Myanmar provisional tax exemption measure to help boost export

YANGON, Aug. 16 (Xinhua) -- Myanmar's union government announced on Monday exemption of commercial tax for exporters for a period of six months in a bid to boost export in face of depreciation of US dollar.

The exemption measure , which is effective from Aug. 15, 2011 to Feb. 14, 2012, covers seven export items of rice, beans and pulses, corn, sesame, rubber, freshwater and saltwater products and animal products (except prohibited ones).

"The program will bring great benefit to national entrepreneurs including rubber plant farm owners, fishery entrepreneurs and livestock breeders and help strengthen the nation's economy," commented official media the New Light of Myanmar a day after the government's announcement.

The media added that "the government keeps its eye on the objective condition of the nation in the interest of the nation and the people. The tax exemption for the seven types of goods is a welcoming news for the public".

The government's latest measure dealing with tax is a follow-up of its tax cut from 8 percent to 5 percent since July 1 at a time when depreciation of the value of U.S. dollar occurred, causing loss with exporters.

The media pointed out that foreign exchange rate is not stable in Myanmar at present and the export is declining, resulting in that local demand is on the decrease bringing about negative impact on productivity and the nation's economy to a certain degree as well as on the business of national entrepreneurs.

Despite the rise of Myanmar's foreign trade to 15 billion U.S. dollars in the fiscal year 2010-11 from 11.8 billion dollars in 2009-10, the country's agricultural export dropped year on year to 900,000 tons in 2010-11 from 1.3 million tons in 2009-10 and from 1.5 million tons in 2008-09.

Likewise, Myanmar's rice export also fell sharply to 500,000 tons in 2010-11 from 900,000 tons in 2009-10.

The decline was partly attributed to the depreciation of the U. S. dollar since the middle of 2010, which has also slashed exporters' earnings.

Meanwhile, Myanmar is deliberating to readjust its official foreign exchange rate of Myanmar Kyat against US dollar and withdraw foreign exchange certificate (FEC) circulated in place of USD domestically in a bid to stabilize domestic foreign exchange trading market.

Coordination with the International Monetary Fund (IMF) for the move is underway.

Myanmar's foreign exchange rate against US dollar was traditionally designated as around 6 Kyats per US dollar since 1975, while the market exchange rate fluctuated between 780 and 1, 000 Kyats per dollar for the past several years.

In face of the great gap between the official and market exchange rate, experts view that if suitable rate is officially readjusted, it will facilitate the work flow of economic entrepreneurs.

FEC, which is circulated in place of U.S. dollar, were introduced about two decades ago.

US dollar started to fall from 900 kyats per dollar in early December 2010 to 750 Kyats per dollar in August 2011.

Moreover, Myanmar's another provisional measure of reducing levying of tax in terms of value on real estate deal, which was introduced in August 2007, has been extended for another one year to encourage the development of real estate business sector

Taxation on the real estate trade in the country will remain unchanged until 2012 as done in the previous years

Tax will be continued to be levied in such a way that buyer, who fails to declare his source of income for the purchase of real estate, has to pay only 15 percent tax over the purchase instead of a heavy 50 percent prescribed in 1976.

Specifically, 15 percent tax were designated to be paid for the purchase of a value of up to 500 million Kyats (about 640,000 U.S. dollars) and 12 percent for above the value, according to the 2007 amendment.

August 16, 2011

Source: Xinhua News