On 26 March 2012 the Ministry of Finance and Revenue unveiled far reaching tax reforms in Yangon. The reforms have been officially published in a series of 16 separate Notifications on income tax and commercial tax which will become effective on 1 April 2012. Our senior tax lawyer in Yangon attended the formal announcement and provides a brief overview of the reforms.
Amongst the tax reforms announced by the government on 26 March 2012, we briefly summarize the key points:
- Notification No. 111/2012 dated 15 March 2012, provides for a reduction in Corporate Income Tax for companies from 30% to 25%. For branch offices the previous rate of 35% or 5% to 40% (whichever is greater) is now a flat rate of 35%, or a flat rate of 25% if the branch holds an Investment Permit issued under the Myanmar Foreign Investment Law, 1988.
- Sole proprietors who earn business income in local currency were taxed a progressive rate of 5% to 40% are now liable to a reduced a progressive rate of 2% to 30%.
- Under Notification No. 115/2012 dated 15 March 2012, all items listed on Schedule 2 to Schedule 5 of the Commercial Tax Law, 1990 which respectively provided for Commercial Tax at a rate of 5% to 25% are now subject to commercial tax at a flat rate of 5%. Commercial tax applies to goods and services produced or rendered in Myanmar and imported goods.
- Under Notification 116/2012, dated 15 March 2012, goods listed in Schedule 6 of the Commercial Tax Law, 1990 were subject to commercial tax at rates varying from 30% to 200% and are now liable to commercial tax at rates varying from 8% to 100%. Goods in Schedule 6 now include natural gas, teak and luxury cars.
- Under Notification 117/2012, dated 15 March 2012, goods listed in Schedule 7 to the Commercial Tax Law, 1990 certain services were subject to commercial tax at rates varying from 5% to 30%. This is now reduced to a single rate of 5%. Also, broking services, landscaping and renovation and building design services, advertising and filming services and legal and auditing services are now subject to commercial tax under Schedule 7.
- Under Notification 121/2012 dated 15 March 2012, goods described in Schedule 1 to Schedule 6 of the Commercial Tax Law, 1990 which are exported are now exempted from commercial tax except petroleum, natural gas, teak logs, jade and precious stones and hardwood logs.
- Under Notification 107/2012 dated 15 March 2012, salary income in local currency is now reduced to a progressive rate of 1% to 20% from the previous progressive rate of 3% to 30%.
This is a brief summary and our tax lawyers are able to provide further information regarding these recent amendments.
Please contact James Finch or Rupert Haw for further details on these reforms and how they may apply to your business undertakings in Myanmar.
28 May 2012
