RANGOON — A new listing of Burma’s top 100 corporate taxpayers has
thrown up a few surprises, not least the appearance of several companies
founded by some of country’s top tycoons—businessmen who remain
blacklisted by the United States for links to the former military regime
and, in some cases, over allegations of drugs trafficking and arms
trading.
“Some of the companies were not included on last year’s list so they
inquired about this and have complied for this year,” said a senior
official at Burma’s Internal Revenue Department (IRD), who asked not to
be named.
Companies run by well-known “cronies”— the collective nickname for
businessmen deemed to have made their money through opaque deals with
the Burmese military—such as Tay Za’s Htoo Trading Company and Steven
Law’s Asia World, both featured on the lists of Burma’s top business
taxpayers published by the IRD.
Other companies and conglomerates on the lists include Max Myanmar,
run by high-profile tycoon Zaw Zaw, as well as Myanmar Brewery, which is
part-owned by the Union of Myanmar Economic Holdings Ltd (UMEHL), a
shadowy, military-run conglomerate that has not paid taxes in the past.
The criteria for listing, the IRD official told The Irrawaddy, were
two-fold: having filed tax returns by March 31, 2013, and to have
cleared all tax arrears up to that cut-off date.
Kanbawza Bank, the biggest private lender in Burma, was listed second
from top—a ranking that came as something of an eye-opener to Than
Lwin, Kanbawza’s vice chairman. “We did not expect to hear we were one
of the highest payers,” he told The Irrawaddy. Kanbawza was previously
under US sanctions but is now partnering with Western financial giants
such as MasterCard, Visa and Western Union.
Citing “irregularities in the system,” Than Lwin said significant
potential tax revenue is lost to the Burma government through
corruption. “There is a lot of illegal border trading, for example, that
is multiples of the legal trade,” he said.
Swathes of Burma’s borderlands have been run for decades as fiefdoms
by ethnic militias fighting on-off wars with the Burmese army, while
Burma has consistently featured near the bottom of global corruption
indices.
The International Monetary Fund (IMF) estimated Burma’s tax revenue
at 6.4 percent of GDP for 2012-13. The revenue official who spoke to The
Irrawaddy conceded that “Myanmar’s tax-to-GDP ratio is low,” but could
not give a precise number.
According to US government statistics, Burma’s tax revenue as a
percentage of GDP was 4.3 percent for 2012, compared with 16 percent for
Cambodia, 22 percent for Laos, and just shy of 30 percent for Vietnam.
Tax figures in Burma are compiled across an array of ministries, with
the IRD responsible for only four of 14 taxes levied, though these
taxes, which include commercial and income taxes as well as stamp
duties, account for about 90 percent of all revenue, the IRD official
estimated.
Lending agencies working with the Burma government have said that tax
reform is key to modernizing the country’s economy. The IMF, stressing
“the importance of establishing a well-administered and broad-based tax
system,” reported in August that the Burma government intends to bring
in a full value-added tax (VAT) in the future.
Improving overall tax administration and collection should help boost
government coffers going forward, but that will likely mean getting
more of Burma’s well-heeled businesses to pay up, as well as levying
taxes on consumption. A 2012 report on the Burma economy published by
the Brookings Institute, a left-of-center US think-thank, said “taxes on
corporate and personal income generate a negligible amount of revenue.”
source: The Irrawaddy
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