Sherpa Hossainy's Blog

Myanmar introduces 2pc advance tax on all imports and exports

Posted in Business, Export and Import, Finance, Myanmar, Tax, Yangon by Sherpa Hossainy on July 10, 2013

Published in Myanmar Business Today (Vol 1, Issue 19) on June 13, 2013

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In a move to improve tax compliance the Internal Revenue Department will start collecting a 2 percent income tax on the value of nearly all imported and exported goods, according to a new government notification.

The newly imposed tax will be implemented from June 14.

According to the notification, importers must pay an advance income tax assessment of 2 percent on the customs value of the goods for import and exporters must pay an advance income tax assessment of 2 percent on the value of all exported goods.

However, there are a few exceptions, including import of materials and equipment during the construction period of projects with an investment permit from the Myanmar Investment Commission (MIC).

The tax collected is counted as an advance payment of the income tax payable by the importer or exporter, and can also be reimbursed.

“A two percent cash leakage for all imports is likely to impact every businesses and consumers in Myanmar, but in most cases rather slightly,” Edwin Vanderbruggen, a partner at VDB Loi, a specialised law and tax advisory with offices all across Southeast Asia, said.

“Trading companies working on high volumes with very tight margins might be affected if their contractual framework doesn’t allow to pass on any unforeseen costs to their customers, and if they have difficulty in financing the sudden missing 2 percent,” he added.

“In theory exporters should not be adversely affected, and foreign investors should not be impacted if they have MIC permit,” Edwin said.

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