Worldwide VAT, GST and Sales Tax Guide 2021
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Myanmar ey.com/GlobalTaxGuides
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A. At a glance Name of the tax Local name Date introduced Trading bloc membership Administered by CT rates Standard Reduced Other CT number format
CT return periods Thresholds Registration Recovery of CT by non-established businesses
Commercial tax (CT) Commercial tax (CT) 31 March 1990 Association of Southeast Asian Nations (ASEAN) Myanmar Internal Revenue Department (MIRD) (www.ird.gov.mm) 5% 1%, 3% 8%, zero-rated (0%) and exempt Changes yearly for the taxpayers assessed under the Official Assessment System (as CT registrations are renewed annually). For the taxpayers assessed under the Self-Assessment System, CT number is same as the tax identification number and company registration number (i.e., 9-digit number). Quarterly and yearly None No (unless the non-established business is registered for CT in Myanmar)
B. Scope of the tax CT applies on the following transactions in Myanmar: • Sale of goods/specific goods produced domestically
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• Examples of specific goods subject to CT are tobacco, liquor, wine, beer, timber logs and wood cutting, raw/finished gemstones, petrol, diesel, kerosene and natural gas, among others • Importation of goods/specific goods • Sale of imported goods/specific goods • Provision of services and trading activities • Buildings developed and sold • Sale of golden jewelry • Export sale of electricity and crude oil
C. Who is liable The following are subject to register for CT: • An importer of goods • Any person or entity that has taxable proceeds from the sale of goods/special goods, export sales of electricity and crude oil, receipts from services or sale of a building after development CT registration must be made one month before the commencement of business. There is no registration threshold applicable for CT registration in Myanmar. The Myanmar Internal Revenue Department (MIRD) must be notified of the commencement of business within 10 days after commencement. The taxpayer is required to notify the MIRD of any changes to its name, including the company name, address, or the nature of the business on which the tax is being levied within 15 days after the change. Exemption from registration. A business may be exempt from CT registration if its transactions
are not subject to CT.
Voluntary registration and small businesses. A business may voluntarily register for CT in Myan-
mar so that its input tax can be used as credit against its output tax incurred. Group registration. Group CT registration is not allowed in Myanmar.
Non-established businesses. Non-established businesses must register and pay CT if they have
any transactions subject to CT in Myanmar. Typically, non-established businesses must appoint a local representative (e.g., Myanmar customer) to comply with their CT obligations. Tax representatives. A non-established business must appoint a local tax representative to comply
with CT obligations in Myanmar.
Reverse charge. The reverse-charge mechanism is not available in Myanmar. The obligation to
collect CT solely lies with the service provider. Typically, overseas service providers may request the recipient or appoint a local representative (e.g., Myanmar customer) to comply with their CT obligations. This means the local company may be requested to act as a representative by the overseas company to comply with its CT obligations. Domestic reverse charge. There are no domestic reverse charges in Myanmar. Digital economy. There are no specific CT registration rules that may be applicable to foreign
companies providing cross-border goods or services (e.g., digital supplies, e-commerce) to Myanmar customers. Online marketplaces and platforms. No special rules exist for online marketplaces and platforms in Myanmar. Registration procedures. Taxpayers are required to register each year as CT operators. To register,
an applicant must appear in person at the MIRD and submit the following documents in hard copy: • Forms KaThaKha-1 and KaThaKha-3
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• Corporate documents, such as the company registration certificate, company/overseas corporation extract from the Directorate of Investment and Company Administration (DICA) and two photographs of any of the company’s authorized managing directors/directors/authorized officers There is no online CT registration system. Foreign entities who do not have branches in Myanmar must appoint a local representative in Myanmar to register as a CT operator in Myanmar. Deregistration. A business that ceases operations must cancel its CT registration by filing a
request for deregistration with the tax authorities within 15 days after the date of ceasing operation. Changes to CT registration details. Taxpayers must submit a letter to the MIRD to notify any
changes in its CT registration details (e.g., business name, address, place of business, nature of taxable activity) within 15 days of the change occurring.
