Tax & Transfer Pricing Archives

DFDL is delighted to announce the release of the 2025 edition of the Myanmar Tax Guide. This guide is a comprehensive and practical resource for anyone who wants to learn more about Myanmar’s tax system, the latest tax developments, and the tax implications of doing business in various sectors. Whether you are a foreign investor, a local entrepreneur, or a tax professional, you will find this guide useful and informative.

The 2025 Myanmar Tax Guide covers topics such as:

The legal framework and administration of taxation in Myanmar
The types and rates of taxes applicable to different entities and transactions
The tax incentives and exemptions available for certain activities and industries
The tax obligations and compliance procedures for taxpayers.

To download a complimentary copy of the 2025 Myanmar Tax Guide, please click on the below button:

Jack Sheehan

Partner, Head of Regional Tax

Lao PDR, Myanmar, Thailand

Overview

On the basis of Article 7 of the Law on Taxation (Royal Kram No. NS/RK/0523/004, dated 16 May 2023), the General Department of Taxation (“GDT“) has introduced a formal notification procedure via Notification 9124 dated 21 March 2025 for enterprises whose tax declarations or payments appear irregular. The move forms part of the GDT’s broader push to strengthen voluntary compliance and enhance procedural transparency through a digitized, verifiable system.

Key Developments

Effective immediately, enterprises may receive a Notification of Incorrect Tax Declaration and Payment if discrepancies are identified by the Tax Administration. Notifications will be delivered either:

in hard copy to the enterprise’s physical address, or
electronically via the GDT’s information technology platform.

Each notification will include:

A summary of detected irregularities, and
A detailed table of the relevant transactions.

Required Actions
Recipients of the notification letter must respond within 30 working days after receiving the notification letter t by choosing one of the following options:

1. Acceptance of Findings:

Settle the tax amount and any additional tax (the monthly interest rate is exempted one (1) time per one (1) calendar year) via a commercial bank (with MoU with MEF) or through the GDT’s e-Payment System using the included barcode or QR Code.
The system will automatically reconcile the amended transactions within the taxpayer’s account.

2. Dispute the Findings:

Submit a written explanation with supporting documentation to contest all or part of the identified discrepancies.
Responses may be submitted in conjunction with a GDT document collection order or directly via the GDT e-Administration portal.

3. Failure to Respond:

If no response is received within 30 working days, a second notification will be issued.
If taxpayers accept the underpaid tax amount and additional tax, taxpayers must make the tax payment to the GDT within 30 working days after receiving the second notification letter. Please note that the monthly interest rate of 1.5% will not be exempted.
Continued inaction may result in the outstanding tax being treated as a formal tax debt, triggering tax audit or enforcement measures as stipulated under applicable laws.

Verification and Fraud Prevention

Enterprises are urged to verify the authenticity of any official GDT correspondence using the GDT Check & Track program:

All official notifications must feature a valid QR Code and barcode number.
Verification can be completed by scanning the QR Code via the “Check Documents” function.

Implications for Taxpayers

This development reflects Cambodia’s continuing shift toward automated compliance and risk-based enforcement. Enterprises are encouraged to proactively review their filings and maintain meticulous documentation to support declared tax positions. Prompt and accurate responses to GDT notifications can significantly reduce the risk of penalties or further scrutiny.

Tax services required to be undertaken by a licensed tax agent in Cambodia are provided by Mekong Tax Services Co., Ltd, a member of DFDL and licensed as a Cambodian tax agent under license number – TA201701018.

Clint O'Connell

Partner, Managing Director, Cambodia

Cambodia

Via Instruction 19116 dated 20 June 2025 Cambodia’s General Department of Taxation (“GDT”) has released detailed guidance on the tax treatment of board members and company directors, offering clarity on how compensation—whether domestic or offshore—is categorized as salary and subject Tax on Salary (“ToS“) or as services and subject to Withholding Tax (“WHT“). This moves underscores Cambodia’s commitment to applying substance-over-form principles, particularly in the context of cross-border personnel arrangements.

