International Offices

Doing Business in Myanmar

1. Starting a Business in Myanmar

The Myanmar Companies Law 2017 (MCL) was approved by the President on 6 December 2017 and came in enforce on 1 August 2018, together with the Companies Regulations and others related notifications. Company incorporation is carried out by Directorate of Investment and Company Administration (DICA) in accordance with the provisions of MCL. Company Registrations can be completed via an online Companies Registry called “Myanmar Companies Online (MyCO)” (www.myco.dica.gov.mm) which was established by DICA. MyCO acts as a public registry of all companies and entities registered under MCL. The information on MyCO is maintained electronically and is publicly accessible.

A company or entity can be registered on MyCO in accordance with MCL and the Special Company Act (1950). The types of companies and entities which can be registered on MyCO are as follows:

• Private Company Limited by Shares
• Public Company Limited by Shares
• Company Limited by Guarantee
• Unlimited Company
• Business Association
• Public Company Limited by Shares under the Special Company Act 1950
• Private Company Limited by Shares under the Special Company Act 1950
• Overseas Corporation

MyCO can be used to incorporate companies, submit necessary forms after incorporation with the Companies Registrar (DICA), search company information and purchase company information.

In the case of a limited liability company, foreign ownership is allowed up to a maximum of 35% in local companies. This is a significant liberalization measure as foreign investors can now own up to 35% of the equity in Myanmar owned companies (directly or indirectly), without changing the company’s status to a “foreign company”

There are no restrictions on the transfer of shares in companies between local and foreign shareholders, but any change to “foreign” status for a company will need to be notified to DICA.

MCL allows companies with a single shareholder and single director to be established. It requires all companies established in Myanmar to appoint at least one director who is 'ordinarily resident' in Myanmar. A person will be ordinarily resident if they hold permanent residency or is resident in Myanmar for at least 183 days in each 12-month period. The period of residency will be calculated from the date of incorporation of a company (or the date of commencement of the new law for existing companies).

Public companies must appoint at least 3 directors, and at least one of the directors must be a Myanmar citizen who is ordinarily resident in Myanmar. There are no minimum capital requirements for the incorporation of company.
 

 

2. Investment Procedures: MIC Permit and Investment Endorsement

 

2.1 MIC Perm​

Before the Myanmar Investment Law, 2016 (MIL) any investor had to submit a proposal to Myanmar Investment Commission (MIC) for a permit, regardless of the business size if they intend to benefit from MIC incentives.

According to the MIL, while most projects no longer require approval of MIC, those meeting certain criteria will continue to need to do so. Projects proposals continuing to require a MIC permit include businesses which are;

• (a) Investment activities that are essential to the national strategy.
• (b) Large capital-intensive investment projects.
• (c) Projects which are likely to cause a large impact on the environment and the local community.
• (d) Investment activities which use state owned land and building.
• (e) Investment activities which are designated by the Government to require the submission of a proposal to the Commission.

     

2.2 Endorsement

If investors are not in the category of investment activities which require a MIC permit as described above (according to Section 36 of the MIL), the investors are not required to submit a permit proposal to the MIC.

However, in order to enjoy the right to use land under Chapter XII, and one or more of the exemptions and reliefs under section 75, 77 and 78 of the law, the investors should undergo an investment endorsement application process. Investor can apply to the MIC (if your investment amount is more than USD 5 million and less than 100 million or if your investment activity need approval from relevant ministry according to Notification No. 15/2017 (d).) or the State and Regional Investment Committee (if your investment amount is 5 million or 6000 million MMK as per Notification No. 11/2017 and not included in the list of Notification No.15/2017 (d).)

Investment proposal applications come under the Myanmar Investment Commission (DICA is the secretariat of the MIC)
 

3. Register with the Tax Office​

Ref Link: https://www.ird.gov.mm/ Company registration number on the incorporation certificate is also used as Tax identification Number (TIN) exclusively on Large Taxpayers Office (LTO) and Medium Taxpayers Office (1) (MTO-1). If the company is registered under Medium Taxpayer Office-2 (MTO-2) or Medium Taxpayer Office-3 (MTO-3), General Index Registration Number (GIR) is provided during company incorporation, In this case, for companies under MTO-2 and MTO-4, it is still necessary to visit Tax Office to obtain TIN. The following documents need to provide to the tax authorities;

• Incorporation Certificate
• Company Extract (can purchase on MyCO)
• Prescribed form from Tax Office

 

3.1 Register for Commercial Tax

Registration for commercial tax (similar to VAT): companies are obliged to register with the tax authorities one month before the start of their business if the business is expected to generate turnover subject to commercial tax (a broad array of products fall into this category, including manufactured goods).

Furthermore, within 10 days of starting a business the tax authorities should also be informed.

