Worldwide Corporate Tax Guide 2021
1202
Myanmar ey.com/GlobalTaxGuides
Yangon
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EY +95 (1) 9253493-9 Unit #20-06 to 10, Level 20, Junction City Tower No. 3A Bogyoke Aung San Road Pabedan Township, Yangon Myanmar Principal Tax Contacts Naing Naing San Moe Moe Aye Tin Win
+95 (1) 9253493-9 Email: naing-naing.san@mm.ey.com +95 (1) 9253493-9 Email: moe-moe.aye@mm.ey.com +95 (1) 9253493-9 Email: tin.win@mm.ey.com
A. At a glance Corporate Income Tax Rate (%) Capital Gains Tax Rate (%) Overseas Corporation Tax Rate (%) Withholding Tax (%) Dividends Interest Royalties for the Use of Licenses, Trademarks, Patents, etc. Payments for the Purchase of Goods in Myanmar and Payments for Services Branch Remittance Tax Net Operating Losses (Years) Carryback Carryforward
25 10 (a) 25 0 15 (b)(c) 10/15 (b)(d) 2/2.5 (e) 0 0 3
(a) The 10% rate applies to both resident and nonresident companies. However, entities in Myanmar’s oil and gas exploration, extraction and production sector are subject to increased capital gains tax rates ranging from 40% to 50%. (b) Under Myanmar’s tax treaties, certain types of interest and royalties are subject to reduced rates or are exempt from tax (see Section F). (c) This withholding tax applies to payments to nonresidents. However, such withholding tax is not applicable to an overseas corporation in Myanmar. (d) The 10% rate applies to residents, and the 15% rate applies to nonresidents. (e) The 2% rate applies to payments for goods and services made by government organizations to residents. The 2% tax is imposed on the amount by which each payment exceeds MMK1 million. The 2.5% rate applies to all payments to nonresidents for services performed in Myanmar. The 0% rate applies to payments to nonresidents for services entirely performed outside Myanmar, but it requires an up-front written confirmation from the Myanmar tax authorities. The 2.5% tax is imposed on the entire amount of the payment. Payments for goods or services between residents are exempt from withholding tax.
B. Taxes on corporate income and gains Corporate income tax. Myanmar resident companies are subject to corporate income tax on their worldwide income. Myanmar resident companies are those incorporated in Myanmar. Overseas
M YA N M A R 1203
corporations are subject to Myanmar tax on their Myanmarsource income only. Rates of corporate tax. Myanmar resident companies and over-
seas corporations are subject to corporate income tax at a flat rate of 25% on net taxable profits.
Tax incentives. Companies registered under the Myanmar Invest-
ment Law can be granted a wide range of tax incentives, including the following: • Corporate income tax exemption for investments in the following locations: — Three years for adequately developed regions — Five years for moderately developed regions — Seven years for less developed regions • Corporate income tax exemption for profits reinvested within one year • Deductions of accelerated depreciation • Deductions of certain research and development expenditures • Customs duty and commercial tax exemption for machinery, equipment, tools and machinery parts during the construction or expansion period • Customs duty and commercial tax exemption for imported raw materials and semifinished goods for re-export finished goods • Commercial tax exemption for export sales except for exports of crude oil and electric power (this incentive applies with or without a Myanmar Investment Commission [MIC] permit) • Right to pay income tax for foreign investors at the rate applicable to resident citizens Capital gains. Capital gains are assessed separately from business
income and are subject to a flat rate of 10% for both Myanmar resident companies and non-Myanmar resident companies. However, entities in the Myanmar oil and gas exploration, extraction and production sector are subject to increased capital gains tax rates ranging from 40% to 50%. The companies must declare and pay capital gains tax within 30 days of the date of the sale, exchange or transfer by other means of capital assets. Administration. The Myanmar fiscal year runs from 1 October to 30 September.
Companies under the official-assessment system (OAS) must file corporate income tax returns, together with audited financial statements, with the Myanmar Internal Revenue Department within three months after the end of the fiscal year (that is, by the end of December). Companies under the self-assessment system (SAS) are not required to attach the audited financial statements for annual corporate income tax return filing. However, detailed schedules and supporting documents are required to be provided to the relevant tax office. Myanmar’s laws provide that tax payments must be made on a quarterly basis.
1204 M YA N M A R Dividends. Dividends paid from after-tax net profits are not sub-
ject to any further taxes in Myanmar.
Foreign tax relief. The Myanmar domestic tax law does not
provide for a foreign tax credit. However, Myanmar has entered into double tax treaties with eight countries. In general, these treaties provide for a foreign tax credit that is limited to the lower of the foreign tax and the amount of Myanmar tax calculated on such income.
C. Determination of trading income General. Corporate income tax is based on either the audited
financial statements or management accounts, subject to certain adjustments. In general, expenses are deductible for tax purposes if they are incurred wholly and exclusively for the purpose of generating income.