Key Legal References:

Article 42, Law on Taxation (Promulgated May 2023)
Prakas No. 575 MEF.P.GDT (Issued September 2024), Articles 4 and 7
Articles 25 and 26, Law on Taxation – governing WHT and intercompany allocations
Instruction 19116 Tax obligations for Board Members and Directors dated 20 June 2025

Click “Download” to read DFDL Cambodia’s Summary of Core Guidance, which outlines:

Employment status determines tax treatment
The location of payment is irrelevant
Intercompany cost allocations may trigger withholding tax (WHT)

Clint O'Connell

Partner, Managing Director, Cambodia

Cambodia

On 28 April 2025, the Governments of the Kingdom of Cambodia and the Socialist Republic of Vietnam signed a new Arrangement on Bilateral Trade Enhancement (“Bilateral Agreement”), reaffirming their shared commitment to deepening economic cooperation and facilitating cross-border trade.

To support the implementation of the Bilateral Agreement, Cambodia’s Ministry of Commerce issued Notification No. 1712 on 3 June 2025, which formally initiates the application of the Bilateral Agreement’s provisions for 2025–2026.

DFDL Cambodia has summarized the key aspects of the Bilateral Agreement into three main points:

What are the key benefits for the Cambodian market?
What are the key benefits for Cambodian exporters?
What are the key benefits for Cambodian importers?

Click ‘Download‘ to read the full briefing outlines the 3 main points above and the two annexes detailing the goods and commodities eligible for Special Preferential Import Duty between the two countries.

Clint O'Connell

Partner, Managing Director, Cambodia

Cambodia

In this publication, we delve into the tax planning considerations for corporate mergers and acquisitions in Thailand. We provide an overview of the various forms of mergers and acquisitions recognized under Thai law, including share acquisitions, asset acquisitions, entire business transfers, amalgamations, and corporate mergers. We examine the Thai tax rules applicable to financing, the role of Thailand’s tax treaties in mitigating potential tax liabilities, and strategies for structuring acquisitions using holding companies.

To read our new publication, please click the download button below:

Jack Sheehan

Partner, Head of Regional Tax

Lao PDR, Myanmar, Thailand

On 12 May 2025, the General Department of Taxation (“GDT”) issued Instruction 14256, providing guidance on related party loans. This instruction, issued under Prakas 574 MEF.Prk dated 19 September 2024, repeals several earlier regulations – Circular No. 151 (22 January 2014), Instruction No. 11946 (21 August 2018), and Instruction No. 10979 (25 May 2022) -and reaffirms the GDT’s evolving approach to transfer pricing for intercompany financing.

Key provisions of Instruction 14256

Documentation-based approach for setting interest rates

Enterprises may apply a mutually agreed interest rate on related party loans without the need to comply with the Arm’s Length Principle, provided robust supporting documentation is maintained, including:

An intercompany loan agreement that specifies the terms of loan and repayment obligations.
A business plan or current/ forecasted financial statements.
Board of Directors’ approval (not applicable for single-member private limited companies)

Interest rate ceiling based on market average

The interest rate applied must not exceed the prevailing annual lending rate of the five largest banks in Cambodia, as published annually by the GDT.

Exclusion for short-term advances

Cash advances repaid within one year are excluded from the definition of “loans” for transfer pricing purposes and are not subject to these rules.

No reporting requirement to GDT

There is no requirement to report loan transactions – whether with related or unrelated parties – to the GDT.

DFDL Commentary

While Instruction 14256 appears substantively similar to Instruction 10979 and does not introduce significant policy changes, it serves important regulatory functions. It reflects the GDT’s effort to consolidate guidance, enhance legal clarity, and reaffirms the principles established in Instruction 10979, in addition to providing continued consistency in the treatment of related party loans.

The emphasis on proper documentation and adherence to the prescribed interest rate ceiling remains critical. Enterprises must ensure that all related party loan arrangements are well-documented and comply with the stipulated requirements in order to mitigate the risk of adjustments, imposition of penalty, and even double taxation, in some cases.