DICA compiles a list of newly registered companies each month and sends this information to the relevant townships where the businesses are located. Certificate of Commercial Tax Registration must be renewed annually.

A Commercial Tax is imposed on a wide range of goods, imported into or produced in Myanmar, trading sales, and services unless the list of goods and services are listed as exempt. The rates of Commercial Tax are set out in the schedules to the Union Taxation Law 2020.

The CT rate is generally 5% payable on services, items of goods produced in Myanmar, imports or exports. The CT rate 3% apply on sales of buildings after being constructed and income receiving from Hotel & Tourism businesses and 1% on gold and jewelry respectively. 15% CT rate on internet service and SIM card sale and SIM card activation service, MMK 2000 per one SIM card which is only for one time tax. However, the CT rate will not be levied on total income amounted to MMK 50 million payable on sales of goods produced in Myanmar or on services in a fiscal year. Registration for Commercial Tax is required for both resident and nonresident companies, and the Commercial Tax is paid to the relevant Township Revenue Department, Large Taxpayers Office or Medium Taxpayers Office. There is no commercial tax on the export of goods except for the export of electricity and crude oils subject to 8% and 5% of CT tax respectively.

Monthly payment on Commercial Tax is due by ten days of the following month. In addition, CT returns must be submitted once every three months and are due within one month from the end of relevant three months. An annual return is also submitted within three months after the end of a fiscal year
 

3.2 Corporate Income Tax (CIT)

A company is resident if it is formed under the Myanmar Companies Law 2017 (MCL) or any other applicable laws of Myanmar and where the control, management and decision-making of the company are situated and exercised wholly in Myanmar. Companies registered under the MIL and SEZ are treated as resident companies.

A non-resident company is a company not formed under any of the above laws. An overseas corporation (previously regarded as branch or representative company) in Myanmar are treated as a non-resident company.

Resident companies are taxed on their worldwide income where non-resident companies are taxed only on income accrued within Myanmar. Both resident and non-resident companies are liable to pay corporate income tax at a rate of 25% on total net profit before deduction on relief. However, resident companies registered under MIL and SEZ are taxed in accordance with the applicable income tax exemptions and reliefs on their investments.

Myanmar operates a one-tier corporate tax system, the taxable period of a company is the same as its financial year (income year), which is from 1 October to 30 September. Income earned during the financial year is assessed to tax in the assessment year, which is the year following the financial year. Income tax returns must be filed within three months from the end of the income year, i.e. by 30 December after the end of the income year. Tax returns for capital gains must be filed within one month from the date of disposal of the capital assets. The date of disposal refers to the date of execution of the deed of disposal or the date of delivery of the capital assets, whichever is earlier.
 

3.3 Personal Income Tax (PIT)​

The Myanmar citizens and foreigners who lived in Myanmar for at least 183 days are deemed as the residents subject to the tax purposes. Residents are taxed based on all Myanmar income source except on the salary income of non-resident citizens who are working abroad. Non-residents foreigners are taxed only on the income derived within Myanmar. The rate of Personal Income Tax on the residents and non-resident foreigners after deduction on exemptions and reliefs are as follows:

• 0% for taxable income MMK 0 – 2,000,000
• 5% for taxable income MMK 2,000,001 – 10,000,000
• 10% for taxable income MMK 10,000,001 – 30,000,000
• 15% for taxable income MMK 30,000,001 – 50,000,000
• 20% for taxable income MMK 50,000,001 – 70,000,000
• 25% for taxable income over MMK 70,000,000

Any individual who has received MMK 4.8 million of salary are exempted subject to tax in a year. Besides, the basis allowance of salary deduction is granted to 20% for resident individuals but must not exceed over MMK 10 million in a year. Residents are entitled to claim tax relief of MMK 1,000,000 per parent who are living with the taxpayer, MMK 1,000,000 for spouse and 500,000 per children.
 

3.4 Capital Gains Tax (CGT)

In Myanmar, capital gains are treated as income and fall within the scope of the Income Tax Law. Capital gains are taxed at a rate of 10% (where the value of capital assets disposed exceed MMK 10 million) for resident national or foreigner, or non-resident foreigner. The capital assets include land, building, vehicle, share, bond, securities or other similar documents.

Tax on disposals made by a non-resident foreigner, is to be paid in the same currency as the disposal or transfer transaction.

