1. Myanmar amends Stamp Duty Law
The Myanmar government recently amended the Myanmar Stamp Act, in particular by imposing an additional 2% stamp duty on the transfer of immovable properties.
Previously, any transfer of immovable property was subject to 2% basic stamp duty (under Schedule I of Stamp Act) and 2% additional duty (under Section 3 of the Stamp Act) for properties located in Myanmar, unless located in Yangon, Mandalay, and Naypyitaw. Additional municipal charges may also be levied under each state’s development law.
Under this new amendment to Law 19/2017 (“Law 19”) effective from 1 August 2017, the stamp duty on transferring immovable property will be as follows:
|
|
Under the old law |
Under Law 19 |
||||||
|
Property located in: |
Basic duty |
Surcharge |
Municipal charge |
Total |
Basic duty |
Surcharge |
Municipal charge |
Total |
|
1. Yangon |
2% |
– |
2% |
4% |
2% |
2% |
2% |
6% |
|
2. Mandalay |
2% |
– |
– |
2% |
2% |
2% |
– |
4% |
|
3. Naypyitaw |
2% |
– |
2% |
4% |
2% |
– |
2% |
4% |
|
4. Rest of Myanmar |
2% |
2% |
– |
4% |
2% |
2% |
– |
4% |
While the law was still in draft form, it had been initially proposed to reduce the penalty for the late stamping of documents from the original 10 times to only three times the tax due. Law 19 was passed without this reduction being featured.
2. The Ministry of Finance lowers corporate income tax rate for YSX listed companies
The Ministry of Planning and Finance issued Notification 76/2017 providing tax relief for companies listed in the Yangon Stock Exchange (“YSX”).
In the Notification, the Ministry reduced the corporate income tax (“CIT”) rate for listed companies to 20% (previously 25%). Furthermore, listed companies that failed to pay the correct CIT for the past two years before being listed can avoid fines and prosecution provided that they now settle their tax arrears in accordance with the Income Tax law. These changes will take effect from 1 April 2017.
This Notification was passed in relation to Section 31(b)(2) of the Union Tax Law 2017, which empowers the Ministry to grant CIT exemptions and relief to listed companies in order to strengthen and develop the YSX.
The Notification is aimed at spurring more companies to apply for a listing on the YSX, and join the only four companies on it currently.
3. Payments to non-resident for services rendered offshore not automatically exempt from withholding tax
The IRD has advised that payments to non-residents for services performed offshore are not automatically exempt from withholding tax (“WHT”). Taxpayers must submit an application letter seeking confirmation from the IRD as to whether WHT should apply on the services procured overseas.
It should be noted that the recent WHT Notification (51/2017) that took effect on 1 April 2017 states that payments to non-residents for “work performed or supply of services and hiring within the country” are subject to 2.5% WHT (previously 3.5%). Conversely, offshore services performed and hiring by a non-resident should not be subject to WHT.
Despite the above, the IRD believes that payments to non-residents for services rendered offshore should still be subject to WHT. This is if the service is directly connected to a Myanmar project and if an element of the service, by its nature, will need to be performed in Myanmar (e.g., repairs and maintenance).
In order to determine whether the related payments are subject to WHT, the IRD requires that taxpayers submit an application letter to the Director General of the IRD. Taxpayers must provide the IRD with a copy of the contract, a certificate of residency of the non-resident, and other related documents to support that the services were performed offshore and not attributable to transactions made in Myanmar. The IRD will evaluate the transactions on a case-to-case basis.
*The information contained in this legal update is provided 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.
DFDL Contact:
Jack Sheehan
Partner, Regional Tax Practice Group
jack.sheehan@dfdl.com
Diberjohn Balinas
Tax Manager
diberjohn.balinas@dfdl.com
