The Myanmar government has recently introduced significant amendments to the Law on Special Goods Tax (“SGT”), including the tax base for computing SGT, and reporting requirements for SGT-registered exporters and manufacturers of locally-produced regulated and non-essential goods.
Law No. 17/2017 (“Law 17”) also known as the Amendment to the SGT law, was passed on 26 July 2017. It modifies the one year old law that imposed excise tax on the import, export, manufacture and storage of tobacco, alcohol, wood, gemstones, cars, fuel, and other goods. While passed only in July, the law retroactively takes effect from 1 April 2017.
Clarification of the tax base for computing SGT
Originally, there was no provision on how to calculate the tax base for export SGT and for goods discovered in an owner’s custody where no tax was paid. Law 17 now provides the following tax base:
| Taxable activity | Tax Base |
| Export of special goods |
FOB shipped value (cost incurred until the time of loading) |
| Special goods discovered in an owner’s custody where no tax is paid | Current selling price or market price |
Law 17 also provides that the Ministry of Planning and Finance may issue regulations identifying domestically manufactured goods upon which the IRD will have discretion in determining the taxable sales price. Normally, the tax base for domestically manufactured goods is the higher of the ex-factory price or the sales price determined by the IRD.
Oddly, Law 17 amended the definition of the term “ex-factory price” from “the sales price from factories, workshops or establishments, excluding the tax under this Law” with “the sales price from factories, workshops or establishments, including the tax under this Law.” Taken at face value, this definition seems to indicate an infinite loop of computing and re-computing both the tax base and the SGT due.
Landed cost remains the tax base for the importation of goods.
Additional SGT filing requirements
Law 17 requires annual registration for SGT. Under the old law, registration for SGT was a one-time event. Failure to register for the relevant year may result in a MMK 5 million (approx. USD 3,700) penalty being imposed.
The SGT filing requirements were amended as follows:
| Taxpayer | Tax filing/payment requirement under the old law | Tax filing / payment requirement under Law 17 |
| Importers |
Prior to withdrawal of goods in customs |
No change |
| Exporters of special goods | No clear requirement | Monthly payment within ten days after the end of the month and quarterly filing within ten days after the end of the quarter |
| Manufacturers of domestically-produced goods | Monthly within ten days after the end of the month | Monthly payment within ten days after the end of the month and quarterly filing within ten days after the end of the quarter |
| Owners/keepers of goods | Within seven days from the date of discovery | No change |
Failure to file a quarterly return on time by the exporter and local manufacturer may result in the imposition of 10% penalty on the undeclared tax.
Clarification on the offsetting of tax payments of exporters
Under Law 17 exporters are also allowed to offset the SGT paid on the importation and purchase from local-producers of special goods. Prior to this amendment, only manufacturers were allowed to credit the SGT paid on the importation and purchase from local-producers of special goods.
The information provided in this email 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.
DFDL Contact:
Diberjohn Balinas
Tax Manager, Myanmar
diberjohn.balinas@dfdl.com
