The department issued the instruction to clarify disputes among phone importers and retailers after the taxes were announced earlier this year.

The ruling means that retailers collect taxes from the buyers and then repay this to the IRD. However, the tax does not necessarily apply to all brands.

“As Samsung pays import fees as well as other tariffs and taxes imposed by the government, buyers need not pay additional taxes. There will be no price hike on Samsung products,” said Ko Zarni Win Htet, Samsung Myanmar’s head of IT and Mobile Group.

For other local distributors though, the additional taxes, are likely to have a negative impact on sales.

U Ko Ko Aung, CEO of phone retailer Lu Gyi Min, said that he accepts the tax and it should be explained to the consumers. He added though, that the government should ensure that all retailers obey the system

“If some shops follow the law and some don’t, market competition is not fair. The government should ensure law enforcement and encourage all to follow the law,” he said.

“Phones are expensive goods so the government should also educate business owners and buyers so that they follow the law,” he added.

The tax that is to be paid by the buyers and sellers is a burden, said Ko Zin, assistant director for digital marketing of phone accessories retailer REMAX. “The government should take action against the vendors who sell handsets without paying taxes,” he said.

There many companies that import handsets to sell locally. The most popular brands are Huawei, Oppo, Samsaung, Xiaomi and Apple Vivi, Realme and One plus.

In Myanmar, the price of the cheapest mobile phone ranges from K100,000 and K200,000.

In the local market, the lowest price of a mobile phone is between more than K100,000 and K200,000. If a consumer buys a mobile phone costing K100,000, he will pay an additional K5000 due to the 5pc tax.

“There are many companies that import goods via illegal avenues. If the government doesn’t take action on the shops that don’t collect the commercial tax, the ones collecting it are at a disadvantage,” said Ko Min Min Aung, a manager of a company importing mobile phones.

‘‘If they [the government] collect it, we have to pay. But I want to know how the government will check if people follow it or not,” said Ko Myint Hlaing, who bought a mobile phone recently.

The new tax, separate from the import tax paid by importing companies, will be levied only on consumers and vendors will have to affix stamps on receipts based on the total sales value of the purchase.

Consumers should also ask for receipts with tax stamps for their purchase. If the customers receive unstamped receipts from the vendors, they can complain about the case to the IRD and action will be taken against them according to the law, said U Min Htut.

‘‘The 5 pc commercial tax is for all mobile handset vendors. If companies import each item for K100, they only pay tax on K100. The new tax is levied on their additional sales value of the purchase,” U Min Htut, director general of IRD.

Source: https://www.mmtimes.com/news/tax-mobile-phones-kicks-june-1.html