I. Tax System in Myanmar1. The Constitution of the Republic ofthe Union of Myanmar, in Article 389, pronounces “Everycitizen has the duty to pay taxes to be levied according to the law”. TheGovernment has undertaken the tax reform program from 1988 and enhanced 2010onwards. In accordance with the reform process of the country, Internal RevenueDepartment under Ministry of Planning and Finance is implementing Tax policyand Tax administration reform.
The method to determine tax liabilities inMyanmar has changed from official assessment system to self-assessment system(SAS) with the establishing of large taxpayers office in 2014 and medium taxpayersoffice in 2017. There are five major taxes in Myanmar such as Income Tax, CommercialTax, Special Goods Tax, Stamp Duties and State Lottery.2. Thedetailed types of taxes and duties collected and administering bodies are asfollows: No.
Types of Taxes Administering Bodies 1 Excise duty Ministry of Home Affairs 2 Commercial tax Ministry of Planning and Finance 3 Import license fees Ministry of Commerce 4 State lottery Ministry of Planning and Finance 5 Fees for vehicle, vehicle license and business license Ministry of Rail Transportation 6 Stamp duty Ministry of Planning and Finance 7 Pearl oyster tissue implant tax Ministry of Natural Resources and Environmental Conservation 8 Fees for travelling license, hotel and guest-house license, travelers transporting license, tourism guide enterprise license Ministry of Hotel & Tourism 9 Special goods tax Ministry of Planning and Finance 10 Income tax Ministry of Planning and Finance 11 Customs Duty Ministry of Planning and Finance 12 Taxes collected on land Ministry of Home Affairs 13 Water tax Nay Pyi Taw Council 14 Embankment tax Ministry of Home Affairs 15 Forest product tax Ministry of Natural Resources and Environmental Conservation 16 Minerals extraction tax (not including industrial raw materials, minerals and decorative stones) Ministry of Home Affairs 17 Fisheries tax Ministry of Agriculture and Irrigation 18 Oil and natural gas extraction tax Ministry of Electricity and Energy 19 Mineral tax and gems stones tax Ministry of Natural Resources and Environmental Conservation 20 Communication service tax Ministry of Communication, Information Technology 21 Gratis tax collected on the generation of electricity from water energy Ministry of Electricity and Energy 3. Taxes onIncome”Income” is defined as theprofits and other gains. Income tax is levied on total income under each of theheads of income: (i) salaries; (ii) profession; (iii) business; (iv) property;(v) capital gains; (vi) income from undisclosed sources; (vii) other sources ofincome. If a personwhose income exceed kyats 4,800,000 in a year is necessary to pay income taxbased on the total his or her income. Income tax will be levied on total incomeafter deduction of the allowances in accordance with Income Tax Law section (6).If the income from salary or profession, business and other source of income isabove Kyats 4,800,000, the income will be levied as follows: Brackets of taxable income (Kyats) Income Tax Rate From To 1 2,000,000 0% 2,000,001 5,000,000 5% 5,000,001 10,000,000 10% 10,000,001 20,000,000 15% 20,000,001 30,000,000 20% 30,000,001 and above 25% For the company, businessand state-owned enterprises, 25% income tax are levied on the total net profitbefore deduction the allowance. Property Tax is managed by the relevant local regulations.
The tax is charged on the annual value of land and the rate and calculation varyon the purpose of use of the lands. If the total value of theassets sold , exchanged or otherwise transferred within one year is not abovekyats 10,000,000 , income tax will not be levied on a capital gain. If thetotal value is above kyats 10,000,000 , 10% income tax shall be assessed, inkyats or foreign currency, on the capital gain of an individual person or agroup of persons except from the oil and gas companies1. In the case of incomefrom undisclosed source, the tax will be levied 30% on undisclosed sourceincome for citizens and foreigners before deduction of described tax reliefsand allowances. If the citizen can approve the source of income used for buying,constructing or acquiring any capital assets or establishing a new business orexpanding a current business, the income will be subtracted from the totalundisclosed income and the balance of income will be taxed with the ratedescribed in table below. Income Income tax rate 1 – 30,000,000 15% 30,000,001 – 100,000,000 20% 100,000,001 and above 30% 4.
CommercialTaxThereare four types of activities needed to pay commercial tax such as localproduction and sales of goods, imported goods, trading and provision ofservices. Apart from the goods that specified as commercial tax exemption, 5%commercial tax is charged on the selling prices of goods produced and sold inthe country or the import goods’ landed cost. 5% commercial tax is levied onthe domestic services except from the services list that described as nocommercial tax is levied. In the case of selling and constructing ofbuildings/apartments and condos, 3% commercial tax is levied and 1% on the saleproceeds from selling gold jewelries.
Exporting goods except certain naturalresources are not necessary to pay commercial tax. 5. SpecialGoods Tax SpecialGood Tax is levied on the imported specific goods, domestic production ofspecific goods and the exported specific goods. There are 17 types of specialgoods and some are SGT exemptions. Threshold does not exists in special goods exceptfrom domestic production of tobacco, cheroots and cigars which does not exceed minimumthreshold of Kyats 20 million. If the special goods are imported goods, thespecial goods tax will be levied on the landed costs.
Special Goods Tax islevied from 5% to 80% depending on the types of goods. II. Current issues in Myanmar Although reform in tax policy andadministration has been undertaken, challenges and issues still remain in Myanmar’s tax system. Even inthe Internal Revenue Department which is responsible for the taxation, theknowledge on taxation is limited and it is also necessary to enhance thecapacity of the officials. Human resource is also limited in the Department tohandle the tasks related with taxes effectively and efficiently.
Awareness ofTaxpayers on tax is required to be promoted. 1 Inoil and gas sector, the income tax is levied according to the profits. Up toequivalent kyats 100 billion profits – 40% , From equivalent kyats 100billion+1 to 150 billion profits– 45% , Equivalent kyats 150 billion+1 andabove profits – 50%