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October 1, 2020
2020-6266

Myanmar enacts Union Taxation Law 2020

Executive summary

Myanmar’s Union Parliament promulgated the Union Taxation Law 2020 (UTL 2020) on 2 September 2020 and it will be effective from 1 October 2020. The UTL 2020 will be applicable for the financial year (FY) from 1 October 2020 to 30 September 2021 (i.e., FY  2020 - 2021).

This Alert summarizes the key differences between the UTL 2020 and the Union Taxation Law 2019 (UTL 2019).

Detailed discussion

Income Tax (IT)

Under the UTL 2020, there are no changes to the rates of personal income tax, capital gains tax and corporate income tax. We have provided a comparison of differences in the tax rates on income escaped from assessment for Citizens1 under the UTL 2019 and the UTL 2020.

Changes to tax rates on income escaped from assessment for Citizens

Pursuant to the UTL 2019, income escaped from assessment for Citizens who have invested in capital assets, construction and business expansion activities shall be subject to progressive tax rates ranging from 3% to 30%. Under the UTL 2020, the income tax rates on such income shall be increased to 6% – 30% as shown in the below comparative table.

Sr.

Income (Kyats)

UTL 2019

UTL 2020

From

To

Kyat

Kyat

1

1

100,000,000

3%

6%

2

100,000,001

300,000,000

5%

10%

3

300,000,001

1,000,000,000

10%

20%

4

1,000,000,001

3,000,000,000

15%

5

Above 3,000,000,001

30%

30%

Income escaped from assessment means income escaped from assessment realized/occurring before 1 October 2020. Moreover, the income tax rates will be effective only from 1 October 2020 to 30 September 2021.

Specific Goods Tax (SGT)

Increase in SGT rates

Under the UTL 2020, the SGT rates for cigarettes, alcohol, wine and cheroots will be increased. The below table illustrates the changes in SGT rates between the UTL 2019 and the UTL 2020.

Specific goods

Under UTL 2019

Under UTL 2020

Cigarettes

  • Range of MMK8 – MMK25 per stick (for 20 sticks per pack with selling price ranging from below MMK600 to MMK1,001 and above)
  • Range of MMK9 – MMK26 per stick (for 20 sticks per pack with selling price ranging from below MMK600 to MMK1,001 and above)

Alcohol

  • Range of MMK170 – MMK4,100 per liter (For one-liter value ranging from MMK200 to MMK1,000 and up to MMK15,000)
  • Range of MMK180 – MMK4,346 per liter (For one-liter value ranging from MMK300 to MMK1000 and up to MMK15,000)

Wine

  • Range of MMK81 – MMK3,250 per liter (For one-liter value ranging from below MMK750 and up to MMK16,500)
  • Range of MMK87 – MMK3,510 per liter (For one-liter value ranging from below MMK750 and up to MMK16,500)

Cheroots

  • MMK 75 pyas per stick
  • MMK 80 pyas per stick

* See Appendix (A) below for a list of Specific Goods and respective SGT rates under the UTL 020.

Commercial Tax (CT)

Under the UTL 2020, there are no significant changes to the CT. Amendments/additions to the list of goods and services exempted from CT under the UTL 2019 and the UTL 2020 are underlined in the tables below:

