On 27 July 2020, the Ministry of Planning, Finance and Industry (“MOPFI”) issued Notification 79/2020 (“Notification 79”) which clarifies the tax registration, tax exemption procedures and tax compliance requirements for non-profit organizations under the Income Tax Law and Tax Administration Law.
Notification 79 will apply to non-profit organizations that provide social welfare (e.g. for education, health, saving of and caring for the poor and victims of natural disasters), local and international non-governmental organizations (“NGOs” and “INGOs”), Private Foundations, Civil Society Organizations and similar organizations but excluding religious institutions. This Notification will take effect on 1 October 2020 or the start of the financial year 2020-2021 (“FY 2020-2021”) in Myanmar.
Tax Registration of Non-profit Organizations
Notification 79 clarifies that non-profit organizations must be tax-registered. A non-profit organization must apply for a Taxpayer Identification Number (“TIN”) from the tax office assigned by the Director General of the Internal Revenue Department (“IRD”). Currently, the IRD has not yet issued a notification in regard to the assignment of tax offices, so further guidance from the IRD is needed before TIN registrations can commence.
Tax Exemption Application
Notification 79 provides that a non-profit organization can apply for a confirmation of an income tax exemption (including tax deductibility certification for donors) at the relevant tax office as assigned by the Director General of the IRD. Please note that the Notification does not clarify whether such tax exemption confirmation would only be limited to income tax or if it can also be applied to other taxes (e.g. commercial tax).
In order to apply for tax exemption certification, the non-profit organization must submit an application form (to be prescribed by the relevant tax office) together with the following information:
- A bank account (using the organization’s TIN) at a bank licensed by the Central Bank of Myanmar;
- A registration certificate issued by a Government organization if the non-profit organization is required to be registered under existing laws;
- An organizational structure or a copy of the Memorandum and/or Articles of association; and
- A financial statement of the previous financial year.
The Director-General of the IRD will assess the purposes of the organization and whether such purposes are stated or in alignment with the organizational structure, memorandum and/or articles of the organization. This includes assessment of whether the non-profit organizations’ income is used exclusively for religious or charitable purposes. In addition, the Director General of the IRD may also determine that no income, funds and assets of the organization are used by any member of the organization or related personnel for his or her own benefit. In cases of liquidation, the Director-General of the IRD will also check matters relating to the use of movable and immovable property after the liquidation of a non-profit organization.
If the application and the stated conditions are satisfied, the Director-General of the IRD will issue a tax exemption certificate to the organization. The list of certified organizations will be announced by the IRD under a separate Notification.
Please note that in cases of non-compliance, the Director-General of the IRD may revoke the tax exemption previously granted to such an organization.
Tax Obligations of a Non-profit Organization
Once registered, the non-profit organization must comply with the tax compliance requirements under existing Myanmar tax regulations. This includes the submission of tax returns to the relevant tax office and maintenance of records for seven years from the date of the transaction as stated in the Income Tax Law and Tax Administration Law.
Furthermore, the organization must also notify its relevant tax office of any significant change to the organization that would affect the status of a tax exemption with which it was previously granted.
Please let us know if you have any questions or need additional information.
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.
Partner, Head of the Regional Tax Practice Group
Senior Tax Manager, Myanmar