MPs warn of money-laundering loophole

The joint committee on the 2016 tax bill has stated that the taxation of incomes that cannot show sources needs to be abolished since it can encourage money laundering.

MP Dr Myat Nyana Soe, the joint secretary of the committee, said: “Paragraph 24 of the bill says to tax the incomes that cannot show sources. We should think about it from multiple angles. It cannot be related to the money laundering, according to the Anti-Money Laundering Law. But institutions need to review whether this paragraph should be included in the tax bill. Paragraph 24 could support the money launderers, so institutions need to think this through again.”

He added that the 3-per-cent taxation on Ks100 million (US$76,900) incomes that cannot show sources was a very small amount for the money launderers, and the taxation on incomes without sources ought to be removed.

The committee also advised that sub-section B of paragraph 27 should be amended to individuals and groups – except those operating in the oil and natural gas sector – should be taxed at 10 per cent of their profit in kyat or foreign currencies depending on the currency unit they earn; the foreigners abroad must pay the tax in the currency they earn.

The annual tax rates of the incomes without sources are 3 per cent on Ks1 to Ks100 million; 5 per cent on up to Ks500 million; 10 per cent on up to Ks1 billion; 20 per cent on up to Ks1.5 billion; 30 per cent higher amounts, according to the bill.

Engines, accessories and spare parts used in aircraft and helicopters should be tax-exempt for sake of the country’s aviation, the joint committee’s report recommended.

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