Viewpoint: U Win Thin
Myanmar’s Internal Revenue Department (IRD) has begun the journey towards a self-assessment tax system. First opened was a Large Taxpayers’ Office and later, to accommodate smaller taxpayers, Medium Taxpayers’ Offices (MTOs) 1, 2 and 3, and a Small Taxpayers’ Office were also opened to cope with the growing need of this group.
These tax offices will furnish income return forms for taxpayers with questionnaires regarding how their incomes are computed, and notes to make adjustments to arrive at a tax-based income or assessable income, which will be noted in the income return form prescribed. The income returns filled out and filed with these tax units are accepted as being completed assessments.
In each of these tax units, there will also be a tax audit section to monitor the cases on regular rotational intervals, depending on the number of cases each tax auditor can handle. I hope the opening of MTOs will eventually cover more small businesses.
In addition to assisting taxpayers to file income tax return forms, the offices will also handle commercial tax (value-added tax and good and services tax) and special commodities tax (excise tax) under separate tax laws and regimes.
Going forward, the IRD is drafting a new comprehensive law to clarify all doubts and confusion regarding tax administration and procedural law, covering all three tax regimes. Thus, over time, these large, medium and small taxpayers will become well-trained, efficient taxpayers with more time to devote to their businesses, and equipped with more transparent financial records.
Once the taxation hassle is relieved, financial records will be more transparent, enabling more businesses to enjoy collateral-free, short-term loans with reasonable interest from commercial banks. This would allow businesses to plan for their respective growth and, depending on their size, perhaps eventually qualify to enter the Yangon Stock Exchange (YSX) or another exchange in the future.
In order to implement Union Budget Laws for the respective fiscal years, the Union Parliament prescribes Union Taxation Laws yearly, specifying exemptions, reliefs, categories, rates and allowances applicable to the ensuing fiscal year. From the 2015 Union Taxation Law, newly established industry-based small and medium-sized enterprises (SMEs) are exempted from tax on income up to MMK10m ($8120) for the first three consecutive business years, inclusive of the commencement year.
For the economy as a whole, incentives should also be given to other sectors such as agriculture-based SMEs. In this regard, the word income has to be the assessable income or tax-based income computed according to income tax law. In the tax exemption clause itself, SMEs should be advised to compute their incomes according to income tax law and to register with the respective tax authority, as is required under the 2015 SME Development Law.
The Ministry of Industry opened the Central Department of SME Development for proper registration and provision of capacity-building services by way of conducting workshops and seminars covering management and accounting matters. This may be viewed as efforts to nurture SMEs to grow stronger, ultimately leading to these businesses meeting the listing requirement of YSX through tax incentives. I personally feel that similar exemptions or benefits should also be extended to agricultureand service-based industries.
In addition, expenses incurred in capacity-building activities should be, by way of encouragement, allowed as deductible expense at two times the amount expended in some advanced countries in this area. As SMEs are the growth engine of the economy – with significant potential for expansion – our economy as a whole will surely grow as a result.
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