Depreciation and amortization allowance. A company may depre-
ciate its fixed assets in accordance with the following depreciation rates prescribed by the Myanmar Income Tax Law and Regulations. Asset
Percentage of initial cost per year (%)
Buildings Furniture and fittings installed in buildings Machinery and plant Machine equipment Waterway transport vehicles Road transport vehicles Miscellaneous (office equipment and others) Other general work assets
1.25 to 10 5 to 10 5 to 10 2.5 to 20 5 to 10 12.5 to 20 10 to 20 2.5 to 20
Relief for losses. Under the Myanmar Income Tax Law, operating
tax losses can be carried forward and offset against profits in the following three consecutive years. Loss carrybacks are not allowed.
Groups of companies. The Myanmar tax law does not include any
provisions for consolidated treatment under which companies within a group may be treated as one tax entity. Each individual company must file its income tax return and pay its taxes.
D. Other significant taxes The following are other significant taxes. Nature of tax
Commercial tax; generally imposed on goods sold, services rendered and imports; certain items and services specified under the law may be exempt from commercial tax Value of goods sold in Myanmar except for 43 types of exempt goods Value of services in Myanmar except for 33 types of exempt services Landed cost of imported goods
Rate (%)
5 5 5
M YA N M A R 1205 Nature of tax
Rate (%)
Landed cost, including specific goods tax of imported specific goods 5 Sale amount, including specific goods tax of specific goods produced in Myanmar 5 Buildings developed and sold in Myanmar 3 Sale or importation of gold jewelry 1 Exports of certain goods (crude oil and electricity) 5/8 Specific goods tax; imposed on 14 types of specific goods Importation of specific goods into the country and domestic production of specific goods Various Natural resources’ specific goods (wood logs and conversions) exported to other countries; the rates of specific goods tax on export sales apply and the exporter can offset the input tax against the output tax 10 Gemstones tax Sale or importation of gemstones 5 to 11 Export sales Not specified Stamp duty; imposed on various transactions; the most relevant rates are listed below Value of sale or transfer of immovable property 4 Value of whole amount for rental of immovable property for contract period of less than one year 0.5 Value of average annual rent for rental of immovable property for one-to-three year contract periods 0.5 Value of average annual rent for rental of immovable property for contract periods longer than three years 2 Value of premium or deposit for rental of immovable property 2 Value of sale or transfer of shares 0.1 Value of loan amount for loan agreements 0.5 Value of service amount for service agreements 1 (capped at MMK150,000)
E. Miscellaneous matters Foreign-exchange controls. The repatriation and/or remittance of foreign currency out of Myanmar requires the permission of the Foreign Exchange Control Department of the Central Bank of Myanmar. Transfer pricing. Myanmar does not have any transfer-pricing
rules.
Thin capitalization. Myanmar does not have any formal thincapitalization rules.
F. Treaty withholding tax rates The rates in the following table reflect the lower of the treaty rate and the rate under domestic tax law.
1206 M YA N M A R Dividends %
India Korea (South) Laos Malaysia Singapore Thailand United Kingdom Vietnam Non-treaty jurisdictions
0 0 0 0 0 0 0 0 0
Interest %
15 15 15 15 15 15 15 15 15
(a)(b) (a)(b) (a)(b) (a)(b) (a)(c) (a)(b) (d) (a)(b)
Royalties %
15 15 15 15 15 15 15 15 15
(f) (g)(h) (f) (f) (g)(h) (h)(i)(j) (e) (f)
(a) The following types of interest are exempt from tax: • Interest paid to the government, a political subdivision or a local authority • Interest paid to the central bank as prescribed under an applicable tax treaty (b) The rate is reduced to 10% if the beneficial owner of the interest is a resident of a contracting state. (c) The rate is reduced to 8% for Singapore if the recipient of the interest is a financial institution or a bank and to 10% in all other cases. (d) The UK tax treaty does not provide for a reduced withholding tax rate for interest. (e) Royalties are exempt from tax if the recipient of does not have a permanent establishment in the other contracting state and if the amount of royalties represents a fair and reasonable consideration for the rights for which the royalties are paid. (f) The rate is reduced to 10% if the beneficial owner of the royalties is a resident of India, Laos, Malaysia or Vietnam. (g) The rate is reduced to 10% for royalties paid for patents, designs, models, plans, secret formulas or processes, industrial, commercial or scientific equipment or information concerning industrial, commercial or scientific experience. (h) The rate is 15% for royalties in other cases. (i) The rate is reduced to 5% for royalties paid for copyrights of literary, artistic or scientific works. (j) The rate is reduced to 10% for royalties paid for services of a managerial or consultancy nature or for information concerning industrial, commercial or scientific experience.
Myanmar has signed tax treaties with Bangladesh and Indonesia, but these treaties have not yet been ratified.