The Government in Myanmar is reviewing tax laws with potential changes expected in the near future. For companies, correct tax reporting will be even more important. Selecting the correct corporate structures, accounting and management procedures will be imperative.
Reports indicate that one of the Government’s objectives is to broaden the tax net, to extend the range of areas from which tax is derived.
Government expenditure has indeed been increasing, so an increase in available budgets bodes well for more new projects. Investors can expect more JV opportunities. There have been enormous changes and substantially higher levels of investment in Myanmar, with more on plan, and these project costs have to be met.
If you have been following news outlets and or our blogs you will know that a raft of changes in laws and regulations have been arriving with the aim (that is producing exactly this desired result) of encouraging even more investment from overseas.
Should potential investors be concerned about new taxes?
Digging deeper into this question reveals some interesting facts. The results will surprise you and encourage you to invest in Myanmar. Why?
Here are some results of a short review we completed comparing levels of tax versus national GDP in Myanmar.
In 2015 for Myanmar, total tax as a percentage of GDP was 4.9%. In Thailand, as a comparison, total tax was 17 percent of national GDP. Myanmar has consistently shown a percentage that is considerably lower than most other countries in Asia, indeed anywhere in the world. If you are reviewing investment opportunities in Asia and choosing in which country to invest, the recorded figures for Myanmar are noteworthy.
Percentage of Taxes Collected to GDP
When tax revenues do rise, which is expected, Myanmar has excellent growth forecasts:-
- GDP: Expected to grow by 6.6% in 2018 and by 7.0% in 2019.
- Inflation rates: “Forecast at 6.2% in 2018 and 6.0% in 2019.
- Per capita GDP growth: Expected at 5.9% in 2018 and 6.3% in 2019.
Source ADB Bank
A fully electronic tax recording system is to be introduced. In April 2017, The Government announced a “Modernization of Public Finance Management Project (MPFMp)”. Myanmar received US$ 30 million from the World Bank, and a US$25 million grant from the UK and Australian governments towards the costs for “Modernization of Public Finance Management systems”. The project has multiple aims including supporting “efficient, accountable, and responsive delivery of public services” and improved “External Oversight and Accountability”.
Recent announcements by U Min Htut, Director General of the Internal Revenue Department confirm that potential changes are under review. U Min Htut was appointed in May 2013.
A more timely reporting system will pave the way for fines to be introduced for late payment of taxes, adding to the importance for all companies to have in place a correct corporate tax management and reporting structure.
FocusCore has been operating in Myanmar since 2014, providing a wide range of corporate services from Company Incorporation, MIC Application Services, Corporate Secretarial Services, Staffing, Payroll & Bookkeeping Services, License & Permit Services, Tax & Compliance Services, to finding the perfect office space.