Tax evaders under scrutiny, officials warn

The Internal Revenue Department has fined or warned scores of businesses for failing to pay taxes but has yet to file criminal charges against a single tax evader, said Min Htut, its director-general.

Fines for tax evasion range from 10-150 per cent of taxes owed, he said, adding that the department had not filed criminal charges for tax evasion – which carry a maximum jail sentence of 10 years – because it had yet to build its capacity to properly educate businesses and individuals about the amount of taxes they are required to pay and how to do so.

“The department has already taken action against many tax evaders,” Min Htut said, adding that he could not say the exact number. No criminal charges had been filed because the infrastructure for tax collection is inadequate and there is a lack of knowledge about the taxation system among businesses and individuals, he said. Once these obstacles are overcome and a fair taxation system can be implemented those who continue to evade paying taxes will face stiffer penalties, he added.

Less than one-third of companies required to submit income statements for the first quarter of this fiscal year – 12,000 of 39,000 – had done so by the end of June, Min Htut said.

The rest face a 10 per cent fine on any taxes owed, he added.

Thura U Thaung Lwin, chairperson of the board for scrutinising and monitoring tax collection, said in May that it was “educating” companies evading taxes about the law and that once the education period was over a crackdown would ensue. The department will take legal action according to taxation law, which could see offenders jailed, he said at the time.

The department set a tax-collection target of Ks 5 trillion (about US$5 billion) for this fiscal year and had received about Ks 1.15 trillion as of the end of August, or about one-fifth of its target during the first five month of the fiscal year. This amount, however, excludes taxes from large corporations, Thura U Thaung Lwin said.

The Ks 1.15 trillion was collected from small businesses and shops, like those in Mingalar market and Yuzana plaza, and was up by about Ks 200 million over the year-ago period, he explained.

Since President Thein Sein took office the amount of taxes collected has risen each year, according to the Internal Revenue Department. It collected Ks 1.538 trillion in fiscal 2011-2012, Ks 2.711 trillion in fiscal 2012-2013 and Ks 3.512 trillion in the last fiscal year.

The department has already issued warnings to 60 companies for alleged tax evasion, officials said.