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Myanmar Tax Structure

Taxation Issues & Regulatory Requirements

19 June 2012

Soe Win Myanmar Vigour

Myanmar Tax Structure


Applicable laws to individuals, companies and joint ventures: The Myanmar Income Tax Law The Commercial Tax Law The Union of Myanmar Foreign Investment Law (MFIL) and Latest Notifications issued by Ministry of Finance Revenue dated 15 March 2012.

Application of the Law


The Income Tax Law applies to the following types of taxpayers:i. State Economic Enterprise ii. Co-operative societies iii. Foreigners and foreign organisations engaged under special permission in state-sponsored enterprises iv. Foreigners engaged by the private sector v. Foreign and local companies vi. Myanmar Nationals vii. Partnerships or joint-ventures

Resident Foreigners
Individual - stayed not less than 183 days during income year Company - formed under the Myanmar Companies Act An association - formed wholly or partly with foreigners where management affairs situated and exercised in Myanmar.

Non-Resident Foreigners
- A foreigner or organisation which is not a resident in Myanmar

Chargeable Income
Heads of Income i. ii. iii. iv. v. vi. vii. Salaries Profession Business Property (letting out) Capital gains Income from other sources Income from undisclosed sources

MFIL Company
Income Tax at 25% on income accrued in Myanmar Tax Incentives under MFIL. Capital Gains Tax at 10% on gains (Except Oil and Gas Co.) Withholding Tax for payments made to third party:Res: Interest Royalties, trademark, patent Payment to contractor Payments for procurement within country Nil 15% 2% 2% Non-Res: 15% 20% 3.5% 3.5%

Resident Company
Income Tax at 25% Capital Gains Tax at 10% on gains in excess of Kyat 5 mil (Except Oil and Gas Co.) Withholding Tax for payments made to third party:-

Res: Interest Royalties, trademark, patent Payment to contractor Payments for procurement within country Nil 15% 2% 2%

Non-Res: 15% 20% 3.5% 3.5%

Non-Resident Company
Income Tax at 35% Capital Gains Tax at 40% on gains Withholding Tax for payments made to third party:-

Res: Interest Royalties, trademark, patent Payment to contractor Payments for procurement within country Nil 15% 2% 2%

Non-Res: 15% 20% 3.5% 3.5%

Foreign Branches
Calculation of taxable income, at the option of the Internal Revenue Department (IRD): Method 1: 35% Method 2: on a proportion of worldwide profit adjusted in accordance with the Myanmar Tax Law Method 3: on any basis deemed reasonable by IRD

C.M.P Companies
Income tax Income tax 25 % on income As per notification 148/2012, income tax shall be in Kyat.

Business Representative
Income tax Being a cost center, gathering statistics and acting as liaison office, tax exposure is not likely.

Income Tax on Companies


Type of Taxpayer or Income i. Companies incorporated in Myanmar under Myanmar Companies Act ii. Companies operating under MFIL iii. Foreign organisations engaged under special permission in Statesponsored projects, enterprise or any undertaking 111/12 iv. Non-resident foreign organisations such as a branch of a foreign company v. Capital gains - Resident companies - Non-resident companies Tax Rates 25% 25% 25%

35%

10 % 40 %

Income tax on Oil & Gas Company


For Oil and Gas Company, sale, transfer or exchange in foreign currencyUp to 100 Million 100 to 150 Million Above 150 Million @ 40% @ 45% @ 50%

Income tax on Individuals


Types of Taxpayer or Income Salaries i. Foreigners engaged under special permission in a Statesponsored project, enterprise, receiving salary in Kyat ii. Foreigners working for MFIL companies iii. Resident Foreigners iv. Nationals earning foreign exchange in Myanmar v. Non-resident Foreigners Other income: - Foreigners Capital gains tax - Resident - Non-resident Tax Rates
20 %

Progressive rates Progressive rates Progressive rates 35% 35 %

10 % 40 %

Progressive Income Tax Rates on Salary


No. Chargeable income per annum (Kyats) (A) (B) Tax rate in % Difference (C= B-A) Progressive payable tax Accumulated tax

1 2 3 4 5 6 7 8 9 10 11 12

1 500,001 1,000,001 1,500,001 2,000,001 3,000,001 4,000,001 6,000,001 8,000,001 10,000,001 15,000,001 2 ,000,001nd above

500,000 1,000,000 1,500,000 2,000,000 3,000,000 4,000,000 6,000,000 8,000,000 10,000,000 15,000,000 20,000,000

1% 2% 3% 4% 5% 6% 7% 9% 11% 13% 15% 20%

500,000 500,000 500,000 500,000 1,000,000 1,000,000 2,000,000 2,000,000 2,000,000 5,000,000 5,000,000

5,000 10,000 15,000 20,000 50,000 60,000 140,000 180,000 220,000 650,000 750,000

5,000 15,000 3,0000 50,000 100,000 160,000 300,000 480,000 700,000 1,350,000 2,100,000

Calculation of Personal Income Tax


Example
Kyats Total income
Less Less Less Less Less

xxxx (xxxx) (max 300k) (max 200k) (xxxx) (xxxx) xxxx

Basic Allowance (20% of income) * Spouse Allowance Children Allowance (each) Life Insurance Premium 25% of approved donation

Taxable Income * Maximum allowance K.10,000,000\

Commercial Tax
Manufacturing
Input tax (1) Custom Department Output tax (2) Manufacture IRD

- Export sales in $ - nil except - O & G, Teak, Hard Wood, Precious Stones

Sales in Kyat as per CTL

Input tax on imported items will be calculated based on landed cost as per new revised rates; Output tax - as per rates prescribed in Commercial Tax Law;

Commercial Tax Rates on Revenue


Activities % on Total Receipts USD Trading (purchase & sales of goods) Passenger Transport Entertainment Hotel, restaurants, lodgings Food & drinks Tourism business Cleaning & Oiling of motor vehicles Insurance business except life assurance business Beautifying and physical exercise business, hair dressing etc Printing Brokerage Design, Landscaping, Maintenance and Decoration Advertisement, Photo, Video, Editing, Distribution Lawyers, Certified Public Accountants 5 5 5 5 5 5 5 5 5 5 5 5 5 5 Kyats 5 5 5 5 5 5 5 5 5 5 5 5 5 5

DTA Treaties with Myanmar


United Kingdom Singapore India Malaysia Vietnam South Korea

Avoidance of Double Taxation Agreement


United Kingdom Dividends Interest Exempt No specific provisions Malaysia Exempt up to 10% Singapore Exempt -up to 8% for banks and financial institutions -up to 10% for others up to 10%

Royalties

Up to reasonable amount in country where income arises

up to10%

Shipping

Country which owns the shipping line must collect the tax Country which owns the airline must collect the tax

Country which owns the shipping line can collect 50% tax due. Country which owns the airline must collect the tax.

Country which owns the shipping line can collect 50% tax due.

Air Transport

Country which owns the airline must collect the tax

Technical Fees

No specific provisions

up to 10%

No specific provisions

Date

12-3-1953

9-3-1998

23-2-1999

THANK YOU!