www.pwc.com              Myanmar              Business GuideAugust 2012
Table of Contents        1. Foreword                                   4        2.     The Economy                        ...
7. Other Considerations                                     277.1.   Commercial registration and licensing requirements   ...
Foreword               It is impossible to ignore the           landscape have resulted in optimism               enormous...
Contacts      PwC Myanmar Desk      Ong Chao Choon        Partner    chao.choon.ong@sg.pwc.com          +65 6236 3018     ...
2. The Economy                 Myanmar is rich in natural resources          7% in industry, reflecting Myanmar’s         ...
Exports of gas increased by nearly15% to an estimated US$3 billion.Gemstones and jade exports,however, declined after doub...
Gas production and exports are                   and contribute to a widening of the      2.3. Major Investors in  schedul...
South Korea is the fourth largest          Table 2: Foreign investments by CountryForeign Direct Investment (FDI)contribut...
2.4. Sanctions                          rebel groups and liberalisation of        “The European Union welcomes the        ...
Country      Examples of past sanctions                    Action taken and current status            • Visa bans for pers...
Sustainability of political reforms      economy in five years and further  and long term prospects                  accel...
3. Conducting Business in Myanmar              3.1. Form of Business                     namely a private limited liabilit...
-	 minimum foreign share capital for    A foreign company formed under the        2. Branch of a company     companies reg...
3.2. Foreign Investment                   7.	 air and railway transport services        products and similar products,Rest...
-	 The right to pay income tax           The Myanmar SEZ Law is a basic             -	 50% income tax relief on     payabl...
3.4. Investment Guaranteeand ProtectionInvestment Guarantee andProtectionThe MFIL provides an explicitguarantee that an ec...
4. Taxation in Myanmar                   4.1. Corporate Income Tax              from any capital assets within            ...
Table 5: Corporate Tax Rates   Type of Taxpayer or Income                                                                 ...
The Ministry of Finance and Revenue             Non-deductible items include                   include shares, bonds and s...
years (Sec. 20 ITL).                       has concealed income or particularsDouble tax agreements                       ...
4.2. Personal Income Tax                     resident foreigners working for MFIL     Taxable income                      ...
Social Security Contributions           Payment of tax                              on the sales proceeds. The tax is also...
5. Other Taxes                      5.1. Property Tax                       are provided in Schedule 1 of the Act.        ...
6. Human Resources and Employment Law             6.1. Employment of                       In the appointment of personnel...
Work Permit Processing and              These laws govern labour relations  Requirements (Managerial,               proble...
7. Other Considerations              7.1. Commercial registration            commission basis or any business             ...
Foreign Exchange Management               any currency or foreign exchange          the MIC. The lease can be extended  De...
Pw c report on myanmar
Pw c report on myanmar
Pw c report on myanmar
Pw c report on myanmar
Pw c report on myanmar
Pw c report on myanmar
Pw c report on myanmar
Pw c report on myanmar
Pw c report on myanmar
Pw c report on myanmar
Pw c report on myanmar
Pw c report on myanmar
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  1. 1. www.pwc.com Myanmar Business GuideAugust 2012
  2. 2. Table of Contents 1. Foreword 4 2. The Economy 6 2.1. Economic Prospects 7 2.2. Economic Structure 8 2.3. Major Investors in Myanmar 8 2.4. Sanctions 10 3. Conducting Business in Myanmar 13 3.1. Form of Business 13 3.2. Foreign Investment Restrictions 15 3.3. Investment Incentives 15 3.4. Investment Guarantee and Protection 17 4. Taxation in Myanmar 18 4.1. Corporate Income Tax 18 4.2. Personal Income Tax 22 4.3. Commercial Tax 23 5. Other Taxes 24 5.1. Property Tax 24 5.2. Stamp Duty 24 5.3. Custom Duty 24 5.4. Excise Duty 24 6. Human Resources and Employment Law 25 6.1. Employment of Foreigners 25 6.2. Labour Laws in Myanmar 262 PwC
  3. 3. 7. Other Considerations 277.1. Commercial registration and licensing requirements 277.2. Exchange control 277.3. Foreign ownership of land and property 287.4. Arbitration law 287.5. Economic and Trade Agreements 288. Banking in Myanmar 308.1. Financial Structure of Myanmar 308.2. Foreign exchange rates 338.3. Interest rates 339. Country Overview 349.1. Country snapshot 349.2. Brief History 369.3. Demographics 379.4. Political System and Governance Structure 38 3 Myanmar Business Guide