D. Rates The term “taxable supplies” refers to supplies of goods and services that are liable to a rate of CT, including the zero rate. The CT rates are: • Standard rate: 5% • Reduced rates: 1%, 3% • Special rate: 8% • Zero-rate: 0% The standard rate of CT applies to all supplies of goods or services unless a specific measure provides for a reduced rate, the zero rate or an exemption. Examples of goods and services taxable at 0%
• Exports However, the export of certain items, such as crude oil (5% CT) and electric power (8% CT), is subject to CT upon export. Examples of goods and services taxable at 8%
• Export of electricity Examples of goods and services taxable at 3%
• Buildings developed and sold in Myanmar Examples of goods and services taxable at 1%
• Sale and importation of gold jewelry The term “exempt supplies” refers to supplies of goods and services that are not liable to CT and do not qualify for input tax deduction. Examples of exempt supplies of goods and services
• Food (e.g., paddy rice, split rice, soft bran, rough bran, paddy husk, various maize and pulses, peanut oil, sesame oil, fresh fruits, vegetables, fish, prawns, meat, seedless corn, milk, dairy products and yogurt) • Agriculture and livestock (e.g., fertilizers, insecticides, fungicides and pesticides, farm equipment, machines, spare parts, tractors and raw cotton plant) • Office and school supplies • Merchandise regarding health (e.g., raw materials used for pharmaceuticals, including traditional medicines) • Goods used for religious and social welfare
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• Transportation-related equipment and goods (e.g., machines, equipment and spare parts for aircraft and helicopters, jet fuel for outbound planes) • Goods related to manufacturing and production (i.e., including goods listed for tax exemption with an approval of Union Hluttaw and notifications issued by Union Government) • Defense-related goods • Pure gold (standard qualified gold bar, gold coin) • Goods imported under a duty drawback arrangement or imported for temporary admission • Solar panels, solar chargers and inverters • Foreign affairs • Defense • Religious and cultural services (e.g., funeral services, Myanmar traditional massage and massage performed by a blind person) • Transportation services (e.g., parking lot rental, freight transport services, except for transportation with pipeline; toll fees collection services, mail and courier delivery service operated by Union Government) • Education and information services (e.g., license fees paid to government organizations) • Health care services (excluding cosmetic surgery) • Planning and finance services (e.g., life insurance, microfinance, banking and financial services under the permission of the Central Bank of Myanmar, capital market services and custom clearance services) • Social welfare, relief and resettlement services (e.g., childcare services) • Industry and electricity services (e.g., custom manufacturing services) • Sugarcane, sugar, palm sugar, brown slab-sugar, soymilk, milk, and dairy products, condensed milk, fresh milk, powered milk, yoghurt (excluding the milk substitute products that are not produced by cow milk, buffalo milk, goat milk and creamers) • Services obtained locally by resident United Nations organizations • Airline transportation services that collect charges on domestic and overseas travel passengers Option to tax for exempt supplies. The option to tax exempt supplies is not available in Myanmar.
E. Time of supply The time of supply for output tax is the earlier date of invoice date and payment receipt date from the customers. The time of supply for input tax is the time of payment to suppliers with the prescribed Form 31. Deposits and prepayments. There are no special time of supply rules in Myanmar for deposits and
prepayments. Therefore, the general time of supply rules apply (as outlined above).
Continuous supplies of services. There are no special time of supply rules in Myanmar for sup-
plies of continuous supplies of services. Therefore, the general time of supply rules apply (as outlined above). Goods sent on approval for sale or return. There are no special time of supply rules in Myanmar
for supplies of goods sent on approval for sale or return. Therefore, the general time of supply rules apply (as outlined above).
Reverse-charge services. Myanmar currently does not have CT reverse-charge/self-assessment
mechanism. The obligation to collect CT solely lies with the service provider. Typically, overseas service providers may request the service recipient or appoint a local representative (e.g., Myanmar customer) to comply with their CT obligations. This means the local company may be requested to act as a representative by the overseas company to comply with its CT obligations. Leased assets. There is no special time of supply rules in Myanmar for supplies of leased assets.
Therefore, the general time of supply rules apply (as outlined above).
1052 M YA N M A R Imported goods. The time of supply rules for imported goods is at the time of customs clearance,
which is borne by the importer. The importer of record must pay the CT due to the customs authority, which collects the CT on behalf of the MIRD at the time of importation.
