There has been a series of sweeping tax reforms during the past year in Myanmar. The government has issued many notifications about these changes and there are some important ones for foreign investors to consider.
Corporate Income Tax Rates
Bearing in mind the incentives offered under the Foreign Investment Law, current corporate income tax rates are the following:
Company investing under the FIL with an MIC Permit – 25% flat tax
Company investing without an MIC Permit – 25% flat tax
Special Companies engaged in business with the State – 25% flat tax
Branch office investing with an MIC Permit – 25% flat tax
Branch office without MIC Permit – 35% flat tax
State Owned Enterprise – 25% flat tax
Sole Proprietorships – 2-30% progressive tax (based on revenue)
Individual Income Tax Rates
Individual incomes are taxed progressively in Myanmar. In the past decade there has been very low compliance in paying taxes from individuals. It remains to be seen how effective Myanmar’s new government will be in collecting taxes. There are 2 types of individual income tax in Myanmar – one for taxes on salaries and the other for taxes on business income.
The following are tax rates in 2012 for income earned from salaries based on Notification 107/2012.
Personal income tax on salaries – 1 – 20%
Most foreigners will find themselves in the top income tax bracket in Myanmar which has a threshold of 20,000,000 Kyat per year (about $23,500 at current rates). Individuals who make under 1,440,000 Kyat per year (about $1,700 at current rates) do not need to pay income taxes.
Income earned from a business (i.e. if you are not an employee and you own your own business) is taxed at progressive rates between 2 – 30%, with the top threshold being 30,000,000 Kyat (about $35,000 at current rates) per year.