  4. 4. Foreword It is impossible to ignore the landscape have resulted in optimism enormous economic, political and from the global business community. social transformations which have However, there are also numerous been sweeping through Myanmar in practical considerations. I trust recent times. Change is happening at this guide will serve as a valuable a rapid pace in Myanmar. Economies reference guide to help you embark such as the US and European Union on a successful and profitable venture continue to ease long held bans on in Myanmar. foreign investment into the country. Equally important, Myanmar is I am pleased to share that PwC is in taking steps to liberalise its state the process of setting up an office controlled economy. in Yangon. These details will be available shortly. In the meantime, Although these developments bring the contact details of the team behind immense opportunities for businesses the Myanmar desk in Singapore are looking to invest in Myanmar, contained in this guide. challenges remain. PwC’s inaugural edition of the Myanmar Business Guide provides a comprehensive summary of the various key Yeoh Oon Jin developments, as well as practical Chairman Designate guidance and considerations for PricewaterhouseCoopers LLP, doing business there. Singapore August 2012 Inside you will find details on Myanmar’s economy and investment climate, including its growth prospects and recent developments regarding international sanctions against the country. PwC has also provided insights on Myanmar’s laws on taxation, human resources and employment as well as insights on foreign exchange, ownership of land and property, and the country’s banking system. We would also like to acknowledge the assistance of U Win Thin, who provided valuable local insights into these topics which have been incorporated into the guide. The significant developments in Myanmar’s economic and political4 PwC
  5. 5. Contacts PwC Myanmar Desk Ong Chao Choon Partner chao.choon.ong@sg.pwc.com +65 6236 3018 Chris Woo Partner chris.woo@sg.pwc.com +65 6236 3688 Jovi Seet Partner jovi.seet@sg.pwc.com +65 6236 3168 Lim Hwee Seng Partner hwee.seng.lim@sg.pwc.com +65 6236 3118 PwC Services include the following: 1 Mergers and acquisitions advisory 2 Capital projects and infrastructure advisory 3 Market entry advisory and market studies 4 Taxation, customs and excise duties advisory services 5 Audit and other assurance services 6 Human resources advisory and international assignment services 7 Accounting, incorporation and corporate secretarial services 8 Anti-corruption and corporate restructuring services 9 Consulting services 5 Myanmar Business Guide
  6. 6. 2. The Economy Myanmar is rich in natural resources 7% in industry, reflecting Myanmar’s such as arable land, forestry, primarily agricultural economy. minerals, natural gas, as well as freshwater and marine resources, The most productive segments of the gems and jade. The country has economy are currently the extractive recently emerged as a natural industries, in particular oil and gas, gas exporter, with exports to mining and timber. Other areas such neighbouring countries providing as manufacturing and tourism, which an increasingly important revenue represent a small share of economic stream. activity, are largely accounted for by state industries. The economy is expected to have grown 5.5-5.8%1 in the fiscal year While the Myanmar government ending 31 March 2012 (FY11) has good economic relations with compared to 5.3% and 5.1% in FY10 neighbours such as China and and FY09 respectively, driven by Thailand, significant improvements higher investment in hydropower, in the business and political climate natural gas and oil and commodity and economic governance will be exports. required to attract serious, long- term investment, particularly from GDP composition by sector in 2011 western economies. Initial steps consisted of services (43.6%), towards reform and opening the agriculture (including livestock, economy were taken in 2011 through fisheries and forestry) (38.2%) and the lowering of export taxes and an industry (18.2%), with services easing of restrictions on the financial overtaking agriculture for the sector. first time in FY11 to be the largest contributor to the economy (the FY10 The exchange rate of the Kyat on composition of GDP was agriculture the unofficial market appreciated 43.1%, services 36.9% and industry to approximately MMK800/US$1 20%). However the distribution of in FY11, maintaining an upward the labour force is still largely skewed trend from MMK1,000 in FY09. towards agriculture with a 70% The appreciation was driven by share, relative to 23% in services and foreign investment and the general depreciation of the US dollar. 1 Asian Development Bank and UN estimates “UN tips 5.8% growth in 2011”, Myanmar Times, May 20116 PwC
