On 24 September 2019, Pyidaungsu Hluttaw (i.e., the Union Parliament) passed the Union Tax Law 2019 (UTL 2019). The UTL 2019 came into effect on 1 October 2019.

We discuss below the key changes introduced by the UTL 2019.

1. Changes to the Income Tax Law

Key changes to the income tax law are as follows:

(a) Conditional amnesty

The UTL 2019 provides a conditional amnesty to encourage taxpayers to self-correct income tax non-compliance that is applicable to income unassessed before 1 October 2019. The amnesty period will start from 1 October 2019, and expire on 30 September 2020.

Under the amnesty, if the taxpayer invests in purchasing capital assets, construction, acquiring and establishing a new business, and business expansion, such income may be deducted. The taxpayer will be subject to tax on the remaining amount of unassessed income at lower rates as follows:

Unassessed Income Declared in Kyat (K)

Tax Rate Offered

From K 1 to K 100,000,000

3%

From K 100,000,001to K 300,000,000

5%

From K 300,000,001 to K 1,000,000,000

10%

From K 1,000,000,001 to K 3,000,000,000

15%

3,000,000,001 and above

30%


We are hopeful that the amnesty will mobilise private funds and result in more capital injection into Myanmar's economic system.

(b) Cash rewards received as a result of the seizure of unlawful property

Previously, there was an income tax exemption threshold of K 10,000,000 per annum for cash rewards received once or several times as a result of the seizure of unlawful property. Under the UTL 2019, the income tax exemption threshold has been removed. As such, the total amount of the cash rewards will be exempted from income tax.

(c) Powers granted to the Ministry of Planning and Finance (Ministry)

Previously, the Ministry, with the consent of the Union Government, may grant exemptions for income tax matters relating to Yangon Stock Exchange listed public companies for the purpose of stock exchange market development. The UTL 2019 amends the powers granted to the Ministry to cover instead income tax matters relating to market development of securities.

2. Changes to the Special Commodity Tax Law

Under the UTL 2019, the special commodity list remains the same except for the following:

(a) Cigarettes and cheroots

The tax rates for various kinds of cigarettes have increased.

Tax Rates Applicable to Various Kinds of Cigarettes 
Price Range for a Pack Containing 20 Sticks

New Tax Rate (Per Stick)

Old Tax Rate (Per Stick

Up to K 600 K 8 K 6
From K 601 to K 800 K 17 K 14
From K 801 to K 1,000

K 22

K 19
From K 1,001 and above K 25 K 21

The tax rate for cheroots has been increased from K 0.50 to K 0.75 per stick.

The tax rate for Virginia and cured Virginia tobacco remains unchanged (i.e., 60%). Further, the tax rate for cigars, piped tobacco, and betel quid preparations remains unchanged (i.e., 80%).

(b) Alcoholic beverages

The tax rates and value tiers for various kinds of liquor have changed, and are now as follows:

Tax Rates Applicable to Various Kinds of Liquor
Price Range

Tax Rate

From K 400 to K 1,000 per litre (L) K 170 per L
From K 1,001 to K 2,000 per L K 424 per L
From K 2,001 to K 3,000 per L

K 707 per L

From K 3,001 to K 4000 per L K 990 per L
From K 4,001 to K 5,000 per L K 1,273 per L
From K 5,001 to K 6,000 per L K 1,555 per L
From K 6,001 to K 7,000 per L K 1,838 per L
From K 7,001 to K 8,000 per L K 2,121 per L
From K 8,001 to K 9,000 per L K 2,404 per L
From K 9,001 to K 10,000 per L K 2,686 per L
From K 10,001 to K 11,000 per L K 2,969 per L
From K 11,001 to K 12,000 per L K 3,252 per L
From K 12,001 to K 13,000 per L K 3,535 per L
From K 13,001 to K 14,000 per L K 3,817 per L
From K 14,001 to K 15,000 per L K 4,100 per L
K 15,001 and above per L 60% of the 1 L price

The tax rate for various kinds of wine with a price that ranges from K 16,501 to K 19,500 per L is now 50% of the 1 L price (previously, it was K 3,900 per L). Wines with a price above K 19,500 per L have been removed from the special commodity list.

The tax rate for various kinds of beer remains unchanged (i.e., 60%).

(c) Natural gas

Sales income generated from exporting natural gas is no longer subject to special commodity tax. Previously, tax at the rate of 8% was applicable.

(d) Gemstones

Gemstones are now no longer subject to special commodity tax. Previously, special commodity tax was levied at the rate of 15% on uncut jades, 10% on other uncut gemstones (excluding diamonds and emeralds), and 5% on polished gemstones and gemstones embedded in jewelry (excluding diamonds and emeralds).

3. Changes to the Commercial Tax Law

The list of goods and services that are exempted from commercial tax remains the same except for the following key changes:

(a) there have been some changes to the wording for the tea leaves category (which is exempted from commercial tax), such that it now covers tea leaves (for eating), black tea leaves, English tea leaves, and processed tea leaves;

(b) yoghurt is now included in the list; and

(c) postal services provided by the Union Government are now included in the list.

Currently, commercial tax is imposed at the rate of 1% on income from the sale of gold jewelry. The UTL 2019 clarifies that commercial tax paid for purchasing gold jewelry within the country or importing gold jewelry may not be set off against the commercial tax payable for selling or exporting the same.

4. Gemstones Tax

As discussed above, gemstones are no longer subject to special commodity tax. In addition, gemstones are no longer subject to a 5% commercial tax.

Instead, gemstones are now regulated under the Myanmar Gemstones Law which imposes tax on uncut gemstones, polished gemstones, jewelry and items made with gemstones in accordance with prescribed tax rates. Any gemstones tax collected is to be transferred to the Internal Revenues Department's bank account.

Sales of gemstones will be assessed based on the actual sales price or the sales price as determined by the Myanmar Gemstones Enterprise, whichever is higher. Tax applicable to the import of gemstones will be assessed based on the landed cost.

The applicable tax rates are as follows:

Type of Gemstones

Tax Rate

Uncut jades 11%
Rubies, sapphires, and other uncut gemstones (except for diamonds and emeralds) 9%
Polished jades, rubies, sapphires, and other gemstones (except for diamonds and emeralds). Also, polished jewellery in which jades, rubies, sapphires, and other valuable gemstones (except for diamonds and emeralds) are embedded.

5%

Items made from gemstones 5%
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