F. Recovery of CT by taxable persons A taxable person may recover input tax (CT) that it paid on most goods that were supplied to it for business purposes, including goods produced and sold, trading goods and imported goods. A taxable person generally recovers input tax by deducting it from output tax, which is CT charged on supplies made/services provided. Input tax includes CT charged on goods supplied in Myanmar and CT paid on imports of goods into Myanmar. In addition, the input tax can also be recovered on services. Nondeductible input tax. The purchase of goods that are not used for business purposes, but
instead are acquired for private use by an entrepreneur, does not give rise to a right to deduct CT paid. Examples of items for which input tax is nondeductible
• Damage and losses of raw material when producing finished goods • Damage and losses of semi-finished goods • Damage and losses of trading goods Partial exemption. There are no specific rules that input tax incurred for both taxable and exempt
supplies require apportionment. In practice, the input tax paid on general business overheads should be able to offset against the output tax when it obtains the prescribed “CT Form 31” and copy of valid commercial tax registration certificate for each relevant fiscal year from their suppliers or service providers. Excess input tax will not be refunded but it may be carried forward to the next period in certain conditions (e.g., for the advance rental payment). Otherwise, excess input tax will be treated as a deductible expense for corporate income tax calculation purposes within the same financial year. If a business makes purely CT exempt supplies, the input tax incurred on purchases, can be treated as a deductible expense for corporate income tax calculations. Approval from the tax authorities is not required to use the partial exemption standard method or special methods in Myanmar. However, while there is no formal requirement to obtain approval from the tax authorities, the taxpayer may voluntarily apply for approval from the tax authorities to use the partial exemption standard calculation or any special methods. Capital goods. Input tax incurred on capital goods in Myanmar is allowed to be offset with the
output CT payable, starting from 1 October 2019. However, at the time of preparing this chapter, further detailed procedures for claiming input tax on capital expenditures have yet to be issued by the MIRD. Refunds. Section 42 of the CT Regulation allows the CT creditable system to CT-registered com-
panies, such as manufacturing companies, trading companies and service providing companies.
The CT Law and Regulation doesn’t describe the available partial exemption mechanism. However, in practice, when computing the CT payable amount, the input tax on purchase to be offset shall not exceed the output tax on the sales according to Section 42 of the CT Regulation, and the remaining excess amount of input tax may be carried forward to the next period in certain conditions (e.g., advance rental payment) or shall be allowed to be deducted as a business expense as per the tax officer’s judgment.
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Individual procedures relating to the claim of input tax varies on a case-by-case basis, depending on the case officers allocated to each entity by the Myanmar tax authorities. Pre-registration costs. Input tax incurred on pre-registration costs in Myanmar, is not recover-
able.
Write off of bad debts. Output tax in relation to bad debts is not recoverable in Myanmar, but it
should be treated as deductible expense for corporate income tax calculation purposes within the same financial year provided that the bad debt is trade related and there is a proper documentation providing proof of the efforts made to collect the debt in place. Noneconomic activities. Input tax incurred in relation to noneconomic activities is not recover-
able in Myanmar.
G. Recovery of CT by non-established businesses Input tax incurred by non-established businesses in Myanmar is not recoverable (unless the nonestablished business is registered for CT in Myanmar.).
H. Invoicing CT invoices. There are no specific timing requirements for the issuance of tax invoices in the
Myanmar CT Law. However, in practice, the invoice should be issued upon the supply of goods and services. There is no prescribed form for invoices, but CT Regulations define the mandatory data to be stated in each invoice for manufacturing and trading businesses as follows: • Invoice number • Name, address and registration certificate number of vendors • Name, address and registration certificate number of customers • Transaction date • Name, type, description of goods or services • Quantity, price or rate and amount of goods or services • Amount of CT collected Credit notes. There are no specific CT rules in Myanmar for credit notes. As there is no guidance
on the conditions and criteria for issuing a credit note, in practice it is accepted that the credit notes are issued within the framework of the basic accounting principles. Electronic invoicing. Electronic invoicing is allowed in Myanmar, but not mandatory. At the time
of preparing this chapter, there are currently no specific rules on electronic invoicing in Myanmar. Although it is not mandatory, electronic invoicing is allowed, provided that it contains the mandatory invoice data Simplified CT invoices. Simplified CT invoicing is not allowed Myanmar. As such, full CT
invoices are required.
Self-billing. Self-billing is not allowed in Myanmar. Proof of exports. For proof of exports, the taxpayer must present the completed export declaration
form issued by the Myanmar Customs Department.
Foreign currency invoices. Invoices can be issued in a foreign currency or Myanmar kyats (MMK),
but CT shall be paid in local MMK. Income in foreign currency shall be converted from the foreign currency to MMK based on the official rate of Central Bank of Myanmar. Supplies to nontaxable persons. For business-to-consumer (B2C) transactions, there are no spe-
cial rules for CT invoices issued by taxable persons to private consumers.