  7. 7. Exports of gas increased by nearly15% to an estimated US$3 billion.Gemstones and jade exports,however, declined after doublingin FY10. Higher levels of imports,particularly construction materialsand machinery, widened the currentaccount deficit to an estimated 2.7%of GDP in FY11 from 0.9% in FY10.Increased foreign investment inenergy and hydropower, estimatedat US$2.8 billion in FY11, helpedlift international reserves toapproximately US$8 billion by March2012, equivalent to 9.4 months ofimports. Foreign investment in otherindustries is insignificant owingto barriers to entry and the poorbusiness environment.The monetary authorities loweredadministered bank interest ratesby 4 percentage points from 17% taken to reform and diversify the Among the planned reforms is ato 13% for lending and from 12% economy, many structural barriers land law giving farmers the rightto 8% for deposits in FY11, though will need to be overcome to realise its to own, sell, and mortgage theirbanks were also given some flexibility full potential. land. Credit to the farm sectorin setting deposit rates. Yields on remains inadequate, even though thetreasury bonds made them attractive The government that took office in Myanmar Agriculture Developmentinvestments for banks, which reduced March 2011 has an opportunity to Bank has doubled its funding forcentral bank monetisation of the rejuvenate the economy after more farmers in each of the past two years.fiscal deficit in FY11. than 50 years of stagnation. In a A microfinance law was approved promising start, the authorities took in November 2011 to expand2.1. Economic Prospects steps to unify the multiple exchange microcredit to farmers. rates and are preparing otherGoing forward, GDP is expected reforms, including a new national The government is preparing ato grow 6% in FY12 and 6.3% in development plan.2 new foreign investment law thatFY13, driven by improved business is expected to offer tax breaksconfidence following recent political New currency arrangements from to investors and allow them toand economic reforms. However, 1 April 2012 involve a managed lease private land and repatriateshort term risks to growth include float of the Kyat with a reference investment proceeds using marketthe rapid appreciation of the exchange rate of MMK818/US$1. exchange rates. Special economicKyat and potential slowdown in The government plans to establish a zones in Dawei in southernneighbouring countries due to the formal interbank market and relax Myanmar, Thilawa near Yangon, andEuropean sovereign debt crisis, as exchange restrictions on current Kyaukphyu on the west coast will bewell as operational challenges that international payments and transfers. established to attract investments.may be faced by the authorities. Fiscal policy in FY12 targets a modestWhile important steps have been fiscal deficit equivalent to 4.6% of GDP.2 Asian Development Outlook 2012 7 Myanmar Business Guide
  8. 8. Gas production and exports are and contribute to a widening of the 2.3. Major Investors in scheduled to increase sharply in current account deficit. Myanmar FY13 when the Shwe and Zawtika gas fields and pipelines to the Easing of economic sanctions China surpassed Thailand to People’s Republic of China (PRC) and imposed on Myanmar by industrial become the largest foreign investor Thailand, now under construction, countries would lead to higher in Myanmar in FY10-FY11, when are completed. Inflation has been levels of trade and investment, as approximately US$20 billion quickening to just over 6%. The well as the resumption of assistance of energy and infrastructure authorities raised administered and concessionary financing both development projects were electricity prices in late 2011 and fuel from these countries and from announced. According to the Vice- prices in early 2012. A government international financial institutions. Secretary General of the China- plan to help farmers by supporting ASEAN Expo Secretariat, Mr Nong rice prices is likely to lead to higher 2.2. Economic Structure Rong, Chinese investors are targeting retail prices of rice. the underdeveloped infrastructure Myanmar’s economy is dominated by and construction sectors as well as Relaxing foreign exchange controls natural resources and commodities. manufacturing due to availability of is expected to propel imports upward Its largest exports are natural gas cheap labour. Thailand is the second largest Table 1: Myanmar Key Industries foreign investor in Myanmar, with approximately US$9 billion Permitted Enterprises invested in manufacturing and No Industry No USD in mil % mining projects. Investment has 1 Power 5 18,874 46.4% been particularly strong in oil and 2 Oil and Gas 109 14,063 34.6% gas – through PTT Exploration and 3 Mining 66 2,814 6.9% Production, the overseas arm of state owned PTT, which operates 4 Manufacturing 164 1,761 4.3% the Zawtika gas project in the gulf 5 Hotel and Tourism 45 1,056 2.6% of Mottama, while also being a 6 Real Estate 19 1,056 2.6% partner in the Yetagun and Yadana 7 Livestock and Fisheries 25 324 0.8% offshore gas projects. According to the commercial counsellor at 8 Transport and communication 16 314 0.8% Thailand’s embassy in Myanmar, Mr 9 Industrial Estate 3 193 0.5% Prajuab Supinee, new Thai investors 10 Agriculture 7 173 0.4% are showing an interest in consumer 11 Construction 2 38 0.1% goods manufacturing and agriculture 12 Other Services 6 24 0.1% ventures. Total 467 40,699 100% Figure 1 Others 12% Rice 2% Agriculture Products 3% Natural Gas 29% Raw Rubber 3% Fishery Products 4% Garment 4% Minerals 26% Forest Products 7% Bean and Pulses 10% Source: Ministry of National Planning and Economic Development8 PwC
