Myanmar Tax System
Corporate Income Tax (CIT)
A company is resident if it is formed under the Myanmar Companies Law 2017 (MCL) or any other applicable 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 MIL and SEZ are treated as resident companies.
A non-resident company is a company not formed under any of the above laws. An overseas corporation (previously regarded as branch or representative company) in Myanmar are treated as a non-resident company.
Resident companies are taxed on their worldwide income where non-resident companies are taxed only on income accrued within Myanmar. Both resident and non-resident companies are liable to pay corporate income tax at a rate of 25% on total net profit before deduction on relief. However, resident companies registered under MIL and SEZ are taxed in accordance with the applicable income tax exemptions and reliefs on their investments.
Myanmar operates a one-tier corporate tax system, The taxable period of a company is the same as its financial year (income year), which is from 1 October to 30 September. 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 December 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.
Personal Income Tax (PIT)
The Myanmar citizens and foreigners who lived in Myanmar for at least 183 days are deemed as the residents subject to the tax purposes. Residents are taxed based on all Myanmar income source except on the salary income of non-resident citizens who are working abroad. Non-residents foreigners are taxed only on the income derived within Myanmar. The rate of Personal Income Tax on the residents and non-resident foreigners after deduction on exemptions and reliefs are as follows –
0% for taxable income MMK 0 – 2,000,000
5% for taxable income MMK 2,000,001 – 5,000,000
10% for taxable income MMK 5,000,001 – 10,000,000
15% for taxable income MMK 10,000,001 – 20,000,000
20% for taxable income MMK 20,000,001 – 30,000,000
25% for taxable income over MMK 30,000,000
Any individual who has received MMK 4.8 million of salary are exempted subject to tax in a year. Besides, the basis allowance of salary deduction is granted to 20% for resident individuals, but must not exceed over MMK 10 million in a year.
Capital Gains Tax (CGT)
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 value of capital assets disposed exceed MMK 10 million) for resident national or foreigner, or non-resident foreigner. The capital assets include land, building, vehicle, shar e, bond, securities or other similar documents.
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 CGT 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 m)
- 45% (net profit is between USD100 m – USD150 m)
- 50% (where net profit exceeds USD150 m)
Commercial Tax (CT)
A Commercial Tax is imposed on a wide range of goods, imported into or produced in Myanmar, trading sales, and services unless the list of goods and services are listed as exempt. The rates of Commercial Tax are set out in the schedules to the Union Taxation Law 2020.
The CT rate is generally 5% payable on services, items of goods produced in Myanmar, imports or exports. The CT rate 3% and 1% apply on sales of buildings after being constructed and on gold and jewellery respectively. However, the CT rate will not be levied on total income amounted to MMK 50 million payable on sales of goods produced in Myanmar or on services in a fiscal year.
Registration for Commercial Tax is required for both resident and non-resident companies, and the Commercial Tax is paid to the relevant Township Revenue Department, Large Taxpayers Office or Medium Taxpayers Office. There is no commercial tax on the export of goods except for the export of electricity and crude oils subject to 8% and 5% of CT tax respectively.
Monthly payment on Commercial Tax is due by ten days of the following month. In addition, CT returns must be submitted once every three months and are due within one month from the end of relevant three months. An annual return is also submitted within three months after the end of a fiscal year.
Specific Goods Tax (SGT)
The Specific Goods Tax is imposed on the listed specific goods of cigarettes, alcohols and beers, wines, cars, woods, industrial oils and natural gas that are manufactured in Myanmar, imported or exported. The export of such describing goods except for wood logs and wood cuttings are exempt subject to SGT. The rate of SGT generally ranges from 5% to 120%. All companies that manufacture, import and export the specific goods in Myanmar must register in the relevant Township Revenue Departments for the purpose of SGT. SGT is taxed either before taking the goods in import or within 10 days from the end of the month in which the goods are sold or exported. SGT returns must be submitted within 10 days following the end of relevant three months.
Stamp Duty in Myanmar is governed by the Myanmar Stamp Act 1899 (as amended from time to time) which prescribes stamp duties for various kinds of instruments requiring to be stamped such as agreements, MOA, lease agreements and other kinds of contracts. It also provides that if the instruments chargeable with stamp duty have been executed abroad, it may be stamped within three months from the receiving date in Myanmar. If the instrument chargeable with stamp duty is not properly stamped, it is inadmissible as a strong evidence according to law. In general, some common instruments needed to be stamped are as follows –
- Duty payable on the sale of immovable property – 4% of the value of the sale
- Duty payable on the rental of immovable property (contract for between 1 – 3 years) – 0.5% of the value of the lease
- Duty payable on the rental of immovable property (contract for more than 3 years) – 2% of the value of the lease
- Duty payable on the sale or transfer of shares – 0.1% of the value of the shares
- Duty payable on the bonds (including mortgage deeds) – 0.5% of the value of the bond
- Duty payable on joint venture agreements, production or profit sharing contract, construction agreement or other similar agreement or contract – 1% of the value (maximum duty is MMK 150,000)
Immoveable property situated in Yangon is subject to certain local property taxes such as general tax, lighting tax, water tax and conservancy tax.
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, Malaysia, Singapore, Korea (Rep.), Thailand, United Kingdom, Vietnam and Laos. It has also entered into DTAs with Indonesia and Bangladesh, but those DTAs are awaiting to be ratified.
Tax relief cannot automatically be obtained; however, taxpayers need to claim tax treaty relief to the Internal Revenue Department through the relevant revenue offices by submitting the Certificate of Residency, contracts and the other necessary documents.