Key actions for businesses in Cambodia

Strengthen internal governance: Implement robust internal processes for approving and documenting intercompany financing arrangements.
Review existing intercompany loans: Assess current related party loan agreements to ensure compliance with the documentation and interest rate requirements.
Maintain comprehensive documentation: Ensure that all necessary documents, including loan agreements and business plans, are properly prepared and retained.
Monitor GDT announcements: Stay informed about the annual publication of the prevailing market interest rate by the GDT to ensure ongoing compliance.

Businesses should proactively adapt their practices to ensure compliance and mitigate potential risks. DFDL is available to provide further guidance and support. For further guidance or assistance, please contact:

Clint O'Connell

Partner, Managing Director, Cambodia

Cambodia

On 12 May, the interim Government of Bangladesh issued the Revenue Policy and Revenue Management Ordinance 2025 (the Ordinance), introducing significant changes in the country’s tax governance framework. This marks a bold move toward enhanced transparency, efficiency, and alignment with international standards. The Ordinance will come into effect upon publication of a gazette notification in this regard.

Key highlights of the Ordinance include:

Institutional Overhaul

The Internal Resources Division (IRD) and the National Board of Revenue (NBR) operating under it have both been abolished. In their place, two new autonomous entities have been established under the Ministry of Finance: Revenue Policy Division (RPD) and Revenue Management Division (RMD).

Division of Responsibilities

The RPD will be staffed with experts in law, taxation, and public finance and will be responsible for:

Developing tax policies and rational tax structures
Reviewing exemptions and driving legal reforms
Managing tax treaties and overseeing the various tax tribunals

On the other hand, the RMD will be staffed with the existing officers of the NBR and will be responsible for:

Administering tax collection and enforcing compliance
Handling primary tax appeals and taxpayer services
Implementing international tax obligations
Training and deploying skilled tax officers

The Ordinance aims to achieve a few key objectives.

First, transparency will be pursued by clearly separating tax policy-making from tax administration, eliminating conflicts of interest, and enhancing accountability within the fiscal system.

Second, efficiency will be targeted through the specialization of functions—policy formulation and strategic oversight are now distinct from day-to-day operations such as tax collection and enforcement. This division is expected to streamline decision-making, reduce bureaucratic redundancies, and improve responsiveness to taxpayers.

Finally, the reform will promote alignment with global best practices by harmonizing Bangladesh’s tax governance framework with international norms and treaty obligations.

For a copy of the Ordinance, please click in download button below.

Shahwar Nizam

Partner, Managing Director, Bangladesh

Bangladesh

On 7 May 2025, the Ministry of Planning and Finance issued Notification No. 29/2025 (“Notification 29/2025”) implementing Myanmar’s Tariff Reduction Schedule under the Regional Comprehensive Economic Partnership (“RCEP”) Agreement based on the HS 2017 version. This notification became effective immediately upon issuance.

The RCEP is the largest Free Trade Agreement in the Asia-Pacific region, encompassing 15 member countries. The RCEP Agreement was signed on 15 November 2020 and came into force in Myanmar on 1 January 2022.

Before the issuance of Notification No. 29/2025, Myanmar had reportedly only applied the RCEP deal unilaterally with China since 2022. Now, the RCEP will reciprocally apply to goods originating from the following RCEP signatory countries:

Cambodia
Thailand
Vietnam
Brunei Darussalam
Lao PDR
Singapore
Malaysia
Indonesia
People’s Republic of China

The RCEP-signatory countries not covered by this notification are Australia, Japan, New Zealand, Philippines, and South Korea.

To implement Notification 29/2025, the Myanmar Customs Department issued Announcement No. 009/2025 dated 13 May 2025, stating that tariff reductions under the RCEP agreement can now be applied to eligible import declarations using “Form RCEP” from the specified countries. Importers must select “R” (RCEP) in the Customs Duty Type Code on the IDA Screen of the MACCS system. The MACCS system has completed all necessary settings for imported goods to benefit from tariff reductions, effective from 14 May 2025.

