Myanmar’s foreign football players score goals, unofficial tax breaks
THE face of Myanmar football has changed drastically since 2009, when the modern Myanmar National League was established and hiring players from other countries became common practice. Today more than 50 foreign-born footballers don jerseys for the 22 clubs that comprise MNL and its lower division, MNL-2, and their contributions have changed the nature and raised the level of competition of Myanmar’s homegrown football league.
But their contributions aren’t just on the field. Foreign football players are required by law to pay income taxes – just like any foreigner who resides in Myanmar as an employee for more than 183 days. But a Myanmar Times investigation has found regulatory confusion and a lack of transparency leads many clubs to pay the tax for their foreign players. Others may not be paying at all.
Making more than anyone else Myanmar’s Income Taxes Law, adopted in 1974 and amended in March 2015, states that earners making more than K20 million (US$17,000) per year are required to pay 20 percent of their annual income to the Union government. For those making K30 million (US$25,000) or more per year, the rate is increased to 25pc.
The Myanmar Football Federation reports the salary of Myanmar-born players at K450,000 to K1 million (US$375-$840) per month, but said information on foreigners’ contracts is confidential. The clubs themselves also declined to publicly release the figures, citing fears of causing friction between players – presumably when local players discover their foreign teammates were so much more amply compensated.
Some foreign players wishing to remain anonymous, however, opened up about their salaries. They revealed that most collect between US$2500 and $4500 per month – more than five times that of their local teammates, and enough to lodge them in the highest-earning income tax bracket. According to them, the clubs remitted taxes on their behalf, before giving them their paycheques.
But did the clubs pay enough? By law, Myanmar’s foreign footballers should be handing over one-quarter of their paycheques, but U Kyaw Ko Sint, media officer for Hpa-an-based Zwekapin FC, said the three foreigners on his team have never been required to report earnings to the MFF or the Internal Revenue Department.
He added that the government has not examined any of the foreigners’ contracts, nor contacted players to request payments, but claimed that the taxes are not owed. Instead, he said, the club’s front office handles finances for the players.
“We pay the income taxes of our players,” U Kyaw Ko Sint said. “We have not evaded paying taxes and did not lie about paying taxes.”
He declined, however, to reveal whether the club is paying the highest tax rates.
Who is checking? Some foreigner-employing companies, such as INGOs, have memorandums of understanding with the Relief and Resettlement Department that exempt their expatriate staff from paying income tax. Other firms pay their staff in their home countries, meaning that those expats pay the corresponding income tax back home but are not subject to Myanmar’s tax.
But for football, the rules are a little murkier. In 2009, the MFF announced a tax exemption for foreigners during their first three seasons; after the 2012 season ended, the MFF did not issue any announcements or circulate information to instruct players about paying their taxes after the exemption expired.
U Zaw Min Htike, the MFF’s media officer, passed the responsibility back to the players and clubs, saying the federation does not monitor foreigner footballer earnings or tax returns.
“All MFF members must pay taxes, but we have not inspected whether the players are paying their taxes or not,” he said. “We also do not know what tax rate they are supposed to be paying.”
Neither, apparently, do the clubs themselves. Yangon United media officer U Myo Myint Thaung told The Myanmar Times that the club did not know which tax bracket its foreign players fit.
“The taxable percentage that foreign players have to pay is the same as other workers, but it may vary for the players according to their salaries,” he said.
Despite professing ignorance of the players’ individual tax obligations, U Myo Myint said that the club pays income tax for its foreign players upfront, cutting the mystery amount from their paycheques in advance. Other clubs reported a similar arrangement, saying that the players’ contracts include a clause stipulating that the team will front the player’s income tax for the duration of the contract.
“We do not know what percent foreigner players have to pay, but we pay it,” he said cryptically.
Most of the other MNL teams contacted for this story said that they pay the foreigners’ taxes, but declined to reveal for which bracket. A member of the Internal Revenue Department who wished to remain anonymous admitted that confirming the payments is difficult, as income declarations are often filed at relevant township offices and it is not always clear where the foreigner players are registered – even when most of the MNL’s teams continue to play their home games in Yangon.
The IRD officer confessed suspicions that many foreigners effectively evade paying income taxes, as companies often skip the payments on foreigners’ income because the process can be convoluted and there is little enforcement mechanism in place. He advised companies to send income declarations directly to the central revenue department as well as all necessary paperwork to find out exactly how much the players should be paying.
But until a proper enforcement mechanism is in place to incentivise proper income reporting, many teams can continue sending “ad-hoc” payments, or neglecting them altogether – and the foreign players of Myanmar’s football leagues can keep enjoying life in the Golden Land tax-free.
Ayeyawady United’s Yakubu Abubakar (24) from Nigeria and Nishihara Takumu (27) from Japan, are just two of more than 50 foreign-born footballers playing in the Myanmar National League.