Myanmar

5 Chapter Tax Laws

    • Overview

      In Myanmar, Income Tax Ordinance, 1974 has been applied as base of the tax law for long time. Regarding this law, both personal income tax and corporation income are defined as “income tax”.
      The tax type in Myanmar is below.
       
      Tax item
      Subject
      Direct tax
      Income tax
      Income tax
      Profit tax
      Property tax
      Tax on extraction of minerals, Royalty on extraction of minerals
      Others
      Various registration tax, Fisheries tax, Stamp duty
      Indirect tax
      Distribution tax
      Commercial tax
      Excise duty
      Property tax
      Land revenue
      Water resources tax, Forest tax
      Tariff
      Tariff
      License fees on imported goods
      These tax items are consisted of national tax and local tax. The national tax accounts for a substantial proportion and it divided into 4types depends on its purpose. First type is tax imposed on domestic production and consumption, are Commercial tax or Excise duty. Second one is tax imposed on income or ownership, are Corporate tax, Private income tax, and Profit tax. Next one is tax imposed on tariff. Last type of tax is imposed on using national assets, are Land revenue, Water resources tax, or Forest tax.
      Bureau of revenue collects income tax, profit tax, commercial tax, stamp duty and so on. Ministry of Home Affairs collects excise duty and land revenue as national tax. There are some more national taxes such as transport tax, water resources tax, and forest tax.
      There are fixed property taxes and water supply and sewer taxes as local tax under the jurisdiction of the YCDC [Yangon City Development Committee] or MCDC [Mandalay City Development Committee].
      Direct tax has same taxpayer and tax burden, and income tax applies on it. Indirect tax has different people who pay taxes and who burden, and commercial tax and tariff apply on it. 
       

    • Tax related to personal income

      When you calculate personal income tax, you need to decide habitability of the target. Depends on it, different income range to be taxed.
      Resident in Myanmar is resident citizens and foreigners residing in Myanmar. In here the foreigners residing in Myanmar means a person who stay in Myanmar more than 183days in a year. Non-resident is non-resident citizens and foreigners not residing in Myanmar. Non-resident citizens is Myanmar’s who doesn’t live in Myanmar and doesn’t get income.
      Range of taxation is below.
       
      Residents
      Non-residents
      Citizens
      Foreigners
      Income occurred in Myanmar
      [Domestic source income]
      Taxation
      Income occurred out of Myanmar
      [Foreign source income]
      Taxation
      Tax exempt
      If you are the resident in Myanmar, regardless of where you received it the income taxed in Myanmar. This is called “Worldwide Income Taxation”. The range or rate of tax is different between foreigner residents and resident citizens. If you are non-residents taxed only for domestic source income occurred in Myanmar.
      Income amount is calculated for each income category after disinfected deductible expenses from the amount of income.
      Salary income contains salary, compensation, bonus and paying outside of salary. And calculate the employment income from the total amount.
      Professional occupational income is calculated by subtracting expenses from service revenue. Professional is doctor/ nurse, lawyer, engineer, architect, video producer, actor/ actress, wither, painter, sculptor, accountant, auditor, teacher and so on.   
      Business income is calculated by allowance expenses from income amount.
      Asset rent income is calculated by allowance expenses from income amount.
      Capital gain is calculated by allowance expenses from income amount. The selling price is calculated according to Income-Tax Rules.
      There are some examples of those that will be tax free income of the income amount.
      Income received from religious and charitable organizations
      Income used only for the purpose of religious and charitable
      Local government income
      Pension/ Insurance/ Dividend
      Income allowance
      Item
      allowance amount [kyat]
      Basic allowance
      20% of total income [upper limit is 10,000,000]
      Spouse allowance
      300,000
      Children allowance [for one]
      200,000 per person
      Life insurance premium allowance
      Amount of payment
      Donation allowance
      Limited to 25% of total income
       
      Income tax rate on salary income
      Taxable income [kyat]
      Tax rate
      1~500,000
      1%
      500,000~1,000,000
      2%
      1,000,001~1,500,000
      3%
      1,500,001~2,000,000
      4%
      2,000,001~3,000,000
      5%
      3,000,001~4,000,000
      6%
      4,000,001~6,000,000
      7%
      6,000,001~8,000,000
      9%
      8,000,001~10,000,000
      11%
      10,000,001~15,000,000
      13%
      15,000,001~20,000,000
      15%
      20,000,001~
      20%
       
      Income tax rate on business income and compensation                   
      Taxable income [kyat]
      Tax rate
      1~500,000
      2%
      500,000~1,000,000
      4%
      1,000,001~2,000,000
      6%
      2,000,001~3,000,000
      8%
      3,000,001~4,000,000
      10%
      4,000,001~6,000,000
      12%
      6,000,001~8,000,000
      14%
      8,000,001~10,000,000
      16%
      10,000,001~15,000,000
      18%
      15,000,001~20,000,000
      20%
      20,000,001~30,000,000
      25%
      30,000,001~
      30%
       
