Govt to remove withholding taxes from April 1 to support businesses

The Inland Revenue Department (IRD) is planning to stop levying withholding tax starting April 1 onwards in a bid to boost the economy, it revealed during a weekend discussion.

The discussions, which took place with the Yangon Regional Government, Union of Myanmar Federation of Chambers of Commerce and Industry and other business associations, were held in conjunction with preparations for new regulations under the 2018 Union Tax Law. The IRD issues new tax regulations every fiscal year, effective April 1.

Among the changes for the new fiscal year will be the removal of withholding tax. The decision follows the IRD’s move last month to cancel a 2 percent withholding tax on exports, which came in response to feedback from a December 2017 discussion, during which businesses called for the tax to be withdrawn. The move was in line with the Ministry of Planning and Finance’s strategy to promote exports.

Starting April 1, 2018, all forms of withholding taxes will be removed. For residents, a 2pc withholding tax is currently levied on goods, services and leases procured, while a 10pc withholding tax is levied on royalties paid. Residents are not taxed on interests paid.

Meanwhile, non-residents pay a 2.5pc withholding tax on goods, services and leases procured and a 15pc withholding tax on both interest and royalties paid.

Local businesses have complained that withholding taxes are an unnecessary burden on cash flows and profits. The businessmen also asked for lower commercial tax rates on local factories involved in manufacturing goods for exports and import substitution.

At the meeting, Yangon Region Chief Minister U Phyo Min Thein reminded businesses to be responsible tax payers as the government works to improve the business environment by making the tax rates more attractive.

He also asked the government to improve the tax system and ensure that taxes are efficiently and systematically collected. The Union government currently runs a fiscal deficit to the tune of 4.5 pc of GDP, or around K3.5 trillion-K4 trillion.

Source: Myanmar Times

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