(THAI BUSINESS ASSOCIATION OF MYANMAR)

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The government calls this tax withholding tax, but it's not to be confused with withholding tax that applies to employment income. Withholding Tax is an income tax deducted according to the Income Tax Law at the time of payment by persons responsible for payment and remitted to the relevant revenue offices.

In January 2018, the government eased the 2 percent withholding tax for companies registered as large or medium size export companies at the taxpayers office, however, individual exporters were not included in this change.

There are reports of private traders exploiting the exemption of withholding tax by exporting their goods under the name of a company with the exemption, said U Min Htut, the Director General of the Internal Revenue Department.

“Our withholding tax system for exporters is not fair because large companies enjoy the tax exemption while smaller individual exporters must pay the 2 percent of withholding tax. This is one of reasons why we reintroduced the withholding income tax,” he added.

Local businesses have complained that withholding taxes are an unnecessary burden on cash flows and profits.

“I want the government to re-consider withholding tax. It was not easy to avoid withholding tax,” said U Sai Myint Aung, an exporter in the border city Muse.  "This decision is unfair since all exporters will have to lose the benefit of tax exemption because of some exporters broke the law."

“We reintroduced the 2 percent withholding tax on exports as the traders are exploiting it. We will consider reinstating the tax exemption in the future if companies can follow the rules of doing business,” U Min Htut said.