The Internal Revenue Department (IRD) has initiated a wave of inspections of rental property in Yangon in a bid to strengthen enforcement of property tax and to cool down the overheated market.
IRD has notified property owners in June to pay taxes on rental income, including backtrack taxes for the last three years. However, only a few have paid taxes with the total number being only over 100.
Revenue of property tax of the Yangon region amounted to K700 billion ($718.6 million) in the last fiscal year. With the inspections, the IRD aims to collect K840 billion in total, of which K226 billion has been collected.
The first inspection will be conducted in 18 wards of Sanchaung township on July 29, a senior official from the IRD said. Seminars on taxes will be held in 203 wards in 20 townships including Lanmadaw, Pabedan, Latha, Pazundaung, Yankin and Tamwe to raise public awareness, he added.
The real estate rental market in Yangon is witnessing price increase of up to 25 percent every year. Rent for flats increases by 10 percent on average while condominium rents jumps by more than 35 percent, according to the real estate agencies.
Taxation on rental incomes in addition to property sales will help reduce the inflating prices in the real estate market, industry insiders said.
“In the property rental market, the landlords are asking for prices as high as they want and this practice is pushing up sale prices in the real estate market on the whole.
“If the rental prices are controlled with taxation, overall real estate prices might come down in the future,” a realtor told Myanmar Business Today.
A consolidated database of tax-evading individuals is being prepared by collecting data from Yangon City Development Council, the IRD official said.
By compiling an accurate list of landlords and holding seminars on the importance of taxing, the IRD aims to solve the serious problem of tax evasion, which is estimated to be as high as 50 percent in some fields, the official said.
However, he said the inspection should cover a wider range of rental transactions including factories and offices in addition to real estates. “What is being done now is not enough.”