Conclusion

The implementation of Myanmar’s Tariff Reduction Schedule under the RCEP Agreement marks a significant step towards enhancing trade relations with other RCEP member countries. This initiative is anticipated to streamline and enhance trade processes, benefiting importers and exporters alike. This move not only fosters economic growth but also promotes regional cooperation and integration, ultimately benefiting the broader economic landscape of Myanmar and its trading partners.

The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.

Diberjohn Balinas

Tax Partner

Cambodia, Myanmar

Introduction

With the issuance of Prakas 192 on Tax Rules and Procedures for Trust, dated 12 March 2025 (“Prakas 192”) by the Ministry of Economy and Finance, Cambodia has introduced a new taxation framework for trusts, emphasizing compliance, transparency, and proper fiscal governance. This briefing outlines the key tax obligations trustees must adhere to.

Trust Registration & Tax Classification

Under the new framework:

Trust entities must register as medium or large taxpayers.
Independent individual trustees must register as small, medium, or large taxpayers based on their revenue and assets.
Trust Registration must occur within 15 working days after receiving a license/approval from the Trust Regulator or commencing operations.

Example: A newly licensed independent individual trustee overseeing several high-value real estate trusts must assess their revenue and assets. If their financial profile exceeds the threshold for small taxpayers, they are required to register at least as a medium taxpayer.

Accounting & Financial Reporting Requirements

Trustees must maintain separate accounting records distinguishing:

Trust transactions from personal/business finances of the trustee.
Ownership of trust property and financial movements of trust transactions.
Accounting documentation for each trust administered.

Example: A trustee managing multiple trusts—one dealing with equity investments and another focused on agricultural land development—must maintain distinct financial records for each, preventing asset contamination.

Taxable Income & Applicable Rates

Trustees are taxed on remuneration or profits from trust administration but not on trust assets or funds held on behalf of beneficiaries.

Legal entities: 20% income tax.
Individuals & small entities: Progressive rates (0–20%) depending on annual income structure.

Example: A registered trustee company charges a 5% management fee on a property rental generating 2 million riels per month. The fee is considered taxable income under corporate tax regulations, subject to standard deductions before applying the 20% rate.

Taxation of Trust Property Transactions

Trust assets, when generating income or undergoing ownership transfers, are subject to specific taxation mechanisms:

Tax on Rental of Immovable Property
Income from leasing trust property is taxable under Cambodia’s rental tax rules.

Example: A trust leases an office building for 100 million riels annually. The trustee must declare rental income and comply with tax on rental of immovable property calculations, as applicable.

Capital Gains Tax

Gains from asset sales or transfers are taxable.

Example: A trustee acquires land for 500 million riels as property under the trust, later selling it for 700 million riels. Under an 80% expense deduction method for immovable properties, capital gains tax is calculated as follows:

Capital gains: 700M – (80% × 700M) = 140M riels
Tax owed: 140M × 20% = 28M riels

Stamp tax/Registration Tax

Ownership transfers trigger registration tax liabilities.

Example: A trustee purchases an apartment for 300 million riels as property under the trust. Registration tax (4%) applies:

Tax owed: 300M × 4% = 12M riels

Withholding Tax on Non-Resident Transfers

Income transfers to non-resident settlers may be taxed at 14%, unless capital gains tax has been paid.

Example: A non-resident trustor receives 176 million riels from the sale of trust property. If capital gains tax was already paid, withholding tax does not apply.

Compliance Obligations & Tax Exemptions

Beyond standard taxation rules:

Trustees must comply with all applicable tax laws.
Trust assets are eligible for tax exemptions when aligned with general exemption provisions.

Example: Certain charitable trusts holding assets for public benefit purposes may qualify for tax exemptions.

Conclusion

The taxation of trusts in Cambodia is becoming increasingly structured, reinforcing compliance, transparency, and fair taxation principles. With the issuance of Prakas 192, it formalizes the legal and tax framework for trusts in Cambodia. As such, trustees and those engaged in trust operations must ensure timely registration, accurate financial reporting, and compliance with taxation rules to ensure compliance adherence.

