The rules and regulations for the Condominium Law, which was passed at the start of this year, will be ready by the end of 2016, a construction ministry official told The Myanmar Times. But construction industry bodies also want a revision of the property sales tax, which they say is strangling the real estate market.
Much ink has been spilled over the slowdown in the Yangon real estate market, with people wistfully recalling the bygone days of 2013 when it seemed prices would rise forever. The market has been largely stagnant for the past two years, and real estate industry players had hoped the new Condominium Law, which allows for foreign ownership of apartments, would provide a shot in the arm.
As yet the rules and regulations accompanying the law have not been published, but Sai That Naing Moe, director of the construction ministry’s Department of Urban and Housing Development, told The Myanmar Times on November 3 they will be released before the end of the year.
A meeting for private sector construction industry figures to discuss the prospective rules and regulations will be held before the end of this month, with officials from the construction ministry and the Myanmar Construction Entrepreneurs Association (MCEA) set to attend.
U Shein Win, deputy chair of the MCEA, said the meeting would give his association a chance to make it clear what is needed for the law to benefit the construction industry. However, he and other construction industry figures said the main issue harming the condominium market was tax, which the rules and
regulations cannot alter.
A Union Tax Law passed by the previous government and which came into force on April 1 effectively doubled the tax levied on the purchase of most Yangon apartments. A city-wide review of high-rise buildings also spooked investors and construction firms, as did political uncertainty ahead of the new government taking power. But contractors put the blame squarely on the tax.
“Because they raised taxes there are no buyers,” said U Myo Myint, director of MKT Construction. “If they reduce taxes there will be more sales, and then the government can actually get more tax revenue as a result. The government is short of cash.”
Under the previous tax law, buying a property of K100 million would mean a tax payment of 15pc, in addition to a 7pc stamp duty. Under the new law, all properties of K100 million or over are taxed at 30pc, along with the 7pc stamp duty.
“So if we buy a condominium at K100 million, the tax is K30 million and K7 million for stamp duty and so you pay K137 million altogether,” he said. The stamp duty is also 2 percentage points higher in Yangon, Mandalay and Nay Pyi Taw than outside the big cities, he said.
U Shein Win said most new Yangon apartments were over K100 million, and so the tax system slows down sales across much of the real estate market.
Sai That Naing Moe agreed the existing tax levels were a problem for the construction market, but said that this was a matter for the finance ministry. Finance ministry officials could not be reached for comment.
U Shein Win said it was crucial there was a separate discussion on the tax system, and that the MCEA was planning to hold a meeting on suitable stamp duty and sales taxes. The association will use the tax system on other countries as a reference point to decide what kind of tax rates to lobby for once the condominium rules and regulations are issued, he added.
Quoted from mmtimes.