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.