For any queries regarding the tax or legal obligations of the parties to a trust arrangement in Cambodia please reach out to the authors or your usual DFDL advisor.

Clint O'Connell

Partner, Managing Director, Cambodia

Cambodia

On 30 April 2025, the Ministry of Economy and Finance and the Ministry of Commerce (“MOC”) issued an Inter-Ministerial Prakas aimed at preventing origin fraud and enhancing the transparent enforcement of the Laws on Rules of Origin for exports of certain goods to the U.S. market. This Prakas applies to all producers and exporters of specified goods originating in Cambodia and exported to the United States. It will come into effect on 12 May 2025.

Key Points

Origin Certification Letter (“OCL”): Producers and exporters must obtain an OCL from the MOC in accordance with Prakas No. 047 dated 30 April 2025. This OCL must be attached to the Customs Declaration for exports to the United States. No public service fees are required for the OCL application.
Information Exchange: The General Department of Customs and Excise (“GDCE”) and the General Directorate of Trade Support Services (“GDTSS”) will exchange relevant information and documents to ensure compliance with the rules of origin. The mechanisms for data exchange will be determined by an Inter-Ministerial Decision.
Joint Investigations: In case of doubt regarding the origin of goods, or upon request by the importing country, the GDCE and GDTSS will conduct joint investigations and may seek cooperation from relevant institutions.
Sanctions: Producers and exporters found committing origin frauds, including concealment of transshipment operations and misdeclaration, will be subject to penalties as stipulated in the Law on Rules of Origin and the Law on Customs.

DFDL views

The issuance of this Inter-Ministerial Prakas came after negotiations between Cambodia and the United States about a 49% tariff increase on Cambodian goods, which has been temporarily paused for 90 days. In addition, this was also primarily driven by concerns over trade dumping practices involving solar panels. The U.S. Department of Commerce determined that solar panels from Cambodia were being sold in the U.S. at less than fair value, a practice known as dumping, which can harm domestic industries by undercutting prices. This resulted in the U.S. imposing tariff of more than 3,500% on solar panels exported from Cambodia.

This Prakas is a significant regulatory measure to ensure the integrity of Cambodian exports to the United States by preventing origin frauds and promoting compliance with established rules of origin. It mandates strict documentation and cooperation between relevant governmental bodies to uphold these standards, thereby aiming to restore fair trade practices and maintain good trade relations with the United States. In addition, it strengthens the mechanisms for exports to the United States and clearly checks original sources to stop individuals or entities from mislabeling goods as “made in Cambodia” for export purposes.

Further bilateral discussions between representatives of the Royal Cambodian Government and their United States counterparts are scheduled to take place on 14-15 May 2025, in Washington DC. These talks will address the unilateral imposition of the 49% tariffs by the United States on imported Cambodian goods. It is expected that these discussions will cover reciprocal tariff rates and non-tariff barriers, particularly the issue of transshipment of Chinese goods to the United States via Cambodia.

Clint O'Connell

Partner, Managing Director, Cambodia

Cambodia

Our Tax Team would like to remind you that the deadline for filing corporate tax returns for the fiscal year ending 31 March 2025 (“FY 2024-2025”) in Myanmar is fast approaching. All individuals, businesses, and non-profit organizations doing business in Myanmar must ensure their annual tax returns are filed no later than 30 June 2025.

The tax returns due by 30 June are as follows:

Annual Corporate Income Tax return
Annual Salary Statement for employees
Annual Consolidated Capital Gains Tax return (if applicable)
Annual Commercial Tax return

Corporate Income Tax (“CIT”)

For companies registered with the Large Taxpayers Office (“LTO”) or Medium Taxpayers Office (“MTO”) using the Internal Revenue Department’s (“IRD”) e-filing system, the annual CIT return must be submitted through the e-filing account. The submission should include the approved form and any required attachments.

Companies registered with local township tax offices or other offices without e-filing capabilities must manually submit their CIT return along with financial statements or audited financial reports to the appropriate tax office. This can be done in person, by mail, or via email.