Amendments and additions to the CT exempted goods list

Under UTL 2019

Under UTL 2020

  • Sugarcane, sugar, palm sugar, brown slab-sugar, soymilk, milk, and dairy products, condensed milk, fresh milk, powered milk, yogurt
  • Sugarcane, sugar, palm sugar, brown slab-sugar, soymilk, milk, and dairy products, condensed milk, fresh milk, powered milk, yogurt (excluding the milk substitute products which are not produced by cow milk, buffalo milk, goat milk, and creamers)
  • X-ray film, plates and other X-ray equipment and pharmaceutical apparatus prescribed by the Department of Health, medical cotton wool, gauze, bandages, hospital tools to take medicines, surgical mask (once time used), cap, surgical glove, masks used to prevent flu, household pharmaceuticals, and other pharmaceuticals and traditional medicines (FDA registered medicines, raw material for medicine including raw material for traditional medicines, other than medicines which are restricted by Law, Rule & Regulation)
  • “X-ray film, plates and other X-ray equipment and pharmaceutical apparatus prescribed by the Department of Food and Drug Administration, medical cotton wool, gauze, bandages, hospital tools to take medicines, surgical mask (once time used), cap, surgical glove, masks used to prevent flu, household pharmaceuticals, and other pharmaceuticals and traditional medicines (FDA registered medicines, raw material for medicine including raw material for traditional medicines, other than medicines which are restricted by Law, Rule & Regulation)”
  • No Provision
  • Imported goods and goods purchased locally by United Nations organizations are added to the list of goods exempted from the CT

There is an additional provision under Section 14, sub-section (h) of the UTL 2020 which states that “imported goods under Temporary Admission or Drawback system in accordance with the customs procedure which were not exported back within the prescribed period and the goods were used for domestic consumption will be subject to 5% CT (which were exempted upon the importation) and shall be repaid in accordance with the customs procedures.”

Amendments and additions to the CT exempted services list

Under UTL 2019

Under UTL 2020

  • No Provision
  • Services obtained locally by Resident United Nations organizations are added to the list of services exempted from the CT
  • Domestic and International airline transportation service
  • The airline transportation services that collect charges on passengers of both domestic and overseas travel

* See Appendix (B) below for a full list of goods and services exempted from CT under UTL 2020.

Note:

See the link below to access the full version of the UTL 2020 in Myanmar language issued by the Union Parliament.

https://www.ird.gov.mm/sites/default/files/2020_UTL(V-030920)_1.pdf.

Appendix A – Specific goods and respective SGT rates under UTL 2020

SGT rates for importation and produced domestically

Sr.No

Description of specific goods

Price level

Tax rates

1

(a) Various types of cigarette

Up to sale price of 600 kyats for a pack of 20 cigarette

9 kyats per cigarette

 

(b) Various types of cigarette

Between the sale price of 601 - 800 kyats for a pack of 20 cigarette

18 kyats per cigarette

 

(c) Various types of cigarette

Between the sale price of 801 – 1000 kyats for a pack of 20 cigarette

23 kyats per cigarette

 

(d) Various types of cigarette

The sale price of 1001 kyats and above for a pack of 20 cigarette

26 kyats per cigarette

2

Tobacco

 

60%

3

Cured virginia tobacco

 

60%

4

Cheroot

 

MMK 80 pyas per stick

5

Cigar

 

80%

6

Pipe tobaccos

 

80%

7

Various types of betel chewing preparation

 

80%

8

(a) Various types of liquor

Between 300 – 1000 kyats per liter

180 kyats per liter

 

(b) Various types of liquor

Between 1001 – 2000 kyats per liter

449 kyats per liter

 

(c) Various types of liquor

Between 2001 – 3000 kyats per liter

749 kyats per liter

 

(d) Various types of liquor

Between 3001 – 4000 kyats per liter

1049 kyats per liter

 

(e) Various types of liquor

Between 4001 – 5000 kyats per liter

1349 kyats per liter

 

(f) Various types of liquor

Between 5001 – 6000 kyats per liter

1648 kyats per liter

 

(g) Various types of liquor

Between 6001 – 7000 kyats per liter

1948 kyats per liter

 

(h) Various types of liquor

Between 7001 – 8000 kyats per liter

2248 kyats per liter

 

(i) Various types of liquor

Between 8001 – 9000 kyats per liter

2548 kyats per liter

 

(j) Various types of liquor

Between 9001 – 10000 kyats per liter

2847 kyats per liter

 

(k) Various types of liquor

Between 10001 – 11000 kyats per liter

3147 kyats per liter

 

