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Income Tax in Myanmar



Individual - Taxes on personal income:

Resident nationals and foreigners are taxed on their worldwide income under the Myanmar Income Tax Act.

Non-resident foreigners are taxed only on income derived from sources within Myanmar.

Foreigners working for Union of Myanmar Foreign Investment Law (MFIL) or Myanmar Investment Law (MIL) companies may be taxed at the same tax rates as a tax resident, regardless of their period of stay in Myanmar, under the tax incentives that may be granted to the MFIL/MIL companies.

Personal income tax rates:

Type of taxpayer or income
Tax rate
Salaries:

Resident foreigners
Progressive rates from 1% to 25%
Non-resident foreigners
Progressive rates from 1% to 25%
Other income:

Resident nationals and foreigners
Progressive rates from 1% to 25%
Non-resident foreigners
25%
Non-resident nationals
10%
Capital gains tax:

Resident nationals and foreigners
10%
Non-resident foreigners
10%
Rental income
10% on gross

Note: No tax is payable if total income under salaries does not exceed 4.8 million Myanmar kyats (MMK) a year.

Individual – Residence:

A person is a tax resident in Myanmar if the individual is 'domiciled in' or has a 'principal place of abode' in Myanmar. Non-resident Myanmar nationals mean those who live and earn income from employment outside Myanmar for any period of the year.

Foreigners who reside in Myanmar for at least 183 days during an income year are considered resident foreigners.

Foreigners who reside in Myanmar for less than 183 days during an income year are considered non-resident foreigners, unless they are working for MFIL/MIL companies, in which case they could be treated as resident foreigners, regardless of their period of stay in Myanmar, under the relevant tax incentive that may be granted to the MFIL/MIL companies.

Individual - Income determination:

Employment income and the following non-employment income are taxable for PIT purposes:

·        Business income.
·        Income from a profession.
·        Capital gains.
·        Other income from investments.

Employment income:

The definition of taxable employment income is broad and includes salaries, wages, annuities, bonuses, awards, and any fees or commissions received in lieu of or in addition to any salary and wages received or receivable by one from one's employer.

Business income:

Business income includes income from moveable properties, royalties, and interest.

Income from a profession is defined as income from the rendering of a service with one’s skill for fees and includes services rendered by doctors, nurses, lawyers, engineers, architects, film stars, theatrical artists, writers, painters, sculptors, accountants, auditors, astrologers, and teachers.

Capital gains:

Income from capital gains is assessed separately. See Capital gains tax in the Other taxes section for details.

Dividend income:

Myanmar has a one-tier corporate tax system, under which share of profits received by a Myanmar taxpayer from an association of persons (i.e. partnerships, joint ventures, companies, etc.) are exempted from income tax.

Exempt income:

No tax is payable on non-employment income of not more than MMK 4.8 million and on capital gains if the sales proceeds are not more than MMK 5 million.




Individual - Tax administration:

Taxable period

The taxable period of an individual is from 1 April to 31 March. Income earned during the income tax year is assessed to tax in the assessment year, which is the year following the income tax year.

Tax returns

In general, income tax returns must be filed within three months from the end of the income year (i.e. by 30 June after the end of the income year). Tax returns for capital gains must be filed within 30 days from the date of disposal of the capital assets. If a taxpayer discontinues one’s business, returns must be filed within one month from the date of discontinuance of business. The failure of a taxpayer to file income tax returns, knowing that assessable income has been obtained, is deemed to have ‘fraudulent intention’.

Payment of tax

Advance payments are made in quarterly instalments throughout the income tax year based on the estimated total income for the year. The advance payments and any taxes withheld are creditable against the final tax liability. The date for settling the final tax liability is specified in the notice of demand issued by the IRD.

An employer is responsible for deducting income tax due from salaries at the time of payment to employees and must pay the amount within seven days from the date of deduction. If the employer fails to deduct and pay the tax, the employer is deemed to be a defaulter and held responsible for such payment. In addition, the employer is also responsible for filing the statement of annual salary within three months after the end of the income year, and failure to file within the stipulated deadline may result in a penalty of 10% of the tax to be deducted on the annual salaries.

Resident foreigners are subject to a monthly deduction of tax on salary.

Tax audit process:

Under the Income Tax Law, if it is found that there is a fraudulent intention to evade tax, the assessment or reassessment of income tax can be made at any time on the income that has escaped assessment of tax.

Failure by a taxpayer to file a return of income knowing that assessable income has been obtained, failure to comply with the notice of the IRD to submit accounts and documents, including the tax return and profit and loss accounts within the time prescribed, or submitting forged instruments and other documents are included within the meaning of fraudulent intention. If the tax authority in the course of investigation finds that a taxpayer has concealed income or particulars relating to income, the taxpayer may be permitted to fully disclose the facts within the specified time. In addition, the taxpayer must pay a penalty equal to 100% of the tax increased on account of the concealment. If the taxpayer fails to disclose the particulars within the specified time or discloses less than the income concealed, the taxpayer will also be subject to prosecution, in addition to paying the tax and penalty. If the taxpayer is found guilty, the taxpayer may be punishable with imprisonment for between three to ten years.



