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Tax Structure and Incentives
| Sr.
No.
|
Type
of Taxes
|
Administrative
Department
|
| 1.
|
Taxes
levied on domestic production and public consumption
|
| |
Exercise
duty
|
General
Administration Department
|
| |
Licence
fees on imported goods
|
Ministry
of Trade
|
| |
State
Lottery
|
Internal
Revenue Department
|
| |
Taxes
on transport
|
Department
of Road Transport Administration |
| |
Commercial
tax
|
Internal
Revenue Department
|
| |
Sales
proceed of stamps
|
Internal
Revenue Department
|
| 2.
|
Taxes
levied on income and ownership
|
| |
Income
tax
|
Internal
Revenue Department
|
| |
Profit
tax
|
Internal
Revenue Department
|
| 3.
|
Customs
duties
|
| |
Customs
duties
|
Customs
Department
|
| 4.
|
Taxes
levied on utility of State-owned properties
|
| |
Taxes
on land (Land revenue)
|
General
Administration Department
|
| |
Water
tax and embankment tax
|
General
Administration Department
|
| |
Tax
on extraction of forest products
|
Forest
Department
|
| |
Taxes
on extraction of minerals
|
General
Administration Department
|
| |
Tax
on fisheries
|
Fishery
Department
|
| |
Tax
leived on rubber
|
Forest
Department
|
Income Year
Income is computed on the basis of one
fiscal year which starts on April 1 and ends on March 31 of the
following year. The fiscal year in which income is received is
expressed as ϋ income yearϋ and the year following it as ϋ
assessment yearϋ .
Tax Structure
At present there are fifteen types of
taxes and duties under four main categories.
Taxable Income
A person or an enterprise operating under
the Foreign Investment Law is liable to income tax on the income
accruing or derived from all sources within the Union of Myanmar.
Tax Rates
A tax rate of 30 per cent is applicable to
an enterprise operating under the Foreign Investement Law and those
operating under the Myanmar Companies Act.
A foreign employee of any enterprise
operating under the Foreign Investment Law, for income tax purposes
could be treated as a resident citizen. As a consequence progressive
tax rates starting from 3 per cent to a maximum ceiling of 30 per cent
is applicable. From the total income a basic allowance of 20 per cent
of total income subject to a limit of K 6,000, wife and children
allowances and life insurance premium for the employee and spouse are
deductible before the rates are applied.
Relief allowed for the wife of an assessee
is K 2,500. However, the wife shall not on her own earn on assessable
income within the income year.
Children allowance
| For
each child under 5 years of age |
K
500 |
| For
each child above 5 & under 10 years |
K
600 |
| For
each child above 10 & under 1 5 years |
K
800 |
| For
each child above 15 years |
K
1,000 |
Children must be unmarried/if over 18
years, receiving full time education and having no taxable income of
his or her own.
Deductions at Source (Withholding tax)
The employer responsible for paying income
chargeable under the head "Salaries" must at the time of
payment, deduct income tax due from such payment and remit the amount
to the Town Revenue Office. Employers are also required to furnish an
annual return pertaining to such deductions within three months of the
end of the income year.
Payments on income such as interests.
royalties and on contracts are subject to withholding tax at various
rates as shown in the table below.
| TAX |
For resident foreigners |
For non-resident foreigners |
| 1. |
Interests |
15 % |
20 % |
| 2. |
Royalties for the use of licence,
trade marks, patent rights etc. |
15 % |
20 % |
| 3. |
Payment on contracts undertaken by
State organisations, development committees and co-operative
societies |
3 % |
3.5 % |
| 4. |
Payment for work done to foreign
contractor |
2.5 % |
3 % |
A relief of early years of inception may
be applied.
Tax Exemptions and Reliefs
An enterprise covered by the Foreign
Investment Law is entitled to a tax holiday period of three
consecutive years inclusive of the year of commencement of production
or services and also to a further reasonable period. provided the
Commission, in the interests of the State, considers such extension
appropriate.
In addition, the enterprise may obtain any
or all of the following exemptions and reliefs: -
- Exemption or relief from tax on profit
held in reserve and ploughed back into the business within one year.
- Accelerated depreciation of capital
assets.
- Relief from up to 50 per cent of
income tax on the profits arising from the export of goods produced
by the enterprise concerned.
- Allowance for research and development
expenditure which is necessarily incurred within the State.
- Right to carry forward and set-off
losses for up to three consecutive years from the year the loss is
sustained.
- Right to deduct an amount of income
tax paid to the State on behalf of a foreign employee from the
assessable income of the enterprise.