1054 M YA N M A R Records. All accounts and records are required to be kept and maintained in Myanmar. They can-
not be stored overseas. There is no specific provision under the current Myanmar tax laws that allows taxpayers to store tax-related data and records (either in paper or electronic format) in another foreign jurisdiction. Such records include tax returns, payment receipts, purchase and sales invoices, purchase orders, receipts, invoices, financial statements, and all other documents related to the transaction, including supporting documents from the Myanmar Customs Department for imports and exports. Record retention period. All records must be kept for a period of seven years from the date of the original transactions in Myanmar. Electronic archiving. Records may be archived electronically or physically with the approval from MIRD.
I. Returns and payment Periodic returns. CT returns are submitted within one month from the end of respective quarter
(for quarterly returns) and within three months from the end of the end of respective year (for annual returns). All taxpayers in Myanmar are required to file quarterly and annual commercial tax returns based on revenue declared in its accounts. Periodic payments. A supplier of goods and services must collect CT from the purchaser of the
goods or service and remit it to the MIRD (by cash, check, mobile-banking, electronic-banking, internet-banking or online tax payment) by the 10th day of the month following the month in which the tax point is triggered.
Electronic filing. Electronic filing is allowed in Myanmar, but not mandatory. Electronic filings
can be made via email or the e-filing system of MIRD.
Payments on account. Payments on account are not required in Myanmar. Special schemes. No special schemes are available in Myanmar. Annual returns. Annual return must be submitted to the MIRD within three months after the end
of respective year. The CT annual return contains information such as taxpayers’ details, computation on net CT due or overpaid for the financial year, etc. It is mandatory for all taxpayers liable for CT to file an annual return within the prescribed period.
Supplementary filings. Before filing the CT return, a taxpayer must ensure that the declaration of
the paid preparer and declaration of the taxpayer/representative have been signed.
Correcting errors in previous returns. Taxpayers may file an amended CT return to correct any
errors or omissions from prior filings no later than six years after the original CT return was filed.
Digital tax administration. There are currently no transactional reporting requirements in Myanmar.
J. Penalties Penalties for late registration. Failure to register for CT or notify about changes regarding tax-
payer information (including failure to apply for cancellation of tax registration) results in a penalty of 10% of the CT payable in the relevant assessment year. Penalties for late payment and filings. Failure to pay the monthly tax within the stipulated time
results in a penalty of 10% of the additional CT payable in the relevant assessment year.
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Failure to file tax returns in accordance with the prescribed timelines results in a penalty at higher of: • 5% of the tax due and an additional 1% of the tax due for each month (or the proportionate amount if less than a month) from the due date of the return until the date of the IRD assessment Or • MMK100,000 The penalty for failure to provide correct disclosures (such as using fraudulent or incorrect TINs, issuing incorrect invoices or receipts, issuing incorrect receivables or payable records, and providing invoices, receipts receivables and payables not according to tax laws or failure to provide, is MMK250,000. Penalties for failure to provide the documents or records as requested by the tax officer, comply with a notice requesting personal attendance for an examination relating to the assessment results. The penalty shall be as follows: • MK250,000 And/or • One-year imprisonment Penalties for errors. The penalty for failure to maintain records depends on the amount of tax
payable as follows: • MMK5,000 per day of failure for taxpayers with tax payable up to MMK500,000 • MMK50,000 per day of failure for taxpayers with tax payable up to MMK5 million • MMK100,000 per day of failure for taxpayers with tax payable in excess of MMK5 million Please note that the Director General may grant relief from penalty up to (30) days.
Failure to notify the MIRD of changes to a taxpayer’s CT registration details may result in a penalty of 10% of the amount of tax due. Penalties for fraud. For fraudulent activity resulting in underpayment CT:
• If underpayment is not more than MMK100 million or underpayment of tax does not account for more than 50% of actual tax due, the penalty is 25% of the deficient tax. • If the underpayment exceeds MMK100 million or the underpayment of tax accounts to more than 50% of the actual tax due, the penalty is 75% of the deficient tax. The penalty for disclosure of inaccurate or misleading information to the tax officer shall be MMK150,000 and, in addition, a higher penalty of the following: • The difference between the tax liability that should have been paid and the actual tax paid Or • The difference between the tax refund that should have been claimed and the actual tax refunded The penalty for to provide the requested information by the Director General of the MIRD shall be MMK500,000. Personal liability for company officers. There are no specific penalties for a company’s directors/
officers to be held personally liable for errors or omissions in CT declarations and reporting. However, it is stated that if an offense is committed by a company, every director or similar officer of that company is deemed to have committed the offense.