Myanmar’s tax measures instituted to check soaring real estate prices have been ineffective, property agents and economists say, due to the inefficiencies of the government. In addition, the market has seen significant money laundering, due to flaws in regulations, flaws that need to be fixed soon for the property market to properly cool down.

With prices in real estate markets around the country, especially in Yangon, Myanmar’s commercial center, skyrocketing in recent years, the Myanmar government has decided to axe a five-year property tax holiday last year, which brought into effect a 30 percent transaction tax and a 7 percent stamp tax, both to be paid by the buyer.

But the higher taxes may not be efficient or enough to curb the prices, said Than Oo, managing director of the Mandine Real Estate Agency. Regulations are not in place to ensure the tax is paid, Than Oo said, and buyers are not required to inform the Internal Revenue Department about the source of the funds they are using to purchase property, according to the Irrawaddy. For these reasons, the government has little control over the market, which is not sustainable in its current state.

“If they collect the commercial [property] tax systematically and would seriously check for money laundering, the market prices would become stable,” said Thet Tun Oo, an economic analyst with the Myanmar Securities Exchange Center.

At least part of the property boom is fueled by illicit funds that are being laundered through the lax property sales requirements, Thet Tun Oo added. Tightening property tax registration would help rein in prices.

In 2007, the government cut property tax from 50 percent to 15 percent, prompting the first rise in prices. Following the 2011 change in government, President Thein Sein began reforms aimed at attracting foreign investment, which spurred a further rise, according to the Irrawaddy.

Annual GDP growth for Myanmar is projected to be 6.3 percent for the next few years, the plans to build airports and industrial zones, and the government’s plan to boost tourism, have carried Yangon’s property boom to the rest of the nation.

The government is now considering further measures to rein in the prices, including different tax rates for different areas of Yangon, according to property agents.

“Land taxes need to be reviewed. Some taxes need to be applied. Now, people are dealing in land and houses. If a tax is levied on each sale of land, the tax will control [rising land prices],” said Soe Thein, the President’s Office’s Minister, in a speech on Aug. 26, the Irrawaddy reported.