Update on Taxation in Myanmar Following the Union Taxation Law (Oct 2022)

1. INTRODUCTION

The major taxation laws in Myanmar include the Union Taxation Law of 2022, the Commercial Tax Law of 1990 as amended up to 2015, the Income Tax Law of 1974 as amended up to 2016, the Myanmar Stamp Act 1899 as amended up to 2016, and the Tax Administration Law of 2019. The Union Taxation Law 2022 applies to the 2022/2023 fiscal year. This newsletter will provide an overview of the taxation system of Myanmar.

2. TAXATION OF COMPANIES

3. TAXATION OF INDIVIDUALS

In the case of foreigners, those who reside in Myanmar for at least 183 days during the income year are considered resident foreigners. Residents of Myanmar are liable for personal income tax and profit tax on income derived from Myanmar and a foreign jurisdiction. Non-residents are subject to income tax and profit tax on income derived from within the jurisdiction of Myanmar only under the Income Tax Law 2016.

4. COMMERCIAL TAX

The Commercial Tax is levied as a turnover tax on goods and services. This tax applies to goods that are produced in or imported into Myanmar, as well as services that are rendered in Myanmar. For goods and services supplied in Myanmar, commercial tax is imposed at the time of supply and charged on the sales receipt. For the import of goods, commercial tax is collected by the Myanmar Customs Department at the point of importation and charged on the landed cost under the Commercial Tax Law.

The Commercial Tax is applicable as follows:

* 5% commercial tax is charged on exported crude oil.

* 8% commercial tax is charged on exported electricity,

* 11% commercial tax is charged on jade in uncut forms.

* 9% commercial tax is charged on ruby, sapphire, and other precious gemstones in uncut forms except for diamond and emerald.

* 5% commercial tax is charged on jade, ruby, sapphire, and other precious gemstones finished in cut forms and cut form fitted in jewelry except for diamond and emerald.

* 5% commercial tax is charged on the material made with gemstones.

* 3% commercial tax is charged on the sale proceeds of buildings built and sold in Myanmar.

* 5% commercial tax is charged on the sales price of goods produced and sold in Myanmar, or the landed costs of imported goods, except for goods provided in Sec 14 (a) of the Union Taxation Law of 2022.

* 5% commercial tax is charged on the revenue from domestic services, except for services provided in Sec 14 (d) and Sec (e-1) of the Union Taxation Law 2022.

Under the UTL 2022, goods and services that are exempt from commercial tax are classified into different categories, of which 45 categories are comprised of goods, including mainly agricultural and marine products, and of which 33 categories are comprised of services, including education, life insurance, microfinance, intra-government services, and others.

5. STAMP DUTY

The Stamp Duty applies to several transactions as shown in the examples below:

Transfer of shares: 0.1% of the value

Bonds: 0.5% of the value

Leases of immovable property: 0.5% – 2 % based on the term

Stamp duties must be paid before or at the date of execution of the document if executed locally, or within three months of the time the agreement was brought into Myanmar, if executed outside Myanmar.

6. CUSTOMS DUTY

Most imported goods are subject to customs duties upon importation and must be declared to the Myanmar Customs Department. Export duties are levied on exported goods that are commodities such as gems, electricity, crude oil, and timber, as outlined in the Commercial Tax section.

7. DOUBLE TAXATION AGREEMENTS

Myanmar has entered into Double Taxation Agreements (“DTA”) with the United Kingdom, Singapore, Malaysia, Vietnam, Thailand, India, Bangladesh, Indonesia, South Korea, and Laos. DATs with Indonesia and Bangladesh have also been agreed but have not yet been ratified. Under these DTAs, any tax paid in the country of residence will then not be subject to taxation in the country in which it arises.