(Mizzima) – Rumors have circulated in Rangoon since June saying that the Internal Revenue Department will announce a new tax rate for the sale of real estate on August 12.
Ministry-of-Finance-and-RevenueHowever, even the officials from the Internal Revenue Department said they couldn’t predict what will happen. Real estate agents and others who want to invest in are waiting until after August 12 to plan their moves.
The real estate market in Burma is fraught with wheeling and dealing. Former military officers who served under the junta used to buy land and buildings under other persons’ names.
The current real estate sales tax limit is 10 percent of value and a purchase tax of 15 percent (seven percent for revenue stamp and eight percent for profit tax).
The current one-year taxation policy has been established since 2007 and the policy is renewed each year on August 12.
Before the current taxation system, the purchaser had to pay 50 percent of the value as a purchase tax, so purchasers were reluctant to register land and buildings at the registration office. Sellers and buyers used to negotiate with official appraisers to register property using a value lower than the actual value.
“The current tax rate is 15 percent. We heard that the tax rate would be increased to 25 percent to 30 percent. It the tax rate is increased, the sale of expensive real estate will dramatically decrease. Even now, the sale of land and buildings worth more than 500 million kyat is weak,” a well-known real estate agent in Rangoon said.
It the tax rate is increased, he said, the sale of high-priced property can decrease, and as a result, the low volume of sales could temporarily prevent the prices of real estate from increasing. But, when the buyers who have to pay higher taxes resell the property, prices will go up.
“The current system was introduced by the former authorities. Even if the new government wants to modify the rules, it is unlikely that the taxation will be increased this year. The authorities will probably renew the current system. But, the tax rate will be increased probably next year,” a source close to a property registration office said.
Meanwhile, a new special revenue stamp valued at 500,000 kyat has been introduced eliminating bulky contracts.
