Real estate industry insiders say they do not expect tax evasion to increase in the event that a four-year sales tax holiday ends on August 12.
Should the tax increase, real estate agents are tipping it will become a flat 25 percent levy on all sales. The tax break, which has been in place since August 2007, limits property sales tax to 12 percent for sales worth more than K5 billion (US$6.25 million), or 15pc for those worth less.
A spokesperson for Unity Real Estate agency in Mingalar Taung Nyunt said he doubted that any increase in property taxes would lead to more people trying to evade paying their taxes.
“I think 90pc of buyers pay their taxes these days because they want to establish clear ownership of the site,” he said.
U Khin Maung Aye, the owner of Shwe Kan Myay real estate agency in Bahan township, said he doubted that a tax increase of only 10pc would see buyers and sellers collude to avoid paying.
“It depends on how large the sales tax increase is but if it’s only 10pc more than now then I don’t expect many people will try to avoid paying it,” he said.
He added that it was in a buyer’s best interest to ensure that taxes are paid, adding that much of the current sales activity is speculatory, with the buyers hoping to on-sell later at a profit.
“Buyers don’t want any trouble later with property sales taxes; that’s true for 80pc of buyers. I estimate that only 20pc of sales are done now without the proper taxes being paid,” he said.
However, one Yankin-based property speculator said she routinely tries to avoid paying taxes because they cut into her profits.
“The nature of my business does not work well with taxes – I try to buy a property and sell it again within six months for a profit. If I paid the taxes I’m supposed to then I would be giving the government half of my profits – in some cases – for nothing.”