EXPATRIATES working abroad have greeted with scepticism the government’s decision to reduce income tax charged on their wages from 10 percent to 2pc from August 19.
They said the income tax reduction is a good development for people within Myanmar but questioned the benefits for those working in Thailand, Singapore or beyond.
Ko Si Thu, a civil engineer working in Singapore, told The Myanmar Times via email that the tax reduction would have little impact for Myanmar expatriates based there.
“The embassy here takes tax from us depending on what stay permit we have, not what our income is. We are not required to show what our income is,” he said.
Ko Si Thu said S-Pass and employment pass holders, as well as permanent residents, were required to pay between S$80 and $120 a month (US$66-100) last year.
He added that workers normally pay the tax on an annual basis, which meant most workers would be unable to reveal their yearly income, particularly since the tax reduction is guaranteed for only six months.
“If we went in and declared our yearly income then we’d be charged at 10pc for the months before August and we’d have no guarantee that the reduction would still be in place in six months,” he said.
He added that many other migrant workers in Singapore from countries other than Myanmar don’t need to pay any tax at all to their home nations because those nations have double taxation avoidance (DTA) agreements with Singapore.
In a recent report written by a senior official from the Internal Revenue Department, under the Ministry of Finance and Revenue, it was stated that Myanmar has signed DTAs with nine countries, including Singapore, Thailand and Malaysia.
However, the report said workers are regularly refused passport renewals if they fail to pay tax to Myanmar.
“We have to pay taxes to the Singapore government as well as our embassy. But I pay S$80 a month to the embassy here while I only have to pay that amount for one year to the Singapore government,” Ko Si Thu said.
But Ko Si Thu said that if the tax cut was made permanent workers would be able – and willing – to pay it.
A Ministry of Commerce official said government officials are using the six-month trial period to evaluate the possible benefits of a long-term tax reduction.
On August 22, Minister for Finance and Revenue U Hla Tun submitted a proposal to the Pyithu Hluttaw to revise the country’s tax regime and remove some forms of double taxation.
An official from the ministry, who is based in Nay Pyi Taw and did not want to be named, said the income tax cut was unlikely to greatly reduce the nation’s budget.
“In most cases when we reduce taxes we end up reducing the budget but in this instance it’s an acceptable amount because we always get less income tax than we should,” he said.
“We have weak tax collection procedures,” he said.
“We need to update our laws and change the inappropriate attitudes of government staff as well. We [staff] also want to communicate in trust with taxpayers rather than doubting everybody.
“Now, everything is changed. If both government and people are honest, we will certainly see development,” he said.
Ko Kyaw Sann, a worker from an electronics factory in Malaysia, said most of his colleagues do not pay tax and those that do cheat the system to pay less.
“People pay tax only when they need to renew their passport. Most workers return home before their passports expire and return with new passports to avoid paying tax.”
He said only about 20pc of expatriate Myanmar workers at his factory pay tax but added that that might change if the tax stayed at 2pc.
“We hesitate to pay 10pc because there’s no benefit for us if we do. But if the tax is reasonable and beneficial, it’s not a problem,” he said.
According to the official data from the Ministry of Labour’s website, there were nearly 300,000 Myanmar working abroad in 15 different countries in 2010, dropping to 219,805 by July 2011.