December 20, 2016

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Strengthen tax authorities to increase revenue, IMF urges

A small container yard is seen on the riverside in Hlinethayar Township, where some of Yangon’s industrial zones are located. — Photo: Ye Myint
A small container yard is seen on the riverside in Hlinethayar Township, where some of Yangon’s industrial zones are located. Photo: Ye Myint

Myanmar needs to strengthen its taxation authorities in order to broaden its tax base and increase overall revenue, according to an official of the International Monetary Fund. By increasing its revenue and realigning its spending priorities, the government can create “fiscal space,” or freedom to control its finances, Ms Yu Ching Wong, IMFresident representative in Myanmar told The Global New Light of Myanmar via email on Friday.
Expanding the reach of the country’s Internal Revenue Department and Larger Taxpayers Office will improve tax compliance, Ms Wong said, adding that tax incentives should be minimized.
The IMF said the question of whether tax rates for higher income earners need to be changed is for the government and parliament to decide.
“We don’t have a view on tax rates on individual groups of people,” she said.
In Myanmar, those earning above K30 million per year are taxed at the top rate of 25 percent while those making between K2 million and K5 million are taxed at the basic rate of 5 percent. Mr Yongzheng Yang, who led an IMF team on its recent mission to Myanmar, said minimization of tax incentives is among the government’s options on the revenue side, noting Myanmar’s very low revenue-to-GDP ratio.
“On the expenditure side, transfers to regions and states should be conditional on their implementation capacity and spending responsibilities,” he added. On reprioritization of expenditure, the IMF mission chief stressed the need to reevaluate costly projects, but recommended increasing spending on health, education and infrastructure. Daw Khin Yamon Aung, director of the Internal Revenue Department middle taxpayers’ office (1) said the IRD has set a K4,500 billion revenue target for this year, equivalent to last year’s receipts.

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