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TAXTION |
| A person or an enterprise operating under the Foreign
Investment Law is liable to income tax or the income accruing or derived from
all sources within the Union of Myanmar. At present, there are fifteen types of
taxes and duties under the four main categories. Income is computed on the
basis of one fiscal year which starts on April 1 and ends on March 31 of the
following year. A flat tax rate of 30 percent is applicable to an enterprise
operating under the Foreign Investment Law and those operating under the
Myanmar Companies Act. A foreign employee of an enterprise operating under the
Foreign Investment Law, for income tax purposes, could be treated as a resident
citizen. As a consequence, progressive tax rates starting from 3 percent to a
maximum ceiling of 30 percent is applicable. Personal Income Tax A person or an
enterprise operating under the Foreign Investment Law is liable to income tax
on the income accruing or derived from all sources within the Union of Myanmar.
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Business Tax (Commercial Tax)
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| The Commercial Tax Law was promulgated on 31st March,
1990 and became effective from the financial year 1990/91. This law was amended
in March 1991. Commercial tax is a turn-over tax levied on goods and services.
The tax is imposed on a wide range of goods and services produced or rendered
within the State and the imported goods from abroad. Except for trade, the tax
imposed as an ad valorem single tax, that is, at the point of sale of producer
or manufacturer for domestically produced or manufactured goods. The tax
payable for imported goods is to be collected by the Customs Department in the
same manner as the customs duty is collected. Regulations are provided to set
off input from output tax, in case of production and services in order to avoid
tax cascading. The tax levied according to the Schedules appended to the said
Law Schedule I lists tax-free items comprising 65 essential and basic
commodities. Schedules II to V carry rates ranging from 5% to 25% depending on
the nature of the goods. The tax will be charged on the landed cost of the
imported goods and on the sale proceeds of the goods produced within the State.
Schedule VI is for specific type of commodities such as cigarette, fuel oil,
liquor, pearl, jade and gems on which tax is chargeable at rates ranging from
30% to 200% and Schedule VII is applicable to services including trade. On the
proceeds of sale from trading business, no tax shall be payable according to
Schedule VII, Serial number 3 in respect of goods imported from abroad. The tax
rates for services are 8% on passenger transport fares, 30% on movie shows, 15%
on other forms of entertainment, 5% on trading and 10% on hotel, lodging and
restaurant services. There are provisions for the exemption of commercial tax
whenever such exemption is considered appropriate, particularly as incentives
for newly established businesses and exports. Every enterprise engaged in the
production of goods and services liable to commercial tax must first be
registered with the Township Revenue Office. An application for registration
must be filled one month before the commencement of business, furnishing an
intimation within 10 days of the commencement of business. The tax is payable
monthly on or before the 10th of each month for gross sales or receipts of the
proceeding month. Quarterly gross sales or receipts must be filed with the
Township Revenue Office within one month of the end of the respective quarter.
An annual return must also be filed within three months of the end of the year
for the purpose of final assessment.
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Value-Added Tax
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| There is by law a 10% Value-Added Tax on hotel and
restaurant services which must be shared between the staff. In addition, there
is also a Value-Added Tax on all goods and services of any sort which goes to
the Government.
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| Rates
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| Bodies corporate registered outside Myanmar having
registered branches in Myanmar are regarded as non-resident and are taxed on
income only arising or accruing in Myanmar at the minimum non-resident rate of
35% or at graduated resident rates of 3% to 50%, whichever is the highest.
Branch profits can be assessed at the option of the Internal Revenue Department
in any of four ways, and this means in practice, that the Department will
choose, whichever they think will raise the greatest revenue. First Method: On
branch account profits as revealed by certified branch accounts. Second Method:
On a proportion of world profits, with adjustment according to the Myanmar Tax
Law. In effect, the world income is divided in the ratio of Myanmar receipts
versus the world receipts and the profits taxable are in that proportion. Third
Method: On deemed profit, namely a reasonable percentage of gross receipts.
Reasonable has been defined as 5% to 10% negotiable. Fourth Method: On any
basis, which the Inland Revenue Department considers to be reasonable. Myanmar
resident corporations having overseas income are liable to Myanmar tax, without
any relief whatsoever for tax paid abroad. There is only one exception which
arises because Myanmar has only one overseas tax treatly and, that is, with the
UK. For this reason, Myanmar corporations normally think in terms of opening
for business their first overseas branch in UK. The Companies Act distinguishes
between public and private corporations. A public corporation is defined is one
that has at least seven members, has the right to advertise and offers shares
to the public and may transfer shares without restriction. A private
corporation has between two and 50 shareholders and restricts share transfers.
However, the tax laws make no such distinction. The 'Acid Test' of 'control and
management in Myanmar or overseas' is applied. Payment of tax is quarterly in
advance and must be paid at the end of June, September, December and March. If
on final assessment underpayment is revealed, there is a late-payment penalty
of 5% to 10% of the shortfall per annum. Tax assessment is based upon the
previous year's income. The fiscal tax year runs from 1st April to the
following 31st March. Corporations cannot choose their own year ends. If tax
returns for the fiscal year are not made before 30th June, i.e. within three
months, there will be a further penalty of 5% to 10%.
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Tax Rates
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| A flat tax rate of 30% is applicable to an enterprise
operating under the Foreign Investment Law and those operating under the
Myanmar Companies Act. A foreign employee of any enterprise operating under the
Foreign Investment Law, for income tax purposes, could be treated as a resident
citizen. As a consequence, progressive tax rates starting from 3% to a maximum
ceiling of 30% is applicable. This progressive rate also applies to
Co-operatives Societies. From the total income, a basic allowance of 20% of
total income subject to a limit of Kyat 6,000, wife and children allowances and
life insurance premium for the employee and spouse are deductible before the
rates are applied. If the wife has no assessable income within the income tax
year, the husband can claim an allowance by way of relief of Kyat 2,500.
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Business & Economy
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More Info:
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Religious
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12 Months' Festivals
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References
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Travel & Tour
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