Corporate tax in Myanmar

Summary

Corporate Income Tax Rate (%) 25
Capital Gains Tax Rate (%) 10 (a)
Branch Tax Rate (%) 25
Withholding Tax (%)
Dividends 0
Interest 15 (b) (c)
Royalties from Patents, Know-how, etc. 15 / 20 (b) (d)
Branch Remittance Tax 0
Net Operating Losses (Years)
Carryback 0
Carryforward 3

a) The 10% rate applies to both resident and nonresident companies.

b) Under Myanmar’s tax treaties, certain types of interest and royalties are sub­ject to reduced rates or are exempt from tax (see Section F).

c) This withholding tax applies to payments to nonresidents.

d) The 15% rate applies to residents, and the 20% rate applies to nonresidents.

Taxes on corporate income and gains

Corporate income tax. Myanmar resident companies are subject to corporate income tax on their worldwide income. Myanmar resident companies are those incorporated in Myanmar. Branches of foreign corporations are subject to Myanmar tax on their Myanmar-source income only.

Rates of corporate tax. Myanmar resident companies and Myan-mar branches of foreign corporations are subject to corporate income tax at a flat rate of 25% on net taxable profits.

Capital gains. Capital gains are assessed separately from business income and are subject to a flat rate of 10% for both Myanmar resident companies and non-Myanmar resident companies.

Resident companies must declare capital gains tax within one month after the date of the sale, exchange or transfer of capital assets.

Administration. The Myanmar fiscal year runs from 1 April to 31 March.

Companies must file corporate income tax returns, together with audited financial statements, with the Myanmar Internal Revenue Department within three months after the end of the fiscal year (that is, by the end of June).

Companies must also file an annual year-end report (Form E) with audited accounts and minutes of the annual general meeting resolution with the Directorate of Investment and Company Administration. A newly established company must file Form E within 18 months after its first fiscal year. Beginning with the second fiscal year, companies must file Form E within 15 months (but not more than one full calendar year) after the fiscal year-end.

Myanmar’s laws provide that tax payments must be made on a quarterly basis.

Dividends. Dividends paid are not subject to withholding tax.

Foreign tax relief. The Myanmar domestic tax law does not pro­vide for a foreign tax credit. However, Myanmar has entered into double tax treaties with eight countries. In general, these treaties provide for a foreign tax credit that is limited to the lower of the foreign tax and the amount of Myanmar tax calculated on such income.

Determination of trading income

General. Corporate income tax is based on the audited financial statements, subject to certain adjustments.

In general, expenses are deductible for tax purposes if they are incurred wholly and exclusively for the purpose of generating income.

Depreciation and amortization allowance. A company may depre­ciate its fixed assets in accordance with the following depre­ciation rates prescribed by the Myanmar Income Tax Law and Regulations.

Asset Percentage of initial cost per year (%)
Buildings 5 to 15
Furniture 10
Machinery 10
Motor vehicles 5 to 20

Relief for losses. Operating losses can be carried forward and offset against profits in the following three consecutive years. Loss carrybacks are not allowed.

Groups of companies. The Myanmar tax law does not include any provisions for consolidated treatment under which companies within a group may be treated as one tax entity. Each individual company must file its income tax return and pay its taxes.

Commercial tax

Commercial tax is generally imposed on goods sold, services rendered and imports. The following are the commercial tax rates:

  • 5% to 120% on the value of goods sold in Myanmar
  • 5% on the value of services in Myanmar
  • 5% to 120% on the landed cost of imported goods
  • 5% to 50% on the export of certain goods

Certain items and services specified under the law can be exempt from commercial tax.

Miscellaneous matters

Foreign-exchange controls. The repatriation and/or remittance of foreign currency out of Myanmar requires the permission of the Foreign Exchange Control Department of the Central Bank of Myanmar.

Transfer pricing. Myanmar does not have any transfer-pricing rules.

Treaty withholding tax rates

The rates in the following table reflect the lower of the treaty rate and the rate under domestic tax law.

Dividends

%

Interest

%

Royalties

%

India 0 15 (a)(b) 20 (f)
Korea (South) 0 15 (a)(b) 20 (g)(h)
Laos 0 15 (a)(b) 20 (f)
Malaysia 0 15 (a)(b) 20 (f)
Singapore 0 15 (a)(c) 20 (g)(h)
Thailand 0 15 (a)(b) 20 (h)(i)(j)
United Kingdom 0 15 (d) 20 (e)
Vietnam 0 15 (a)(b) 20 (f)
Non-treaty countries 0 15 20

(a) The following types of interest are exempt from tax:

  • Interest paid to the government, a political subdivision or a local authority
  • Interest paid to the central bank as prescribed under an applicable tax treaty

b) The rate is reduced to 10% if the beneficial owner of the interest is a resident of a contracting state.

c) The rate is reduced to 8% for Singapore if the recipient of the interest is a financial institution or a bank.

d) The UK tax treaty does not provide for a reduced withholding tax rate for interest.

e) Royalties are exempt from tax if the recipient of does not have a permanent establishment in the other contracting state and if the amount of royalties represents a fair and reasonable consideration for the rights for which the royalties are paid.

f) The rate is reduced to 10% if the beneficial owner of the royalties is a resident of India, Laos, Malaysia or Vietnam.

g) The rate is reduced to 10% for royalties paid for patents, designs, models, plans, secret formulas or processes, industrial, commercial or scientific equipment or information concerning industrial, commercial or scientific experience.

h) The rate is reduced to 15% for royalties in other cases.

i) The rate is reduced to 5% for royalties paid for copyrights of literary, artistic or scientific works.

j) The rate is reduced to 10% for royalties paid for services of a managerial or consultancy nature or for information concerning industrial, commercial or scientific experience.

Myanmar has signed tax treaties with Bangladesh and Indonesia, but these treaties have not yet been ratified.