Taxpayers mandated to file electronically must also submit a Taxpayer’s Signature document, bearing the original signature of the authorized representative, to their registered tax office by 30 June 2025. The form is available for download here.

Annual Salary Statement for Employees

Individual salary earners are exempt from filing an annual tax return. Instead, employers are responsible for submitting an Annual Salary Statement (PaTa Kha (Wa Nga) – 03-07) on behalf of their employees via their e-filing account.

Employers must also provide employees with Form 15(A), which serves as proof of PIT payments made during the fiscal year.

Consolidated Capital Gains Tax (“CGT”)

Taxpayers who sold, transferred, or exchanged capital assets in Myanmar (e.g., land, buildings, vehicles, or shares) during FY 2024-2025 are required to submit a consolidated annual CGT return with supporting documents through the e-filing system. This consolidated return is in addition to the transactional CGT return that is filed within 30 days from the date of the sale of the capital assets.

Commercial Tax (“CT”)

Companies involved in manufacturing, trading, importing goods, or providing services (except those exempted under the CT Law or Union Tax Law) are subject to CT. However, businesses with revenue below MMK 50 million (approx. USD 23,800) for FY 2024-2025 are generally exempt from CT, unless they have voluntarily opted to register for CT during the year.

For those registered with e-filing-enabled offices, the CT return must be filed electronically using the approved form and relevant attachments. The return must be submitted even if no CT transactions occurred during the fiscal year. Additionally, details of the CT certificates below should be submitted:

Pa Ta Kha (Ka Tha Kha) 05-01 (Local Purchase CT Form);
Pa Ta Kha (Ka Tha Kha) 05-02 (Importation CT Form);
Pa Ta Kha (Ka Tha Kha) 05-03 (Tax Offset Confirmation Form); and
revenue reconciliations when there are discrepancies between the CIT and CT reports.

For companies registered with tax offices without e-filing systems, CT returns and attachments must be submitted directly to the respective tax office.

Penalties on late filing of returns

The IRD may impose the following penalties if annual tax returns are not filed on time:

5% of the tax due, plus an additional 1% for each month (or the proportionate amount if less than a month) from the due date of the return until the date of the IRD’s assessment
MMK 100,000 (approx. USD 48), whichever is higher.

In cases where a taxpayer is found to have intentionally provided false information or omitted critical details that reduce their tax liability, the following penalties may apply:

25% of the underpaid amount for discrepancies under MMK 100 million (approx. USD 47,600) or up to 50% of the tax payable, or
75% of the underpaid amount for discrepancies exceeding MMK 100 million or 50% of the tax payable.

If a taxpayer intentionally fails to file a tax return to obstruct or interfere with the administration of taxes under the Tax Administration Law, the taxpayer is committing an offense. If convicted, the taxpayer may be fined MMK 250,000, sentenced to up to one year in prison, or both.

Our team is well-equipped to assist you with your tax compliance filings in Myanmar. Let us know how we can help with your tax filing to avoid penalties and ensure compliance with your tax obligations in the country.

On 21 April 2025, the Second Protocol upgrading the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA) agreement came into effect, directly advancing the economic integration efforts among ASEAN, Australia, and New Zealand. This landmark agreement enhances business opportunities in a free trade zone that spans over 703 million people, with a combined GDP exceeding US$5.6 trillion. For Cambodia, this presents a chance to diversify its export markets, amplify its economic ambitions and strengthen its role in ASEAN’s growth story.

DFDL has identified six key focus areas that highlight Cambodia’s strategic opportunities under the upgraded AANZFTA:

Building Cambodia’s Economic Bridge
Strengthening Supply Chain Resilience
Empowering Cambodian MSMEs
Advancing Digital Connectivity
Promoting Sustainability and Green Economy
The Road Ahead

Click ‘Download‘ below to view the full article.

Clint O'Connell

Partner, Managing Director, Cambodia

Cambodia

On 31 March 2025, the Ministry of Planning and Finance issued Notification 27/2025 (“Notification 27/2025”) announcing significant tariff changes to promote the development of Electric Vehicles (“EVs”) in Myanmar.

