Mil­i­tary en­ter­prises top com­mer­cial tax list

Mil­i­tary en­ter­prises top com­mer­cial tax list

Mizzima Business Weekly - - CONTENTS - Tim McLaugh­lin

Mil­i­tary-backed en­ter­prises topped this year’s list of com­mer­cial tax pay­ers in what ex­perts said was a wel­come ad­di­tion to Myan­mar’s tax base but warned that the opaque con­glom­er­ates were still a detri­ment to the econ­omy.

The an­nual list was ex­panded this year from 500 com­pa­nies to 1,000 and also for the first time pro­vided in­for­ma­tion about how much tax they paid.

Myawaddy Trad­ing, a sub­sidiary of mil­i­tary-backed Myanma Eco­nomic Hold­ings Limited (MEHL), held the first spot on the list. The company paid more than K10 bil­lion to gov­ern­ment cof­fers, show the fig­ures from the In­ter­nal Rev­enue Depart­ment.

Lists are com­piled by the gov­ern­ment for two types of tax – in­come tax and com­mer­cial tax.

Dagon Bev­er­ages, owned by another mil­i­tary-backed en­ter­prise, Myan­mar Eco­nomic Cor­po­ra­tion, moved up one place from last year and was in sec­ond place in the com­mer­cial tax list­ing. The company paid more than K10 bil­lion.

Dagon was founded in 1998 as a joint-ven­ture be­tween MEC, Ber­muda-regis­tered Brew Invest and Myan­mar Golden Star. In 2009 MEC took full con­trol of the brew­ery, Myan­mar’s sec­ond largest beer pro­ducer.

Round­ing out the top five com­mer­cial tax pay­ers were Denko Trad­ing, In­ter­na­tional Bev­er­ages Trad­ing Company and City Mart Hold­ings.

Sean Tur­nell, an ex­pert on the Myan­mar econ­omy at Mac­quarie Univer­sity in Aus­tralia, said that although it was a pos­i­tive de­vel­op­ment that mil­i­tary-linked com­pa­nies were pay­ing tax, they were still a bur­den on the econ­omy.

“It’s a pos­i­tive de­vel­op­ment in a nar­row sense,” Pro­fes­sor Tur­nell said

“I would ven­ture that the costs they im­pose on Myan­mar via the mis­al­lo­ca­tion of re­sources im­plied by their priv­i­leged sta­tus makes any tax they pay not es­pe­cially rel­e­vant,” he said.

“Bet­ter to let the pri­vate sec­tor un­der­take the ac­tiv­i­ties of th­ese in­ef­fi­cient mil­i­tary firms and yield from them both greater tax rev­enues and greater out­put.”

Con­spic­u­ous by its ab­sence from the lists was Myan­mar Brew­ery, the maker of mar­ket dom­i­nant Myan­mar Beer. The brew­ery was moved this year to the newly cre­ated for­eign tax pay­ers’ list.

This is be­cause Myan­mar Brew­ery is a joint ven­ture be­tween Sin­ga­pore-con­glom­er­ate Fraser and Neave and MEHL. Un­der Myan­mar law, any joint-ven­ture with a for­eign firm is con­sid­ered a for­eign company.

This po­si­tion may shift next year after an arbitratio­n rul­ing in Sin­ga­pore in Oc­to­ber that saw MEHL win the right to ac­quire F&N’s 55 per­cent stake in Myan­mar Brew­ery.

MEHL could take full con­trol of the brew­ery, which would see it move back to the do­mes­tic tax payer lists. The company may also choose to sell the shares to another for­eign firm, mean­ing it would re­main on the for­eign list.

Win Win Tint, Founder and Man­ag­ing Di­rec­tor of City Mart Hold­ings. Photo: Hong Sar (Ra­monya)

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