Statute of limitations:

The statute of limitation to raise an assessment is three years after the financial year end. It does not apply in cases of fraudulent default. Mere filing of the income return and payment of advance tax in time does not constitute a final tax assessment.

Taxes on corporate income:

Foreign investors may register their companies under the Myanmar Companies Act (CA) or in conjunction with the Myanmar Investment Law (MIL) or Myanmar Special Economic Zone Law (Myanmar SEZ Law). The new MIL 2016 was enacted on 18 October 2016. The new MIL is a consolidation of the Myanmar Citizen Investment Law (2013) and the Myanmar Foreign Investment Law (MFIL) (2012). The Myanmar Citizen Investment Law and MFIL have been repealed with effect from 18 October 2016. New rules governing the implementation of the new MIL were enacted on 30 March 2017. Investment permits issued under the old investment laws continue to be valid.

The differences between companies registered under the CA and the Myanmar Investment Commission (MIC)/SEZ are in relation to their eligibility for tax incentives and longer land use terms, as well as minimum foreign share capital requirements.

Generally, resident companies are taxed on a worldwide basis, and, as such, income from sources outside Myanmar is taxable.

Non-resident companies are taxed only on income derived from sources within Myanmar. Income received from any capital assets within Myanmar and from any source of income within Myanmar is deemed to be income received within Myanmar. The income is generally subject to tax under the normal rules for residents.

A company registered under the MIC/SEZ is entitled to enjoy certain exemptions and relief from taxes.

Type of taxpayer or income
Tax rate (%)
Companies incorporated in Myanmar under the Myanmar CA or Special Companies Act
25
Enterprises operating under the MIC or SEZ
25
Non-resident foreign organisations registered under the Myanmar CA or Special Companies Act, such as a branch of a foreign company
25

Corporate residence:

A resident company is a company as defined and formed under the Myanmar CA 1913 or any other existing law of Myanmar.

A non-resident company is one that is not formed under the Myanmar CA 1913 or any other existing law of Myanmar. Generally, foreign branches registered in Myanmar are deemed to be non-resident companies.

Permanent establishment (PE):

Currently, there is no definition of a PE under the Myanmar Income Tax Act. In current practice, the Myanmar tax authorities seek to collect taxes from a non-resident foreigner on its income received from Myanmar by way of a WHT mechanism, regardless of whether the foreigner has a PE in Myanmar or not. The term ‘PE’ may be defined in the tax treaties that Myanmar has with other countries. Subject to the relevant tax treaty, a foreigner who is tax resident of the treaty country may not be subject to Myanmar taxes if it does not have a PE in Myanmar.

Tax administration:

Taxable period

The taxable period of a company is the same as its financial year (income year), which is from 1 April to 31 March. Income earned during the financial year is assessed to tax in the assessment year, which is the year following the financial year.

Tax returns

In general, annual income tax returns must be filed within three months from the end of the financial year, i.e. by 30 June of the financial year.
Tax returns for capital gains must be filed within 30 days from the date of disposal of the capital assets.

If a taxpayer discontinues one’s business, returns must be filed within one month from the date of discontinuance of business.

The failure of a taxpayer to file income tax returns, knowing that assessable income has been obtained, is deemed to have ‘fraudulent intention’.

Payment of tax

Advance corporate tax payments are made in quarterly instalments within ten days from the end of the relevant quarter throughout the income tax year based on the estimated total income for the year. The advance payments and any taxes withheld are creditable against the final tax liability. The date for settling the final tax liability is specified in the notice of demand issued by the IRD.

Capital gains tax needs to be paid within 30 days from the date of disposal of capital assets.

Tax audit process:

Under the Myanmar Income Tax Law, if it is found that there is a fraudulent intention to evade tax, the assessment or reassessment of income tax can be made at any time on the income that has escaped assessment of tax.

Failure by a taxpayer to file a return of income knowing that assessable income has been obtained, failure to comply with the notice of the IRD to submit accounts and documents, including the tax return and profit and loss accounts within the time prescribed, or submitting forged instruments and other documents are included within the meaning of fraudulent intention. If the tax authority in the course of investigation finds that a taxpayer has concealed income or particulars relating to income, the taxpayer may be permitted to fully disclose the facts within the specified time. In addition, the taxpayer must pay a penalty equal to 100% of the tax increased on account of the concealment. If the taxpayer fails to disclose the particulars within the specified time or discloses less than the income concealed, the taxpayer will also be subject to prosecution, in addition to paying the tax and penalty. If the taxpayer is found guilty, the taxpayer may be punishable with imprisonment for between three to ten years.

Statute of limitations:

The statute of limitation to raise an assessment is three years after the financial year end. It does not apply in cases of fraudulent default. Mere filing of the income return and payment of advance tax in time does not constitute a final tax assessment.


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Note: Information placed here in above is only for general perception. This may not reflect the latest status on law and may have changed in recent time. Please seek our professional opinion before applying the provision. Thanks.





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This blog is Created by CA Anil Kumar Jain.