Under Notification 27/2025, the customs tariff or duty rate for Battery Electric Vehicles (“BEVs”) and their essential components and accessories, as outlined in Myanmar’s Customs Tariff of 2022, has been reduced to zero percent. This exemption applies to BEVs powered entirely by electric batteries and covers vehicles imported under Completely Built-Up (CBU), Completely Knocked Down (CKD), and Semi-Knocked Down (SKD) systems. These changes became effective on 1 April 2025 and remain in place until 31 March 2026.

The scope of this tariff exemption covers:

1. Road tractors for semi-trailers;
2. Buses designed to transport ten or more passengers;
3. Trucks;
4. Motor vehicles for passenger transport;
5. Three-wheeled vehicles for transporting passengers or goods;
6. Electric motorcycles and bicycles; and
7. Special-purpose vehicles such as ambulances, prison vans, and hearses.

Additionally, the exemption includes related components and accessories essential to the above BEVs, such as:

Charging station equipment;
Charging system devices approved by the Ministry of Electric Power; and
Spare parts, with samples detailed in a separate annex included in the notification.

This measure, combined with specific goods tax and commercial tax exemptions on BEVs provided under the Union Tax Law, reflects Myanmar’s commitment to attracting foreign investment in the EV sector. It also aims to foster a sustainable EV ecosystem and promote the shift towards greener and more sustainable transportation solutions.

Diberjohn Balinas

Tax Partner

Cambodia, Myanmar

Overview of Transfer Pricing Rules in Laos

Historically, Laos has had limited transfer pricing regulations, but recent updates signal a shift toward stricter oversight of intercompany transactions. While comprehensive TP documentation (e.g., Master File, Local File, and Country-by-Country Reporting) is not yet mandatory, the Lao Tax Authority is increasingly focused on ensuring that transactions between related parties adhere to the arm’s length principle. This principle requires that pricing for goods, services, or intangibles between related entities mirrors what independent parties would agree upon in comparable circumstances.

Key points regarding Laos’ TP rules include:

Increased Audit Focus: Tax authorities are prioritizing audits of MNEs, particularly targeting loss-making entities, intercompany service charges, intellectual property remuneration, and financing arrangements. Non-compliance may lead to penalties of 50% of underreported corporate income tax.

Alignment with OECD Standards: Laos is gradually adopting elements of the OECD’s Transfer Pricing Guideline, which emphasizes transparency through detailed transfer pricing documentation. Although full compliance with Master File and Local File requirements is not yet enforced, MNEs should anticipate future mandates.

Regional Context: Unlike some ASEAN peers (e.g., Vietnam, Thailand, Malaysia, Singapore), Laos’ TP framework is less developed. The lack of regional harmonization within ASEAN means MNEs must tailor compliance strategies to Laos’ specific requirements.

Introduction of the Global Minimum Tax

Laos is expected to implement the Global Minimum Tax (GMT) under Pillar 2 of the OECD/G20 BEPS 2.0 project, potentially as early as January 1, 2026, following the lead of neighboring countries such as Malaysia, Singapore, Thailand, and Vietnam.

The GMT applies to MNEs that have met the revenue threshold in at least two of the past four fiscal years. It targets profit shifting to low-tax jurisdictions by imposing top-up taxes when the effective tax rate (ETR) falls below 15%.

Jack Sheehan

Partner, Head of Regional Tax

Lao PDR, Myanmar, Thailand

On 31 March 2025, the State Administration Council enacted the Union Taxation Law 2025 (Law No. 6/2025 or “2025 UTL”), which clarifies the tax rates and procedures for income tax, commercial tax, specific goods tax, and gemstone tax in Myanmar. The law is effective on 1 April 2025 or the start of the financial year 2025-2026.

The 2025 UTL retains most of the provisions of the Union Tax Law 2024, but it has introduced changes to the tax rates for specific goods such as cigarettes, cheroot, liquor, and wine.