  9. 9. South Korea is the fourth largest Table 2: Foreign investments by CountryForeign Direct Investment (FDI)contributor, with 48 projects Permitted Enterprisesamounting to US$2.9 billion being No Country No USD in mil %undertaken since 1988. South 1 China 5 13,949 34.3%Korean companies (including large 2 Thailand 61 9,568 23.5%conglomerates like Daewoo and 3 Hong Kong 38 6,308 15.5%Samsung) are looking to furtherincrease their investments in 4 Republic of Korea 49 2,941 7.2%construction, mining, agriculture, 5 UK* 52 2,760 6.8%electricity, energy, logistic and 6 Singapore 72 1,804 4.4%freight-forwarding, vehicles and auto 7 Malaysia 41 1,027 2.5%parts, communication and multi-media, iron and steel, agro-fishery, 8 France 2 469 1.2%timber and wood, financing, real 9 United States 15 244 0.6%estate, garment, transport, hotel 10 Indonesia 12 241 0.6%and tourism and civil engineering 11 The Netherlands 5 239 0.6%industries, according to the Korea 12 Japan 24 216 0.5%Trade-Investment Promotion Agency.Singapore and Malaysia are also 13 India 6 262 0.6%among the top sources of FDI to 14 Philippines 2 147 0.4%Myanmar, particularly since the latter 15 Russian Federation 2 94 0.2%joined ASEAN in 1997. The Singapore 16 Australia 14 82 0.2%Business Federation has led twobusiness delegations to Myanmar 17 Austria 2 73 0.2%in February and June 2012, both 18 Panama 2 55 0.1%consisting of representatives from 19 Vietnam 3 42 0.1%more than 70 companies looking to 20 United Arab Emirates 1 41 0.1%identify investment opportunities 21 Canada 14 40 0.1%in information technology, tourism,commodities trading, industrial 22 Mauritius 2 31 0.1%and infrastructural planning, 23 Germany 2 18 0.0%manufacturing, construction 24 Republic of Liberia 2 15 0.0%and real estate. According to the 25 Denmark 1 13 0.0%deputy minister of the Ministry ofNational Planning and Economic 26 Cyprus 1 5 0.0%Development, Dr Kan Zaw, Singapore 27 Macau 2 4 0.0%is expected to be a significant investor 28 Switzerland 1 3 0.0%in the following years. 29 Bangladesh 2 3 0.0% 30 Israel 1 2 0.0% 31 Brunei Darussalam 1 2 0.0% 32 Sri Lanka 1 1 0.0% Total 467 40,699 100% * Inclusive of enterprises incorporated in British Virgin Islands, Bermuda Islands and Cayman Islands Source: Ministry of National Planning and Economic Development 9 Myanmar Business Guide
  10. 10. 2.4. Sanctions rebel groups and liberalisation of “The European Union welcomes the sections of the economy. remarkable changes in Myanmar and Background has decided to open a new chapter in The reforms as well as the conduct our relations. Now that the sanctions International sanctions against of the 1 April 2011 by-elections will be effectively suspended, we Myanmar were imposed over a long have led to widespread praise encourage trade and investment in period of time – throughout the from the international community the country”. past two decades – and formed a and immediate actions to ease – Catherine Ashton complex web of laws, regulations and the sanctions regime against the The European Union (EU) High government-imposed restrictions. country to support its transition Representative for Foreign Affairs to democracy and its economic and Security Policy Recent developments development. The underlying theme of all ‘sanction-easing’ initiatives by “The point has been reached where On 30 March 2011, the State Peace foreign governments has been one lifting sanctions is the best way to and Development Council (SPDC) of responding to actions towards promote further progress.” formally transferred power to a progress and reform taken by the – Bob Carr new Union Government headed by Myanmar government with actions Australian Foreign Minister President Thein Sein, ex-general and to ease sanctions and normalise prime minister for SPDC. The new relations, as reflected by the Overview of sanctions status by regime has since embarked on a series following quotes from key officials: country of sweeping changes and reforms, including amongst others, the release “This reform process has a long way Most sanctions against Myanmar of over 700 political prisoners, the to go. The future is neither clear have been either lifted or temporarily establishment of an independent nor certain. But we will continue to suspended by the EU, the US, National Human Rights Commission, monitor developments closely and Australia and Canada. The current the easing of restrictions on the meet, as I said when I was there [in status is summarised in the table media and civil society, tentative Burma], action with action” below: ceasefires with several major ethnic – Hillary Clinton US Secretary of State Table 3: Overview of sanctions status of country Country Examples of past sanctions Action taken and current status European • Ban on imports