Myanmar Tax System

Corporate Tax in Myanmar

A company is resident if it is formed under the Myanmar Companies Act (MCA) or any other laws of Myanmar and where the control, management and decision-making of the company are situated and exercised wholly in Myanmar. Companies registered under the FIL are treated as resident companies.

A ‘non-resident’ company is a company not formed under any of the above laws. Branch offices of foreign companies, which are not registered under the FIL, are deemed to be ‘non-resident’. Non-resident branch companies pay corporate tax at a rate of 35%

Resident companies are taxed on their worldwide income. However, resident companies registered under the FIL are not taxed on income earned outside of Myanmar.  Non-resident companies are taxed only on income from sources within Myanmar.

Companies incorporated in Myanmar under Myanmar Companies Act (Trade/business income and rental income from movable or immovable property) and companies incorporated under the Foreign Investment Law pay corporate tax at a rate of 25%.

The taxable period of a company is the same as its financial year (income year), which is from 1 April to 31 March. Income earned during the financial year is assessed to tax in the assessment year, which is the year following the financial year. Income tax returns must be filed within three months from the end of the income year, i.e. by 30 June after the end of the income year.  Tax returns for capital gains must be filed within one month from the date of disposal of the capital assets. The date of disposal refers to the date of execution of the deed of disposal or the date of delivery of the capital assets, whichever is earlier.

Commercial Tax in Myanmar

There is no VAT system in Myanmar. A commercial tax (Commercial Tax) is imposed on a wide range of goods, imported into or produced in Myanmar, trading sales, and services. The rates of Commercial Tax are set out in various schedules to the Commercial Tax Law introduced on 31 March 1990.

Registration for commercial tax is required when the amount of income from sales and services for an income year is MMK 10 million or more. There is no commercial tax on the export of goods with very few exceptions. These include:-

  • 5% – petroleum crude
  • 8% – natural gas
  • 30% – jade and other precious stone
  • 50% – teak log and teak conversion; and hard wood log and hard wood conversion

(Such as teak, jade, precious stones, oil and natural gas). Services are only subject to commercial tax if they are listed in schedule 7 to the Commercial Tax Law. 

Commercial Tax on imports is collected by the Myanmar Customs Department at the point of importation in the same manner that customs duties are collected. The following documentation is required to be produced when importing goods into Myanmar:-

  1. Import licence / permit
  2. Invoice
  3. Bill of Lading or Air Consignment Note
  4. Packing list
  5. Other Certificates and permits issued by the relevant Government Departments as a condition for Import

The Government has indicated that it intends to replace the current Commercial Tax regime with a VAT or GST based model. It is anticipated the new model will be introduced by 2018 – 2019. Myanmar has double taxation agreements with the U.K., Singapore, India, Malaysia, Vietnam, Laos, Indonesia and South Korea

Capital Gains Tax in Myanmar

In Myanmar, capital gains are treated as income and fall within the scope of the Income Tax Law. Capital gains are taxed at a rate of 10% (where the proceeds of all assets disposed exceed MMK 5,000,000) for resident companies and 40% for non-resident companies.

Tax on disposals made by a non-resident foreigner, is to be paid in the same currency as the disposal or transfer transaction.

The rate of capital gains tax on the transfer of shares in oil and gas companies increases with the amount of net profit earned on the transfer. The rates are:-

  • 40% (net profit is less than USD100 million)
  • 45% (net profit is between USD100 m – USD150m)
  • 50% (where net profit exceeds USD150 m)

Excise Duty customs tax in Myanmar

Customs duty is levied under the Customs Tariff of Myanmar (2007) at  rates ranging from 0% to 40%. Most imported goods are subject to import duties. All incoming consignments of goods must be cleared through the Customs Department under an Import Declaration form (CUSDEC – 1). The Import Declaration form is to be accompanied by the following documents:-

  1. Import licence / permit
  2. Invoice
  3. Bill of Lading or Air Consignment Note
  4. Packing list
  5. Other Certificates and permits issued by the relevant Government Departments as a condition for Import

Import duty is levied on the tax base, assessable value, which is the sum of Cost Insurance and Freight (C.l.F) value and landing charges of 0.5% of C.I.F. value. Together with customs duty, Commercial tax is levied on the imported goods basing on the landed cost which is the sum of assessable value and import duty. These taxes are collected at the point of entry and the time of clearance.

Excise duty is levied on alcoholic drinks and is collected by the General Administration Department under the Ministry of Home Affairs.

Property Tax in Myanmar

Immoveable property situated in Yangon is subject to certain local property taxes such as general tax, lighting tax, water tax and conservancy tax.

Stamp Duty in Myanmar

Stamp Duty in Myanmar is governmed by the The Myanmar Stamp Act 1899 (as amended from time to time) which prescribes stamp duties for instruments that transfer or create property interests. The relevant stamp duties are as follows:-

  • Duty payable on the sale of immovable property (outside Yangon) – 5%
  • Duty payable on the sale of immovable property (inside Yangon) – 7%
  • Duty payable on the rental of immovable property (contract for between 1 -3 years) – 1.5% of the value of the lease
  • Duty payable on the rental of immovable property (contract for more than 3 years) – 5% of the value of the lease
  • Duty payable on the sale or transfer of shares – 0.3% of the value of the shares

The Income Tax Law and double tax agreements

The Income Tax Law  provides that if the Government enters into an agreement with any foreign state 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 Income Tax Law. Tax treaties have been concluded with India, Indonesia, Malaysia, Singapore, Korea (Rep.), Thailand, United Kingdom, Vietnam, Laos and Bangladesh. The treaties with India, Korea (Rep.), Malaysia, Singapore, Thailand, the United Kingdom, Laos and Vietnam have been notified in the Myanmar gazette.