December 17, 2024
UNDERSTANDING THE TAX LANDSCAPE OF MYANMAR
INTRODUCTION
Myanmar has undergone significant economic transformation in recent years, transitioning from a centrally planned system to a market- oriented economy. This shift has placed greater focus on fostering private sector growth and attracting international investments. To support this transition, the Myanmar government has introduced several amendments to its tax legislation, aiming to modernizes the tax framework and improve revenue collection.
TAXATION AUTHORITY
The Internal Revenue Department (“IRD”) under Myanmar’s Ministry of Finance and Revenue provides notifications and updates on taxation legislation and regulations. The taxation in Myanmar is governed by The Income Tax Law (1974), The Commercial Tax Law (1990), The Myanmar Stamp Act (1935), The Law Amending the Income Tax Law (2014), The Law Amending the Commercial Tax Law (2014), The Law Amending the Myanmar Stamp Act (2014) and The Union Tax Law (2014). Myanmar’s IRD, under the Ministry of Finance and Revenue, administers various taxes and levies, including income tax, commercial tax, stamp duty, withholding tax, and capital gain tax. These taxes are imposed in compliance with the relevant statutes and legislation as stated in the preceding overview of this section.
TAX RATES & REGULATIONS
CORPORATE TAXES
Resident corporations are subject to worldwide taxation, including income from sources outside Myanmar. A resident company is incorporated under Myanmar’s Company Act or other laws, such as the Myanmar Foreign Investment Law (“MFIL”). Companies incorporated under MFIL are not taxed on their foreign-sourced income. A non-resident corporation is not formed under Myanmar’s corporation Act or other laws. Foreign branches are typically considered non-resident companies. Non-resident corporations are solely taxed on income earned in Myanmar. Tax rates fluctuate depending on resident status. At the time of publication, the group taxation system, transfer pricing rule, controlled foreign company regulation, and thin capitalization rule were not in effect. There are current corporate tax rates under the following different business entities:
- Investing under the FIL with an MIC Permit- 25%
- Investing under Myanmar CA- 25%
- Special Companies engaged in business with the State- 25%
- Branch office investing with an MIC Permit- 25%
- Non-resident foreign entity (e.g. branch of a foreign company)- 35%
INDIVIDUAL TAXES
Non-residents and residents are both subject to income tax. Foreigners who stay in Myanmar for at least 183 days in an income year (1 April to 31 March) are termed resident foreigners. Regardless of the length of stay in Myanmar, Foreign employees working for MFIL-registered companies are considered resident foreigners. Myanmar residents pay income tax on all sources of income, both within and outside the country. Non-resident foreigners are only taxed on income sourced within Myanmar.
Starting April 1, 2014, income tax on employment, profession, property, business, and other sources of income for resident foreigners and Myanmar citizens in local or foreign currency is calculated using the table below as the personal income tax schedule:
- Income from 1 Myanmar Kyat (“MMK”) to 2,000,000 MMK is liable to the tax rate of 0%
- Income from 2,000,001 MMK to 5,000,000 MMK is liable to the tax rate of 5%
- Income from 5,000,001MMK to 10,000,000 MMK is liable to the tax rate of 10%
- Income from 10,000,001 MMK to 20,000,000 MMK is liable to the tax rate of 15%
- Income from 20,000,001MMK to 30,000,000MMK is liable to the tax rate of 20%
Income above 30,000,000 MMK is liable to the tax rate of 25%
COMMERCIAL TAXES
Myanmar’s commercial tax is a turnover tax on goods and services sold within the country. The commercial tax is not a value-added tax, but rather an additional tax on commercial transactions. The Commercial Tax Law, the Law Amending the Commercial Tax Law, and the Union Tax Law all cover specific transactions.
For commercial tax reasons, “goods” refer to either imported or domestically made items sold for profit. Service refers to the provision of a service for a charge or consideration. This definition encompasses trading, entertainment, hospitality, tourism, and government-designated service enterprises. According to Chapter 5 of the Union of Tax Law, all services are taxed at 5% on total income, with the exception of 26 exempted services.
OTHER TAXES
STAMP TAX
Stamp duty is levied on various types of transactions under the Myanmar Stamp Act and rates of stamp duties are as follows:
- Sale or transfer of immovable property (not located in Yangon, Mandalay or Nay Pyi Daw)- 3.0% of the value
- Sale or transfer of immovable property (located in Yangon, Mandalay or Nay Pyi Daw)- 5.0% of the value
- Transfer or Sales of shares- 0.3% of the value
- Rental of immovable property (contract from one to three years)- 1.5% of average annual rent
- Rental of immovable property (contract above three years)- 5.0% of average annual rent
PROPERTY TAX
Property taxes are based on the annual valuation or projected gross rent if leased unfurnished. Local authorities establish the property’s annual worth. Myanmar’s Transfer of Immovable Property Restriction Law of 1987 restricts foreign ownership of land and immovable property. Myanmar citizens who acquire land or immovable property must pay a tax based on their income. It has never been taxed and is utilized for this transaction at the following rates:
- From 1MMK to 50,000,000 MMK, the property tax is 3%
- From 50,000,001 MMK to 150,000,000 MMK, the property tax is 10%
- From 150,000,001 MMK to 300,000,000 MMK, the property tax is 20%
- Above 300,000,000 MMK, the property tax is 30%
The balance amount of the transaction that has been taxed and from the known sources is not subject to this tax.
CAPITAL GAIN TAX
Capital gains tax returns must be filed within one month of sale of assets. In the case of a discontinued business, the taxpayer must file returns within one month after the date of discontinuance. Capital gains tax rates are 10% for resident corporations and 40% for non-resident companies, with the exception of transfers of shares in oil and gas companies, which have rates ranging from 40% to 50%. Gains will be taxed as follows:
- Up to 100 billion MMK- 40%
- Between 100 to 150 billion MMK- 45%
- More than 150 billion MMK- 50%
CONCLUSION
Myanmar’s tax landscape reflects a shift towards modernizing its taxation system to support its market- oriented economy and enhance revenue collection while encouraging private sector investments. Progressive income tax rates, commercial tax exemptions, and favourable rules for resident corporations encourages private sector growth. Recent reforms aim to enhance revenue collection while creating a more structured and investor- friendly environment. Continued modernization efforts, including further simplification and transparency, will strengthen Myanmar’s competitiveness and attract global investors.
HOW WE CAN HELP?
- Our team can provide expert guidance on corporate, individual and commercial tax obligations to ensure compliance with Myanmar’s tax regulations.
- Our team can develop effective strategies to optimize tax liabilities under Myanmar’s tax laws, leveraging exemptions, and favourable provisions.
- Our team can keep you informed about the latest tax amendments and compliances requirements to align with revolving regulations.
For more information or queries, please email us at
[email protected]
Key Contact
Surendra Singh Chandrawat
Managing Partner