Proposal to lower property tax for homebuyers in a bid to kick start building.
The Myanmar Construction Entrepreneurs Association (MCEA) has made a request to the Ministry of Finance and Planning and the Internal Revenue Department for taxes to be reduced for homebuyers. This would be applicable for any properties that fall under the Condominium Law that permits foreigners to purchase apartments on the sixth floor and above but must not exceed the foreign quota of 40 percent of the building. A law that is due to be implemented in January.
Vice chair at MCEA, U Shein Win, said, “We’ve submitted a suggestion that all taxes [on buying an apartment], including stamp duty, be no higher than 10 percent. This is an attempt to try to help the slowing construction industry bounce back.”
Currently stamp duty is 7 percent for properties in Yangon and 5 percent elsewhere in the country. In addition a tax on income is often levied against property purchases as residents in Myanmar do not declare their income. So unless they can prove the source of the funds used to pay for the property, the amount spent will be subject to income tax.
Purchases of property up to MMK 30 million incur a tax fee of 15 percent of the value of the property. This amount increases to 20 percent for properties up to MMK 100 million, the point that most properties in Yangon fall into, and anything over this value incurs a 30 percent tax fee. It is a grey area as to whether foreigners are subject to these taxes as the tax law of Myanmar usually applies to those resident in the country.
There is a call from industry experts for regulations to resolve these queries relating to the law. In addition the proposed flat rate tax of 10 percent would need to be debated amongst a team of experts including the government too.