(l) Various types of liquor

Between 11001 – 12000 kyats per liter

3447 kyats per liter

 

(m) Various types of liquor

Between 12001 – 13000 kyats per liter

3747 kyats per liter

 

(n) Various types of liquor

Between 13001 – 14000 kyats per liter

4046 kyats per liter

 

(o) Various types of liquor

Between 14001 – 15000 kyats per liter

4346 kyats per liter

 

(p) Various types of liquor

Above 15001 kyats per liter

60% of the price of a liter

9

Various types of beer

 

60%

10

(a) Various types of wine

Up to 750 kyats per liter

87 kyats per liter

 

(b) Various types of wine

Between 751 – 1500 kyats per liter

264 kyats per liter

 

(c) Various types of wine

Between 1501 – 2250 kyats per liter

438 kyats per liter

 

(d) Various types of wine

Between 2251 – 3000 kyats per liter

615 kyats per liter

 

(e) Various types of wine

Between 3001 – 3750 kyats per liter

791 kyats per liter

 

(f) Various types of wine

Between 3751 – 4500 kyats per liter

966 kyats per liter

 

(g) Various types of wine

Between 4501 – 6000 kyats per liter

1229 kyats per liter

 

(h) Various types of wine

Between 6001 – 7500 kyats per liter

1580 kyats per liter

 

(i) Various types of wine

Between 7501 – 9000 kyats per liter

1931 kyats per liter

 

(j) Various types of wine

Between 9001 – 10500 kyats per liter

2282 kyats per liter

 

(k) Various types of wine

Between 10501 – 13500 kyats per liter

2808 kyats per liter

 

(l) Various types of wine

Between 13501 – 16500 kyats per liter

3510 kyats per liter

 

(m) Various types of wine

16501 kyats and above per liter

50% of the price of a liter

11

Logs and different types of timber

 

5%

12

(a) Engine power from 1501 CC to 2000 CC vans, saloons, sedans, wagons, estate wagons and coupes except Double Cab 4 Door pick up.

 

10%

 

(b) Engine power from 2001 CC to 4000 CC vans, saloons, sedans, wagons, estate wagons and coupes except Double Cab 4 Door pick up.

 

30%

 

(c) Engine power above 4001 CC vans, saloons, sedans, wagons, estate wagons and coupes except Double Cab 4 Door pick up.

 

50%

13

Kerosene, petrol, diesel oil, jet fuel

 

5%

14

Natural gas

 

8%

SGT rates for export

Sr.No

Description of specific goods

Tax rates

1

Logs and different types of timber

10%


Appendix B – List of goods and services exempted from CT under UTL 2020

List of goods exempted from CT

Sr.No

Description of goods

Foods

1

Paddy, rice, broken rice, rice bran, chaff, and paddy husk, wheat, wheat bran and wheat husk, various types of maize and corn powder

2

Various types of pulse, split, powdered pea, pea bran and pea shell, shelled and unshelled groundnut, sesame, flower sesame, cotton seed, rice bran

3

Garlic, onion, potato, spicy leaf, fruit, seeds, barks, prepared spices, chili, chili powder, turmeric, turmeric powder, ginger, ripe tamarind, various salt

4

Various fresh fruits, vegetables

5

Fresh tea leaf, dried tea leaf, sweet dried tea leaf, various types of packed dried tea leaf

6

Fresh fish, fresh prawn, fresh meat, various eggs such as hen eggs, duck eggs, etc.