The rate of CGT on the transfer of shares in oil and gas companies increases with the amount of net profit earned on the transfer. The rates are:

• 40% (net profit is less than USD100 M)
• 45% (net profit is between USD100 M – USD150 M)
• 50% (where net profit exceeds USD150 M)

 

3.5 Stamp Duty

Stamp Duty in Myanmar is governed by the Myanmar Stamp Act 1899 (as amended from time to time) which prescribes stamp duties for various kinds of instruments requiring to be stamped such as agreements, MOA, lease agreements and other kinds of contracts. It also provides that if the instruments chargeable with stamp duty have been executed abroad, it may be stamped within three months from the receiving date in Myanmar. If the instrument chargeable with stamp duty is not properly stamped, it is inadmissible as a strong evidence according to law. In general, some common instruments needed to be stamped are as follows;

• Duty payable on the sale of immovable property – 4% of the value of the sale
• Duty payable on the rental of immovable property (contract for between 1 – 3 years) – 0.5% of the value of the lease
• Duty payable on the rental of immovable property (contract for more than 3 years) – 2% of the value of the lease
• Duty payable on the sale or transfer of shares – 0.1% of the value of the shares
• Duty payable on the bonds (including mortgage deeds) – 0.5% of the value of the bond
• Duty payable on joint venture agreements, production or profit sharing contract, construction agreement or other similar agreement or contract – 1% of the value (maximum duty is MMK 150,000)

 

4. Registration of employees at the Labor office in township

Registration of employees at the ministry is mandatory for labor tax purposes. Under the Employment and Skills Development Law 2013 (Section 5(a)), an employment contract must be executed within thirty days of employment.

Mandatory provisions that must be included in all employment contracts are provided under Section 5(b) of the Employment and Skills Development Law.

Those provisions are concerned with topics including remuneration, termination, duration and social security benefits. The Minister of Labor, Immigration and Population has issued a standard employment contract containing those provisions. The executed employment contract must be registered before the officer of township labor office in the presence of the employees and employer together.
 

4.1 Leave​

• (a) Casual leave: All employees are entitled to 6 days of annual paid casual leave. They may not be carried forward to the subsequent year and may not be utilized for more than three consecutive days at a time, except in the case of religious or compulsory events (e.g., weddings, funerals).
• (b) Earned leave: It may be enjoyed for a minimum of 10 days consecutively or separately per year of employment, provided the employee has completed 12 consecutive months of service with a minimum of 20 working days per month. Each month with less than the minimum of 20 full days of work, one day may be deducted from the minimum earned leave entitlement. It may be carried forward and accumulated up to 3 years unless otherwise agreed between employer and employee.
• (c) Maternity leave: Expectant mothers are provided six weeks of prenatal leave and eight weeks of postnatal leave for a total of 14 weeks of maternity leave. Additional four weeks will be given in case of twins. Up to 6 weeks of leave will be given in the event of a miscarriage.
• (d) Sick leave: Employees are entitled to 30 days of paid medical leave per year, provided that they have completed six months of service. Employees covered by the Social Security Law are entitled to additional leave if certain work injuries are apart from the 30 days of paid medical leave.
• (e) Paternity Leave: Employees are entitled to 15 days off at full salary.
• (f) Marriage Leave: Employees are entitled to paid marriage leave according to the relevant Wage Regulation Order (WRO). Employees working in organizations that are not regulated by (WRO) are allowed two working days of marriage leave.
• (g) Adoption Leave: An employee is eligible for up to 8 weeks of paid childcare leave under the Social Security Law when adopting a child under one year of age.
• (h) Childcare leave: There is no specific provision for careers’ rights. If emergency care is required for dependent, an employee can use their medical leave or casual leave, or annual leave entitlements.
• (i) Death leave: In the event of the death of a parent or family member, the employee shall be allowed to utilize annual leave or casual leave, and if all yearly and casual leave has been exhausted, the employee can take unpaid leave. No additional days of leave are provided as funeral leave.
• (j) Work-Related Injury Leave: There is no separate leave if an employee gets injured at work. This gets covered as part of the medical leave.

 

4.2 Overtime

According to the Shops and Establishments Act of 1951 (the “Relevant Labor Legislation”), overtime “shall be calculated at the rate of double the ordinary rate of wages payable to him”. Generally, overtime pay is required for work in excess of normal office working hours (exceeding an eight-hour day) and any work on public holidays, Saturdays and Sundays. Overtime is considered as hours worked beyond the legal limit on a daily and weekly basis being eight hours per day, and a total of 44 hours per week. Consequently, even if an employee has worked less than 44 hours a week, overtime shall only be paid on hours worked over eight hours on a daily basis. Given that most employers are no longer observing a ½ day work requirement on Saturdays, we are seeing employers provide overtime for any work hours exceeding 40 hours per week (rather than the 44 hours per week in the law, which contemplated a five- and half-day work week).

 

4.3 Minimum wages

The Minimum Wage Law (2013) (MWL) stipulates with formation of the National Committee on Minimum Wage, whose functions include the issuance of a notification on the stipulation of the minimum wage every two years, with the approval of the Union Government. Currently, the Notification No 2/2018 provides that the minimum wage for all locations and business types shall be MMK600 per hour or MMK4,800 for eight working hours per day. The minimum wage however does not apply to small enterprises and family businesses with fewer than ten employees. While the Notification 2/2018 prescribes the daily minimum wage, based on queries with the Department of Labor of the MIPL, the computation of the minimum monthly salary for monthly paid employees is MMK4,800 x 30 days or MMK144,000 regardless of the employee’s number of actual working days. The Minimum Wage Rules also stipulates that trainee employees and probationary employees are entitled to fifty percent and seventy-five percent of the minimum wage respectively.

