Internal Revenue Department (IRD) aims to end excise tax confusion: regulation on the Specific Goods Tax is planned to be introduced in the coming fiscal year in Myanmar

The Specific Goods Tax (SGT) Law was passed on January 18 and provides a list of goods on which an excise tax is payable, in addition to standard commercial tax.

The SGT list includes cigarettes, tobacco, liquor, teak and hardwood logs, jade and gems, jewellery, luxury cars and fuel and natural gas.

Before this law was passed, goods were only subject to a commercial tax, with the different rates all contained in the Union Tax Law which, since 2014, has been passed at the start of each fiscal year.

Internal Revenue Department deputy director U Aung Thu Htoo told a meeting of large taxpayers on March 28 that the new SGT regulations will aim to make tax rates clearer, as tax payers often confuse the Union Tax Law and the SGT Law. The IRD has finished preparing the regulations, which will be submitted to parliament this year, he said.

Tax rates are often a source of confusion in Myanmar for taxpayers and officials. Wheat powder became tax-exempt under an amendment to the Union Tax Law in the 2015-16 fiscal year, but customs staff at a Yangon port blocked one importer’s goods because they had not yet received notification of the exemption from their superiors.

“We will try not to let [things like] this happen this year,” U Aung Thu Htoo said, adding that the Large Taxpayer Office refunded some K6 billion due to tax errors since it started operating last year.

The excise tax adds to the potential uncertainty. The commercial tax rate for this coming fiscal year is unchanged at 5 percent, but this is payable on the value of an item inclusive of any potential excise tax or customs duty.

For example, a wagon, sedan or saloon car with an 1800cc engine is eligible for a 25pc excise tax and, if it is imported, a customs duty. The 5pc commercial tax will then be levied on the total amount payable.

The excise tax varies from item to item and is levied on the value of the goods in question. The value is defined as the higher of two figures – the cost of production or the market value as defined by the IRD.

Whether the item is imported or not can also affect the excise tax. Imported cigarettes are eligible for a 120pc excise tax, in addition to a customs duty.

The excise tax on locally produced products is far lower, but varies depending on the market price. For example, it is K3 for a 20-pack of local cigarettes that costs K400, but this jumps to K8 if the market price is above K401.

“The majority of tax rates are not much different [with the addition of the SGT Law],” said U Aung Thu Htoo. “But punishment [for not paying the correct tax] will become more serious.”

The fine for holding goods on which the correct tax has not been paid is 100pc of the market value of those goods, which will also be seized. The penalty for goods without the correct tax label is 50pc of the market value.

Reference: http://www.mmtimes.com/index.php/business/19741-ird-aims-to-end-excise-tax-confusion.htm

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