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Myanmar

Country Name: Republic of the Union of Myanmar
Currency: Myanmar Kyat (MMK)
Primary Tax Authority: Internal Revenue Department (IRD), Ministry of Planning and Finance
Key Legislation:

  • Income Tax Law 1974 (revised in 2019)
  • Special Goods Tax (SGT) Law
  • Commercial Tax Law
  • Investment Law
  • Union Tax Law (annual budget law)

Fiscal Authority Allocation

Centralized Fiscal System:
Myanmar operates a centralized tax system, with the Internal Revenue Department (IRD) under the Ministry of Planning and Finance responsible for administering and collecting taxes, including corporate income tax (CIT), personal income tax (PIT), special goods tax (SGT), and commercial tax.

Corporate Income Tax (CIT)

Standard Rate: 22%
Myanmar imposes a flat corporate income tax rate of 22% on resident companies. Non-resident companies are subject to the same 22% rate but are taxed only on Myanmar-sourced income.

Corporate Forms and Taxation:

  1. Resident Companies: Taxed on worldwide income.
  2. Non-Resident Companies: Taxed on Myanmar-sourced income only.

Exemptions and Incentives:

  • Investment Law: Tax incentives are available to companies investing in promoted sectors such as agriculture, manufacturing, tourism, and infrastructure. These may include tax holidays of up to five years, reduced customs duties, and CIT reductions.
  • Special Economic Zones (SEZs): Companies operating in SEZs benefit from tax holidays of up to seven years, reduced CIT rates, and exemptions from customs duties on raw materials and equipment used in production.

Goods and Services Tax (GST) / Commercial Tax

Standard Rate: 5%
Myanmar does not have a GST or VAT system, but it imposes a Commercial Tax at a standard rate of 5% on goods and services. Certain goods such as tobacco, alcohol, and luxury products are subject to higher rates under the Special Goods Tax (SGT).

Exemptions:
Essential goods and services such as healthcare, education, and basic agricultural products are exempt from the commercial tax. Exports are also exempt, allowing companies to avoid tax on exported goods.

Personal Income Tax (PIT)

Progressive Rates:
Myanmar applies a progressive personal income tax system for residents on their worldwide income. Non-residents are taxed at a flat rate of 25% on Myanmar-sourced income.

Resident Tax Rates for 2023 (Annual Income):

  • Up to MMK 2,000,000: 0%
  • MMK 2,000,001 to MMK 5,000,000: 5%
  • MMK 5,000,001 to MMK 10,000,000: 10%
  • MMK 10,000,001 to MMK 20,000,000: 15%
  • MMK 20,000,001 to MMK 30,000,000: 20%
  • Above MMK 30,000,000: 25%

Non-Resident Tax Rate:
A flat tax rate of 25% applies to non-residents’ Myanmar-sourced income.

Additional Mandatory Contributions

Social Security Contributions:
Employers and employees must contribute to Myanmar’s social security system, which covers healthcare, pensions, and unemployment benefits.

  • Employer Contribution: 3% of gross salary.
  • Employee Contribution: 2% of gross salary.

Withholding Taxes

  • Dividends: 0%
  • Interest: 15%
  • Royalties: 15%
    Myanmar imposes withholding taxes on interest and royalty payments made to non-residents. Dividends are exempt from withholding tax. Withholding tax rates may be reduced under Myanmar’s double taxation agreements (DTAs).

Transfer Pricing Rules

Myanmar follows the arm’s-length principle for related-party transactions, requiring multinational companies to apply fair market value in cross-border transactions. Transfer pricing documentation is required to support the pricing of such transactions.

Special Tax Regimes

  • Special Economic Zones (SEZs): Businesses in Myanmar’s SEZs are entitled to tax holidays of up to seven years, followed by reduced CIT rates of 50% for the next five years. Additionally, SEZ companies benefit from customs duty exemptions on imports of raw materials and machinery.
  • Investment Incentives: Under the Myanmar Investment Law, tax holidays, reduced CIT rates, and exemptions from customs duties are available to companies investing in sectors deemed essential to national economic development, including manufacturing, energy, agriculture, and infrastructure.

Other Taxes

  • Special Goods Tax (SGT): SGT is imposed on luxury goods such as tobacco, alcohol, and motor vehicles at rates ranging from 5% to 80%, depending on the product type.
  • Customs Duties: Import duties vary by product, with rates ranging from 0% to 40%. Essential goods, including food and medical supplies, are often exempt or subject to lower rates.
  • Real Property Tax: Myanmar imposes a 3% tax on the sale or transfer of real estate, calculated based on the property’s value.

Double Taxation Agreements (DTAs)

Myanmar has signed several double taxation agreements (DTAs) with countries such as India, Singapore, and South Korea. These agreements help reduce withholding taxes on cross-border payments and prevent double taxation of income earned in Myanmar and abroad.

Local Taxes

Local governments in Myanmar may impose minor taxes, such as property taxes and business license fees. However, major taxes, including CIT, PIT, and commercial tax, are centrally administered by the Internal Revenue Department (IRD).

Compliance and Reporting

Annual Filing:
Corporate tax returns must be filed by June 30th of the following tax year. Personal income tax returns are generally due by March 31st. Commercial tax returns are filed on a monthly or quarterly basis, depending on the size of the business.

Penalties for Late Filing:
Penalties apply for late filing or non-compliance with tax laws. Interest is charged at a rate of 2% per month on unpaid taxes, and fines may be imposed for non-filing or underreporting income.

Recent Developments

Tax Incentives for Investment:
The Myanmar government continues to promote foreign investment by offering tax holidays, customs duty exemptions, and reduced CIT rates for companies investing in key sectors such as energy, manufacturing, and infrastructure. The focus is particularly on attracting investment to Special Economic Zones (SEZs) and areas of national development priority.

Efforts to Combat Tax Evasion:
In recent years, Myanmar has increased efforts to improve tax collection and combat tax evasion. This includes enhancing the enforcement of transfer pricing rules, implementing digital tax filing systems, and strengthening tax compliance across all sectors.

Focus on SEZ Development:
Myanmar continues to expand its Special Economic Zones (SEZs), offering significant tax incentives to attract international businesses. The SEZs are designed to facilitate trade and manufacturing activities, especially those aimed at export markets.

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