 

4.4 Registration with the Social Security Board for social security benefits​

Companies with 5 or more employees need to register employees at the social security office for health and pension fund benefits. Under the Social Security Law, the employer must hold back 2 percent of an employee’s salary and put up 3 percent of the employee’s salary to the social security fund each month.

 

5. Visa Requirements for Foreign Employees

Ref Link: http://www.mip.gov.mm Foreign employees may work in Myanmar with a business visa. There are two types of business visas for foreign employees as follows;

• 1) Business Visa (Single) USD 50 : (70) Days. Can apply stay extension according to the rules and regulations.
• 2) Business Visa (Multiple) USD 200 : Duration of Validity: 3 Months. Allow multiple entry and stay. Can apply stay extension according to the rules and regulations. Do not need to exit after staying (70) days.
• 3) USD 400 : Duration of Validity: 6 Months. Allow multiple entry and stay. Can apply stay extension according to the rules and regulations. Do not need to exit after staying (70) days.
• 4) USD 600 : Duration of Validity: 1 year. Allow multiple entry and stay. Can apply stay extension according to the rules and regulations. Do not need to exit after staying (70) days.

 

6. Foreign Exchange control

Myanmar’s foreign exchange regulatory framework has evolved substantially since 2011. In order to ease its stringent foreign exchange controls, the Government of Myanmar enacted a new Foreign Exchange Management Law (FEML) in 2012. The FEML liberalizes transfer payments related to current account transactions, though transfers related to capital accounts remain conditional. The application of the new law in practice continues to evolve. However, companies registered under the new investment law are guaranteed the ability to repatriate investment and profits in the foreign currency in which such investments were made, subject to the approval of Myanmar Investment Commission (MIC).

The Central Bank of Myanmar established a managed float of Myanmar kyat in April 2012 with an initial auction at 818 kyat per one U.S. dollar. As of June 2019, the kyat was trading at about kyat 1520 per one U.S. dollar. and starting from 2022, CBM exchange rate USD 1= MMK 2,100. For more information, please see the Investment Climate Report.

 

7. Auditing and compliance requirements​

Myanmar operates two assessment systems: the self-assessment system (SAS) and the official assessment system (OAS). If the corporate taxpayer is under the SAS, then they are not required to submit audited financial statements to the Internal Revenue Department (IRD). Corporate taxpayers must submit their audited financial statements to the Directorate of Investment and Company Administration (DICA) and the IRD if they are under the OAS.

Small companies, classified as having less than 30 employees and revenue of less than 50 million kyat, are not required to submit their financial statements to DICA.

 

7.1 Fiscal Periods​

The financial year in Myanmar runs from April 1 to March 31 update on (FY2022- 2023). This financial year is mandatory for all businesses. Companies must file any corporate income tax returns and audited financial statements to the IRD.
     

7.2 Appointing Auditors

Companies incorporated in Myanmar must maintain proper books of accounts as well as appoint an auditor by the company’s directors. At each AGM, the directors must present the audited financial statements. A person must hold a certificate from an authorized body entitling them to act as an auditor for companies. All auditors must be either a certified public accountant or hold an accountancy degree in a foreign country recognized by the Myanmar Accountancy Council (MAC).

 

8. Ownership of Real Estate​

The type of property are immovable property and moveable property. According to Myanmar Laws, “immovable property” includes land and any other benefit to arise out of land, buildings and things attached to the earth or permanently fastened to anything which is attached to the earth, but not include standing timber, growing crops and grass. Any property, except immovable property, shall be defined as movable property.

The Transfer of Immovable Property Restriction Law, 1987 (“TIPRL”) (amended in 2005) must be noticed for foreigners or foreign companies in the transfer of immovable property. The notable provisions for foreigners or foreign companies are as follows;

Section 3 of TIPRL: No person shall sell, buy, give away, pawn, exchange or transfer by any means immovable property with a foreigner or foreigner owned company.

Section 4 of TIPRL: No foreigner or foreign owned company shall acquire immovable property by way of purchase, gift, pawn, exchange or transfer.

Section 5 of TIPRL: No person shall grant a lease of immovable property, for a term exceeding one year: (a) To a foreigner or foreigner owned company. (b) No foreigner or foreigner owned company shall receive a lease of immovable property, for a term exceeding one year.

Despite these provisions, the relevant Ministry may allow exemptions to a foreign government for the use of its diplomatic mission accredited to Myanmar or to United Nations’ organizations or to any other organizations of individuals.