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Kyaw Swa Myint
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Myanmars new Tax Law of The Union 2015Myanmar has recently
enacted the Myanmar Tax Law of the Union 2015. The new tax law was
promulgated onApril 2nd 2015 and it will be come into force on
April 1st, 2015. The New Tax Law of the Union 2015 providessome
important changes from the current legislation, which we list in
the following.
I. Commercial Tax
1. Special goodsThe Commercial Tax (CT) rates for the import and
production of 16 kinds of special goods will change underthe New
Tax of the Union 2015. For example, the CT-rate for the import and
production of cigarettes will risefrom 100% to 120% and the CT-rate
on tobacco, liquor and beer will rise from 50% to 60%. The CT-rate
on jade, rubies, sapphires, emeralds, diamonds and other precious
stones will decrease from 30%to 15%. The import and production for
respective jewelry will also decrease from 15% to 5%. When these
special goods are imported, the tax will be charged on the landed
costs. If they are produced inthe country, the tax shall be charged
on the sales proceeds.
2. Commercial Tax exempted goods
Under The Tax Law of the Union 2014 84 kinds of goods were
exempt from commercial tax. However, in theNew Tax Law of the Union
2015 the number of goods exempt from commercial tax has been
reduced to 79.
For example, computers, telephone handsets, soap stocks (oil
residue) and fresh and dried animal feed (farmproducts only) are
not included under the new draft. On the other hand some additional
goods have beenincluded upon the exemption list, such as raw and
dried tea leafs, fire trucks and hearse.
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3. Commercial Tax exempted services
The Tax Law of the Union 2014 exempted 26 kinds of services from
commercial tax, whereas in the Tax Law ofthe Union 2015 the number
of services exempt from CT has been reduced to 23. Information and
technologyservices, technology and administrative consultant
services, container transportation services and license
withslaughter services are no longer included in the Tax Law of the
Union. License fees to be paid to governmentorganizations have been
amended to the exempt list.
All services not included in the list are subject to 5%
Commercial Tax to be paid on the payment received fortheir
services.
Additionally in the New Tax Law of the Union 2015 the
construction and selling of buildings are subject to 3%Commercial
Tax on sale proceeds.
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4. Commercial Tax on goods for export
The CT rate of exporting jade and other precious raw stones has
been reduced from 30% to 15%, and jadeand other precious finished
products has been reduced from 10% to 5%.
Additionally Electricity has been added to the list in the Tax
Law of the Union 2015 with a tax rate of 8% incase of export.
5. Threshold amounts of CT Exemption
The threshold for CT exemption of Production and sale of goods
in Myanmar, as well as Services and Trading inMyanmar got increased
under the Tax Law of the Union 2015 from 15,000,000 MMK to
20,000,000 MMK.
II. Income Tax
Personal and corporate income tax rates including basic relief
are unchanged under the Tax of the Union Law2015.
However a relief for parents is newly added in the Tax Law of
the Union 2015. Provided that theparent/parents live in a common
household and are taken care of, the relief on personal income tax
is1,000,000 MMK per parent. Also the relief amount for spouse
increased from 500,000 MMK to 1,000,000 MMK.Also the relief amount
for children increased from 300,000 MMK to 500,000 MMK per
child.
The major changes will take place regarding the tax on the
income of non-resident foreigners. Under thecurrent tax law
non-resident foreigners (individuals residing less than 183 days
per year in Myanmar or foreignentities, associations, and
organizations including their Myanmar branches) are charged 35% on
Myanmar
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sources income. In the Tax of the Union Law 2015 this tax rate
has been reduced to 25%, whereas salaryincome of non-resident
foreigners is now treated equally to Myanmar citizens and taxed on
base of aprogressive rate between 0% and 25%. It should be noted
that despite current discussions the Tax of theUnion Law 2015 does
not clearly provide whether non-resident foreigners may claim
relief such as citizens orresident foreigners.
Besides that, the Tax Law of The Union 2015 states a 25%
corporate income tax rate for all companies set upunder MIC and
FIL. It still needs to be clarified if this tax rate also applies
for Registered Branches andRepresentative Offices.