of and investments in • Suspension of all restrictive measures against Union timber, coal, certain metals and precious Myanmar was agreed by the EU Foreign Affairs and semi-precious stones. Council on 23 April 2012 and given full legal effect • Restrictions on exports of equipment used by the Council Regulation (EU) No 409/2012 14 in industries targeted by the import ban. May 2012. • Ban on provision of certain services. • Exceptions: arms embargo and embargo on equipment which might be used for internal • Freezing of funds and economic repression remain in place for another 12 months. resources of persons involved in policies which impeded Myanmar’s transition to • Timeline: suspension currently agreed until 30 democracy. April 2013. US • Restrictions on the provision of financial • Suspension of sanctions barring investment and services. provision of financial services in Myanmar on • Prohibitions on imports from Myanmar. 17 May 2012 but reflecting particular human right risks with barring the provision of security • Ban on new investments. services and transactions with any entity or • Ban on bilateral and multilateral person who are still blocked under the Burma assistance. sanctions programme.10 PwC
  11. 11. Country Examples of past sanctions Action taken and current status • Visa bans for persons linked with • The existing Burmese Sanctions Regulations policies impeding Myanmar’s transition (BSR) administered by the Treasury Department’s to democracy. Office of Foreign Assets Control (OFAC) will • Freezing of funds and assets belonging to remain in place until further notice but the the SPDC, the senior officials of SPDC or Treasury will issue general licenses to American the USDA. companies authorising them to invest or provide financial services. • Reporting Requirements: Any US person or entity whose aggregate new investment exceeding US$ 500,000 are required to file the report to State Department of the information with the detailed information of the investment. • Exceptions: arms embargo maintained; American companies will still be restricted from doing business with individuals or companies involved in human rights violations, a list of which is being constantly updated according to US officials. • Timeline: not specified.Australia • Travel bans for members of the • Easing of sanctions and move to normalise trade Government. ties announced in April 2012. • Sanctions directed at financial • Lifting of all remaining economic, financial and transactions. travel sanctions announced on 7 June 2012 and expected to come into effect in the coming weeks. • Exceptions: arms embargo will remain in place. • Timeline: no timeline, sanctions lifted permanently.Country Examples of past sanctions Action taken and current statusCanada • Perceived as having some of the toughest • Lifting of most sanctions announced on 24 April sanctions. 2012. • Economic sanctions imposed in 2007 • Exceptions: ban on arms deals maintained. through the Special Economic Measures • Timeline: not specified. (Burma) Regulations. • Ban on all goods exported from Canada to Myanmar except humanitarian goods. • Ban on all goods imported to Canada. • Freeze on assets in Canada of any designated Burmese nationals connected with the Burmese State. • Prohibition on the provision of Canadian financial services to and from Burma.Japan • The Japanese Government did not • Debt write-off of US$3.7 billion and resumption of impose sanctions and maintained trade development aid announced in April 2012. ties with Myanmar, however official development assistance was suspended except humanitarian aid. • Japanese companies have held back from investing in Myanmar in recent years so as not to jeopardise relations with the US and the EU. 11 Myanmar Business Guide
  12. 12. Sustainability of political reforms economy in five years and further and long term prospects accelerate the pace of change. The government gave permission, for the While the international community first time, to the publication of the has responded to recent democratic International Monetary Fund (IMF) reforms undertaken by the Myanmar annual assessment of the country, Government with immediate actions demonstrating its “willingness to to ease economic and financial re-engage with the international sanctions, the preferred approach community”, according to IMF has been to temporarily suspend mission chief for Myanmar, Meral sanctions rather than lift them Karasulu. The IMF has also noted completely. that the authorities have been actively seeking its advice, and that Given that the sustainability of the Fund is scaling up technical political reforms requires the assistance in line with the authorities’ commitment of the government, the priorities. above should be seen as an incentive mechanism to encourage further The Myanmar’s new draft foreign progress rather than a risk that investment law is being put forward sanctions will be re-imposed. We for approval by Parliament this year. expect the current sanctions status to It sets out land-use terms, legal remain in place given evidence which structures and incentives for foreign suggests that the democratisation companies such as a five-year tax process and political and economic holiday from the start of commercial reforms will continue. operations, demonstrating the government’s commitment to attract President Thein Sein has recently long term foreign investors. announced a second wave of reforms which aim to triple the size of the12 PwC