7

Groundnut oil, Sesame oil

8

Sugarcane, sugar, palm sugar, brown slab-sugar, soymilk, milk, and dairy products, condensed milk, fresh milk, powered milk, yoghurt (excluding the milk substitute products which are not produced by cow milk, buffalo milk, goat milk, and creamers)

9

Various kinds of fish sauce, various kinds of dried fish and dried prawns, various kinds of pickled fish and pickled prawn, powdered prawn, powdered fish, various types of fish paste

Agriculture and livestock goods

10

Mulberry leaf, cocoon

11

Live animals, fish, prawn, terrestrial animals, aquatic animals, amphibians, their eggs, embryo, newborns, species, aquatic plants and seeds, sprout and algae

12

Various types of fertilizer using for growing and blossoming of plants including soil, chemical fertilizer, various kinds of insecticide, weed-killer that are used in agriculture, preventative medicine and pesticide that used in agriculture for not occurring fungi, bacteria, nematodes and other diseases, disinfectant that are used in livestock (not including mosquito insecticide for home, spray, pesticide), medicines and vaccines for animal, fish and prawn (including the medicine and vaccine approved by Ministry of Agriculture, Livestock and Irrigation and vaccine which had been certified by the Livestock Breeding and Veterinary Department), raw and finished goods for animal, fish and prawn feed (not including pets foods)

13

Oil-palm, sunflower seeds, cotton seeds, pumpkin seed, water-melon seed, cashew nut, betel nut, betel nutshell, pure seeds and seedlings of crops

14

Raw material of cotton, various type of cotton, cardamom plant, thanakha and products of agricultural land and gardening which are not elsewhere specified, coconut oil (not palm oil)

15

Coir yarn

16

Firewood, bamboo, finished and unfinished cane, firewood-substitute fuel stick

School and office used goods

17

Lac, various types of stamp (including revenue stamp)

18

State flag

19

Slate, slate pencil and chalk, graphite for the production of pencils

20

Various kinds of textbooks, various kinds of educational and technical books to be used in basic education schools, college and university, various kinds of exercise and drawing books, fiction and literature book, magazine, journal and various types of newspaper and paper sheets for the production of such books (within 40 Gsm to 80 Gsm) and all sorts of pencils, various types of ruler, eraser, pencil sharpener.

Health related goods

21

Herb

22

Honey and bee wax

23

X-ray film, plates and other X-ray equipment and pharmaceutical apparatus prescribed by the Department of Food and Drug Administration, medical cotton wool, gauze, bandages, hospital tools to take medicines, surgical mask (once time used), cap, surgical glove, masks used to prevent flu, household pharmaceuticals, and other pharmaceuticals and traditional medicines (FDA registered medicines, raw material for medicine including raw material for traditional medicines, other than medicines which are restricted by Law, Rule & Regulation)

24

Condom

Religious and social goods

25

Various types of rosary (not including rosary made by precious gemstones), religious clothes (robe etc.)

26

Fire-engine, rescue engine, hearse

Transportation goods

27

Fuel sold by the Ministry of Electricity and Energy to foreign embassies, UN organizations and foreign diplomats

28

Jet fuel sold to be used for planes flying domestic and abroad.

29

Machine, machinery and equipment and the spare parts of planes or helicopters

Industrial goods

30

Bleaching substance (only Hypochlorite using in bleaching), raw material of detergent, raw material of soap and raw soap

31

Jute and other fibers, rubber and Tragacanth Gum Herb

32

Equipment, machines and spare parts, tractors for farm and livestock, equipment, various types of machine and spare parts (other than vehicle that need to register according to Motor Vehicles Act) operated from the time of preparation of soil to harvest time with human labor or animals or machine efficiency separately, equipment, machine and spare parts that used in livestock. Breeds, eggs (including freeze breed) for using in inseminating, larvae and equipment that used for insemination

33

Solar panel, solar charger, controller and solar inverter

34

Raw materials or goods to be used directly as parts of goods provided by foreign resident supplier to use for production of finished goods on a CMP (cut the fabric, make garments, Trim/Pack the garments) basis or goods used for packaging the finished product, according to the need, machine, machinery, equipment and their spare parts (not for sale) imported by the business that operates on a CMP (cut the fabric, make garments, trim/ pack the garments).