- Exemption or relief from customs
duties and/or other taxes on machinery, equipment, components, spare
parts, instruments and other materials imported during the period of
construction.
- Similar exemption or relief on raw
materials imported in the first three years commercial production
following the completion of construction.
Income and Allowable Expenses Exempt
from Tax
Dividends and share-profits received are
not treated as part of the total income of the recipient and are
exempted from tax. Expenses incurred in earning the income, and the
depreciation allowance inclusive of initial depreciation allowance in
respect of capital assets are deductible from the gross income but it
does not include expenses which are of capital, personal or domestic
nature, and which are not commensurate with the volume of business.
The payments made by a firm or an association of persons to its
partners by way of salaries, wages, bonuses, commissions are also not
allowed.
Amount actually donated to any approved
institution or fund established for religious or charitable purpose is
also deductible but not exceeding twenty five percent of the total
income.
Carry Forward of Loss
A loss, not being a capital loss or a
share of loss from a source of income can be set off against the
income from the remaining sources of income in the same year.
Unabsorbed net loss can be carried forward and set off up till the
following three consecutive years.
Advance Payment of Tax
Advance tax is payable monthly or
quarterly by an enterprise in the course of the year in which the
income is made on the basis of projected income for the whole year and
credit is given for such payment in the regular assessment.
Tax Returns
The return of income is to be filed with
the Office of the Internal Revenue in the respective townships on or
before June 30 following the income year, but on the business being
discontinued it is to be filed within one month from the date of
discontinuation.
Returns for capital gains are also to be
sent in within one month of the disposal of the capital assets
concerned.
Customs Duties
With a few exceptions, all imported goods
are liable to customs duties and would accordingly have to be declared
to the Customs Department. In order to levy customs duties in
accordance with the market oriented economic system and to have a
harmonized system of grouping and symbolizing goods as practised in
most nations of world, the Tariff Law was promulgated in March 1992
and notifications have been issued. The customs duties levied on the
import of machinery, spare parts and inputs, generally range from 5
per cent to 30 per cent.
With regard to export duty, tax is levied
on the export of a few commodities. The rates applicable are K. 10 per
metric ton for rice and rice flour, 10 per cent ad valorem for bamboo
and 5 per cent ad valorem for rice bran, rice dust, raw hides and
skins, oil cakes, pulses and cereals, other than rice and rice
prodccts.
Commercial Tax
The Commercial Tax Law was promulgated on
March 31,1990 and became effective from the financial year 1990/91.
This law was amended in March 1991. Commercial tax is a turn over tax
levied on goods and services. The tax is imposed on a wide range of
goods and services produced or rendered within the State and the
imported goods from abroad. Except for Trade, the tax is imposed as an
advalorem single stage tax, that is at the point of sale of producer
or manufacturer for domestically produced or manufactured goods.
The tax payable for imported goods is to
be collected by the Customs Department in the same manner as the
customs duty is collected.
Regulations are provided to set off input
from output tax, in case of production and services in order to avoid
tax cascading.
The tax is levied according to the
schedules appended to the said law. Schedule I lists tax free items
comprising 65 essential and basic commodities. Schedule II to V carry
rates ranging from 5 per cent to 25 per cent depending on the nature
of the goods. The tax will be charged on the landed cost of the
imported goods and on the sale proceeds of the goods produced within
the State. Schedule VI is for specific type of commodities such as
cigarette. fuel oil, liquor, pearl, jade and gems on which tax is
chargeable at rates ranging from 30 per cent to 200 per cent and
Schedule VII is applicable to services including trade.
On the proceeds of sale from trading
business, no tax shall be payable according to Schedule VII, serial
number 3 in respect of goods imported from abroad.
The tax rates for services are 8 per cent
on passenger transport fares, 30 per cent on movie shows, 15 per cent
on other forms of entertainment, 5 per cent on trading and 10 per cent
on hotel, lodging and restaurant services.
There are provisions for the exemption of
commercial tax whenever such exemption is considered appropriate
particularly as incentives for newly established business and exports.
Every enterprise engaged in the production
of goods and services liable to commercial tax must first be
registered with the Township Revenue Office. An application for
registration must be filed one month before the commencement of
business, furnishing an intimation within ten days of the commencement
of business.
The tax is payable monthly on or before
the 10th of each month for gross sales or receipts of the preceding
month. Quarterly gross sales or receipts must be filed with the
Township Revenue Office within one month of the end of the respective
quarter. An annual return must also be filed within three months of
the end of the respective year for the purpose of final assessment.
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