  13. 13. 3. Conducting Business in Myanmar 3.1. Form of Business namely a private limited liability company and a public limited Under the Foreign Investment Law, liability company. Currently, there a foreign entity may establish its is no public foreign company in presence in Myanmar as a limited Myanmar. A private limited liability liability company (private or company is required to have at least public), a registered branch and a two shareholders and the number representative office of a company of members is limited to 50. The incorporated outside Myanmar, a transfer of shares to a foreigner is sole proprietorship, a partnership or restricted. A public limited liability a joint venture with a citizen, private company is required to have at least company, cooperative society or seven shareholders. State-Owned Economic enterprise (SEE). A foreign entity may also Registration of companies enter into a production sharing contract with an SEE for exploration, Foreign investors may register extraction and sale of petroleum and their companies under the natural gas and mining operations. Myanmar Companies Act (CA) or in conjunction with the Union of 1. Limited liability company Myanmar Foreign Investment Law (MFIL). The differences between A limited liability company may be companies registered under the CA 100% owned by foreign investors and the MFIL are: except certain industries that are closed to private investment and - companies registered under the can only be carried out by the MFIL are eligible for tax incentives government. The government, on a (refer to section 4 for details) case-to-case basis, may permit these whereas companies registered activities to be carried out by any under the CA are not person or economic organisation, with or without a joint venture - both companies registered with the government and subject under CA and MFIL are allowed to unspecified conditions (refer to to undertake manufacturing section 4.2 for details). activities and provide services, however the minimum foreign There are two types of limited share capital requirements are liability company in Myanmar, significantly different (as specified below) 13 Myanmar Business Guide
  14. 14. - minimum foreign share capital for A foreign company formed under the 2. Branch of a company companies registered under MFIL CA does not need to obtain an MIC incorporated outside Myanmar is US$500,000 for manufacturing permit, and is only required to apply and US$300,000 for service for a permit to trade and then register A foreign company can also set up its companies whereas for companies with the CRO. branch office in Myanmar. A foreign registered under CA it is only branch formed under the CA does not US$150,000 for manufacturing Corporate structure need to obtain an MIC permit, and is and US$50,000 for service only required to apply for a permit to companies. At least two shareholders and two trade and then for registration. The directors are required. There is no branch is allowed to be formed as a Registration of foreign investment requirement for the shareholders to manufacturing or a service company under the MFIL involves the be natural persons and there is no (for instance oil companies are set up following steps: requirement for the directors to be mostly in the form of branches). residents in Myanmar. - obtaining a permit from the In contrast, a foreign branch formed Myanmar Investment Commission Minimum share capital requirements under the MFIL is required to obtain (MIC) an MIC permit in addition to a permit The level of minimum share capital to trade and a registration certificate. - applying for a permit to requirements imposed on the trade from the Directorate companies varies depending on the Registration fees payable on of Investment and Company types of activities that a company the registration of a branch are Administration (DICA) intends to undertake, as detailed in US$2,500. the following table: - applying for registration with the 3. Representative office of a Companies Registration Office company incorporated outside (CRO). Myanmar Foreign companies with business relations or investment projects Table 4: Minimum share capital requirements in Myanmar may apply to set up representative offices in Myanmar (this being a common practice for Types of company Minimum foreign share capital banks). In contrast with a branch, a Companies registered under representative office of a company the MFIL incorporated outside Myanmar is not allowed to perform direct commercial - Manufacturing company US$500,000 or revenue generating activities in - Service company US$300,000 Myanmar. However, it is permitted to liaise with its head office and collect Companies registered under the CA data useful for the head office. - Manufacturing company US$150,000 4. Joint venture - Service company US$50,000 Foreign investors can set up their Registration fees on the incorporation of a company are US$2,500. business in the form of a joint venture, either as partnerships or limited companies, with any Myanmar partner (an individual, a private company, a cooperative society or a state owned enterprise). In all joint ventures, the minimum shareholding of the foreign party is 35% of the total equity capital.14 PwC