Defense related goods

35

Weapons, vehicles, machineries, accessory and equipment, spare parts and accessories thereof used by State Defense and Security Organizations, various kinds of gun powder, various kinds of dynamites and related substances used by civil departments (only the things that imported with the permission of Office of the Commander-in-Chief (Army)). Goods purchased for the use of defense services and for the consumption of defense services personnel incurred from the expenditure allotted in the budget accounts for the Ministry of Defense

Gemstone and mineral products

36

Pure gold (standard gold bars, gold block, gold coins), in uncut forms and finished in cut forms of jade, ruby, sapphire selling at the Myanmar’s Gems and Jewelry supervised and held by the Government in country

37

Oil dregs

General goods

38

Materials sold in foreign currency to overseas passengers at specific places

39

Goods to be used by foreign embassies or small embassies and their diplomats and non-diplomat staff inclusive of reciprocal right policy between two countries which are permitted by Ministry of planning and finance with notification, proposing from Ministry of foreign affairs in consent with the Union Government

40

Imported goods and goods purchased locally by United Nations organizations

41

Goods purchased with the donation or funds provided by domestic and foreign organizations to the State

42

Goods exempted by the Pyidaungsu Hluttaw as per the needs of the State

43

Goods imported by temporary admission or drawback system in accordance with the Custom’s procedures

List of services exempted from CT

Sr.No

Description of Services

Foreign affairs sector

1

Services acquired by foreign embassies or small embassies and their diplomats and non-diplomat staff inclusive of reciprocal right policy between two countries which are permitted by Ministry of planning and finance with notification, proposing from Ministry of foreign affairs in consent with the Union Government

2

Services obtained locally by Resident United Nations organizations

Defense sector

3

Printing service by the security printing of the Ministry of Defense

Religious and cultural sector

4

Culture and fine art service

Transportation and communication sector

5

Renting of parking space service

6

Transportation of goods service (Transportation by train, motor vehicles, vessels, airplanes and machineries except the pipeline transportation)

7

Moving household service

8

Collecting toll service

9

International and domestic passenger air transport service with fee

10

Public transportation service

11

Postal services rendered by Union Government

Education and information sector

12

Education services

13

Book, magazine, journal, newspaper publishing service

Health sector

14

Healthcare service except body fitness

15

Traditional massage service/ Blind massage service

16

Animal healthcare and welfare service

17

Collecting fees at public toilet service

Planning and finance sector

18

Life insurance service

19

Microfinance service

20

Capital market service

21

Monetary service providing with the permission of the Bank and Central Bank

22

Customs and port clearance service

23

Union Lottery service

Social welfare, relief and resettlement sector

24

Hiring of equipment used in catering service

25

Funeral service

26

Childcare service

Industry and electricity sector

27

Providing raw materials in return for finished goods system service.

28

Mechanized agriculture service

29

Private owned small electrical distribution services for the region which are not connected with Maha (Main) grid

General sector

30

License fees payable to State organizations to obtain the permission for operating any matter

31

Services exempted by the Pyidaungsu Hluttaw as per the needs of the State

32

Service acquired with the donation or funds provided by domestic and foreign organizations to the State

33

Services provided each other by the organization such as the President’s Office, the Union Government’s Office, the Pyidaungsu Hluttaw Office, the Pyithu (Public) Hluttaw Office, the Amyotha (National) Hluttaw Office, the Supreme Court of the Union, the Constitutional Tribunal of the Union, the Union Election Commission Office, the Union Attorney General’s Office, the Union Auditor General’s Office and the Union Civil Service Board Office, Union Ministries, the Nay Pyi Taw Council Office, the Central Bank of Myanmar, Social Security Board, State or Region Government’s Office, Departments (Services provided by State-owned enterprises and services acquired by State-owned enterprises are not included).

Endnote

1. This is a tax which is assessed on undisclosed income.

_____________________________________________________________________________________________________________

For additional information with respect to this Alert, please contact the following:

EY UTW Advisory Limited, Yangon

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