Tax Regime
On the taxation front, the 2018 Myanmar Union Tax Law (an update of the 2017 Union Tax law) was approved on 20 March 2018 without a tax amnesty clause which is to be drafted separately.
Corporate Income Tax
Companies formed and registered under the Myanmar Companies Act 1914 or the Special Company Act 1950, including businesses that have obtained the permit of MIC are subject to an income tax rate of 25%. Tax holidays are available to companies operating with the MIC permits. Companies listed on the YSX are taxed at 20%.
Commercial Tax
Commercial tax, at rates ranging from 0% to 8%, is levied as a turnover tax on goods and services. Generally, commercial tax is imposed at the rate of 5% on a wide range of specified goods and services produced or rendered within the country, and on imported goods. All products and services are subject to 5% commercial tax except for 86 products and 30 services that are specifically exempt from commercial tax. Commercial tax is zero-rated on all exports, except for electricity (8%) and crude oil (5%). Companies registered under the MIC/SEZ may, at the discretion of the MIC/SEZ Committee, be granted exemption from commercial tax during certain stipulated periods.
Specific Goods Tax
With effect from 1 April 2016, the Specific Goods Tax Law was introduced to replace commercial tax on a list of specific goods that are imported into Myanmar, manufactured in Myanmar, or exported to a foreign country. There are 17 specialist goods with tax rates from 5% to 80%. Under the Specific Goods Tax Law, only a manufacturer or exporter of specific goods can claim and offset the specific goods tax incurred on purchase of raw materials/semi-finished goods against the specific goods tax charged on sale of specific goods. On top of specific goods tax, a commercial tax of 5% will also be imposed. Specific goods tax is exempt on all exports.
Personal Income Tax for Foreigners
Resident and non-resident foreigners’ salaries are taxed at the same progressive rate of 0 to 25%, with the only restriction for non-resident foreigners being their ineligibility to claim tax reliefs. A foreigner staying in Myanmar for 183 days or more during an income year is considered a resident.
Tax reliefs applicable to resident foreigners:
• Basic relief (20% of the total salary income), but limited to MMK 10,000,000 • Spouse relief of MMK 1,000,000 (limited to 1 spouse) • Child relief of MMK 500,000 (per child) • Premium paid for life insurance by the employee and his or her spouse • All contributions to social security funds
Special Economic Zones (SEZs) Tax Incentive
Investments in the SEZ shall be applicable under the Myanmar Special Economic Zone Law 2014. Primary attractions of the SEZs include incentives such as a five to seven years corporate tax holiday depending on the zone, 50% relief on income tax for the second five years and investors can lease land up to 75 years, i.e. 50 years plus 25 years extension.
Double Taxation Agreements
The Income Tax Law (ITL) provides that if the government enters into an agreement with any foreign or international organisation relating to income tax, and if the agreement is notified, the terms of the said agreement will be followed notwithstanding anything to the contrary contained in any other provisions of the ITL
Tax treaties have been concluded with India, Indonesia, Malaysia, Singapore, Republic of Korea, Thailand, United Kingdom, Vietnam, Laos and Bangladesh. The tax treaties with Indonesia and Bangladesh have yet to be ratified.