      Income tax rate on foreigner and non-residents
      Type of income
      Tax rate
      Income gained outside of Myanmar by non-resident citizen except salary income
      10%
      Non-resident foreigner who engaged in national projects with special permission
      20%
      Income on non-resident foreigner
      35%
                                                                                         
      Tax exempt of personal income
      Type of income
      Total amount of income [kyat]
      Salary income
      Limited to 1,440,000
      Business income
      Limited to 1,200,000
      Cooperative
      Limited to 1,200,000
      Capital gain
      Limited to 5,000,000
       
      Those who have taxable income during the tax year must submit an income tax declaration within three months after the taxable year. Those who have only salary income, the employer submits an annual salary calculator within three months after taxable year.
       

    • Corporation income

      When you calculate corporation income tax, you need to decide habitability of the target. The tax depends on different income range.

      Resident in Myanmar is Domestic corporation and Foreigner resident corporation in Myanmar. Range of taxation is same as the case of personal income.

      The income amount to be taxable for corporate income tax is calculated by deducting expense from benefits. Benefits include business income, capital gain, interest / dividend income, real estate income, royalty income, service fee income and commission income. It is not included in benefit that dividend received from the company in Myanmar. All cost which is necessary for normal business is included in expenses in principle. However, there are restrictions on reserves, fixed asset removal losses, and depreciation expenses.
       
      Corporate income tax rate
      Corporate form
      Corporate tax rate
      Notification
      Corporation in Myanmar
      25%
      Notification No.111
      Corporation that have permission to invest from MIC
      Non-resident foreign company engaged in Specified company project
      Branch office of foreign corporation
      35%
      Branch office of foreign corporation with permission to invest from MIC
      25%
      Corporation
      2~30%
      Notification No.109
      Annual tax return form must submit within three months after the taxable year.

    • Commercial tax

      Commercial tax in Myanmar was enacted instead of Goods and services tax. If you do business activities in Myanmar, commercial tax payment is obligatory. Commercial tax is VAT taxed on the sale of goods and provision of services, and transactions related to import and export are also taxed. Commercial tax payment is obligatory to those; importer, manufacturer, corporation, business group, merged company, and certain services providers such as trade, transport, and hotel/ restaurant.
       
      Commercial tax rate
      Target items and services
      Tax rate
      Grounds for notice
      Items defined as schedule 1 [rice/wheat, vegetable, fish]
      Duty free
      Commercial tax law, 1990
      Items defined as schedule 2~5
      5%
      Notification 115/2012, dated 15 March 2012
      Items defined as schedule 6 [natural gas, luxury vehicle]
      8~100%
      Notification 116/2012, dated 15 March 2012
      Service defined as schedule 7 [sightseeing, interior design, legal affairs, audit, advertisement]
      5%
      Notification 117/2012, dated 15 March 2012
      However, commercial tax is free when you export those items to outside of Myanmar except those items; natural gas, oil, jade, rare metal, solid wood materials.
       
      All who do commercial business in Myanmar should apply for registration to the tax office one month before starting the business. And you need to notice the date of starting the business to the tax office, 10days before starting the business.
       

    • Tariff

      Tariff in Myanmar is collected based on Tariff Law. All imported goods are the target of taxation on tariff. Tax base value is CIF price added 0.5% to amount. There are some items out of the target of taxation.
      When you import raw materials recognized as consigned processed goods according to prescribed procedures of MIC or related government agencies, you can receive a tax exemption. 

    • Other national taxes

      Stamp duty is taxation to both trial stamp and non-trial stamp. Trial stamp is collected on the judicial charge fee law. The amount of stamp duty is stipulated for each target. Both of trial stamp and non-trial stamp, you need to indicate that you paid stamp duty by stamp or affix.
       
       

    • Withholding tax system

      Part of the income tax that is taxed on the below payment must be withheld by the employer and paid to the taxing authorities.
      ・Interest
      ・Royalty
      ・Payment by an organization established in accordance with the Myanmar rule and the　payment is for purchase of domestic products and using services
      ・Payment by foreign corporation and the payment is for purchase of domestic products and using services.
       
      Withholding tax rate
      Type of income
      Tax rate
      Resident
      Non-resident
      Interest
       
      15.0%
      Divided
       
       
      Royalty
      15.0%
      20.0%
      Payment contracted with domestic corporation
      2.0%
      3.5%
      Payment contracted with foreign corporation
      2.0%
      3.5%
      Withholding tax collected by payer should be paid to the authority within 7days from collected.