on tax culture and widening the tax base. Currently, it is working to educate people through different forms of media, instead of serious punishments like those handed to tax dodgers in other countries.
“We are balancing between charging serious penalties and being relaxed,” he said.
Tax revenue was more than K2 trillion in the 2013-14 fiscal year for the first time, he added.
Tax authorities have also undergone a reorganisation.
The Internal Revenue Department had divided up the former Company Circle Tax Office into three parts. The Large Tax-Payers Office was formed in the 2014-15 fiscal year, with Medium Tax-Payer Office 1 and 2 created in June.
There are about 500 companies on the list of the Large Tax-payer Office, 1200 on Medium Taxpayer Office 1’s list and 19,000 on Medium Taxpayer Office 2’s list. The difference in the two medium offices is that the companies with Office 1 are allowed to conduct self-assessments for tax in the 2016-17 fiscal year.
Medium Taxpayer Office 2 has about 70 tax officers, while Large Taxpayer Office and Medium Taxpayer Office 1 have 50 officers each, as they have fewer companies to watch.
U Tet Htut Aung said the 19,000 companies with Medium Taxpayer Office 2 is the number on the general register – meaning they had contacted the tax office – and is a much smaller figure than what DICA had originally sent.
Tax revenue income was more than K2 trillion as of 2013-14 fiscal year though it was under K2 trillion normally in previous years. However, they waiting the result of revenue figure after they divided offices during these years, he said.
The effort to clean up the company registry is not the only tax initiative launched by the government. Late last year the Internal Revenue Department began a program where restaurants are to purchase rolls of stamps, which are then affixed to restaurant receipts to prove to customers they are paying tax.
From:The Myanmar Times