A. Matters relating to Specific Goods Tax (“SGT”)

The 2025 UTL increased the SGT tiers and rates for cigarettes, cheroots, liquor, and wine. Effective 1 April 2025, the following changes apply:

Types of Goods	Tier	Tier of Selling Prices	Tax Rate
Cigarettes	Lowest	If sale price is a tier of MMK 800 per pack of 20 cigarettes	MMK 14 per cigarette (previously MMK 13)
Cigarettes	Highest	If sale price is a tier from MMK 1,101 and above per pack of 20 cigarettes	MMK 30 per cigarette (previously MMK 29)
Cheroot		N/A	MMK 2 per item (previously MMK 1)
Liquor	Lowest	If a liter value is between MMK 400 and MMK 2,200 (previously MMK 2,000)	MMK 261 per liter (previously MMK 237)
Liquor	Highest	If a liter value is MMK 28,601 and above (previously MMK 24,001)	60% of one liter’s value
Wine	Lowest	If a liter value is up to MMK 2,000 (previously MMK 1,400)	MMK 210 per liter (previously MMK 176)
Wine	Highest	If a liter value is MMK 28,601 and above (previously MMK 22,101)	50% of one liter’s value

The SGT rates for these specific goods remain unchanged:

Tobacco leaf and Virginia Tobacco: 60%
Cigar, pipe tobaccos, and various kinds of spices for chewing betel leaf: 80%
Beer: 60%
Logs, conversions: 5%
Vans, saloon cars, and others (excluding double cab 4-door pickup trucks, pickup cars, and battery electric vehicles): 10-50%
Kerosene, petrol, diesel, and jet fuel: 5%
Natural gas: 8%

B. Matters relating to Commercial Tax (“CT”)

The 2025 UTL does not introduce any changes to CT, and the list of exempt goods and services from the prior year tax law remains the same. The CT rate remains at 5%, with specific rates applying as follows:

Internet services: 15%
Sale of SIM cards and related services: MMK 20,000 per SIM card
Hotel and tourism services: 3%
Sale of buildings constructed in Myanmar, whether through a long-term lease with the State or a partnership with a lessor: 3%
Sale of gold jewelry: 1%
Export sale of electric power: 8%

C. Matters relating to Income Tax

The 2025 UTL does not introduce any changes to income tax.

The general corporate income tax (“CIT”) rate remains at 22%. Companies listed on the Yangon Stock Exchange are subject to a reduced rate of 17%, while companies in the oil and gas exploration and production sector remain subject to 25%.

The general capital gains tax (“CGT”) rate remains at 10%, with higher rates of 40-50% applying to the oil and gas sectors.

The personal income tax (“PIT”) rates remain at 0-25%. Non-resident Myanmar citizens employed overseas are taxed using the lower of the following methods:
- Prevailing PIT rates (0-25%) after deductions for relief and allowances under the Income Tax Law; or
- A flat rate of 2% without deductions.

Foreign income (other than salary) received by non-resident citizens is taxed at a flat rate of 10% without deductions or relief.

The income tax for undisclosed sources of income remains at progressive rates of 3-30%.

The 2025 UTL maintains the requirement for income tax payments to be made in the currency in which the income was earned, which was introduced in the Union Tax Law 2024. This applies to all types of income tax payments, such as CIT, CGT, withholding tax, and PIT.

D. Matters relating to Gemstone Tax

The gemstone tax remains unchanged under the 2025 UTL. Gemstone sales in Myanmar continue to be taxed at a rate of 5-11%, with the rate varying based on the type of gem and whether it is sold as a raw material or as finished jewelry.

In conclusion, the 2025 UTL closely mirrors the provisions of the Union Tax Law 2024, with only minor updates to the tiers and tax rates for certain specific goods. Effective from 1 April 2025, taxpayers should be mindful of the unchanged requirements for income tax payments in foreign currency, as well as the specific provisions related to income tax, CT, and gemstones tax to ensure compliance.

Diberjohn Balinas

Tax Partner

Cambodia, Myanmar