  15. 15. 3.2. Foreign Investment 7. air and railway transport services products and similar products,Restrictions transport equipment, building 8. banking and insurance services materials, pulp and paper,Foreign investment in Myanmar chemicals, chemical products andis governed under the Foreign 9. broadcasting and television pharmaceuticals, iron and steelInvestment Law (FIL) 1988. A revised services and machinery and plantdraft FIL is being put forward toParliament for approval by this year. 10. exploration, extraction and export 8. constructionThe MIC has issued a notification of metalslisting the types of economic 9. transportation andactivities that are open to foreign 11. electricity generating services, communicationsinvestment. It covers most activities other than those permitted bywith the exception of those reserved law to private and cooperative Investment proposals in sectorsfor the State under the State-owned electricity generating services other than those listed above areEconomic Enterprises Law (SEE considered on a case-by-case basis byLaw). We will issue a revised edition 12. manufacture of products relating the MIC.of the Doing Business Guide once the to security and defence whichnew FIL is finalised and gazetted. the government has, from time to 3.3. Investment Incentives time, prescribed by notification.Economic activities prohibited Incentives under the MFILunder the SEE Law The government, on a case-to-case basis, may permit these activities Companies registered under the MFILThe SEE Law specifies 12 economic to be carried out by any person which have obtained MIC permitsactivities that are closed to private or economic organisation, with are entitled to the following specialinvestment and can only be carried or without a joint venture with benefits and tax incentives. Theout by the government: the government and subject to benefits and incentives are granted unspecified conditions. by the MIC at its discretion.1. extraction and sale of teak in Myanmar and abroad Sectors allowed for foreign - Exemption from income tax for investment up to three consecutive years2. cultivation and conservation for an enterprise engaged in of forest plantations, with the Based on the MIC Notification the production of goods or exception of village-owned No. 1/89 of 30 May 1989, foreign services. The exemption may be firewood plantations cultivated investments may be made into the extended by the MIC for a further by the villagers for their personal economic activities (other than 12 reasonable period, depending on use economic activities restricted under the success of the enterprise. the SEE Law above) which are3. exploration, extraction and sale classified into nine sectors as follows: - Exemption or relief from income of petroleum and natural gas and tax on profits of the business that production of products of the 1. agriculture and irrigation are maintained in a reserve fund same and subsequently re-invested 2. livestock and fishery within one year after the reserve4. exploration, extraction and fund is made. export of pearls, jade and 3. forestry precious stones - Accelerated depreciation of 4. mining machinery, equipment, building5. breeding and production of fish or other capital assets used in the and prawns in fisheries that have 5. power business at the rate fixed by the been reserved for research by the MIC. government 6. oil and gas - Relief from income tax of up to6. postal and telecommunications 7. industry involving food 50% of the profits accrued on services stuffs, textile, personal goods, exported goods. household goods, leather 15 Myanmar Business Guide
  16. 16. - The right to pay income tax The Myanmar SEZ Law is a basic - 50% income tax relief on payable to the state on behalf of law for any Special Economic Zone reinvestment obtained from foreign employees and the right (SEZ) within Myanmar whereas the export sales for the following five to deduct such payments from Dawei SEZ applies only to a specified years assessable income. designated area, i.e. the Dawei SEZ, which is located in the Tanintharyi - exemption on customs duty for - The right to pay income tax on the Region in the south, and is the first certain goods (e.g. machineries income of the foreign employees SEZ in Myanmar. and vehicles) for five years. A 50% at the rates applicable to citizens exemption applies for the next residing within the country. The main regulatory body handling five years. foreign investment under the - The right to deduct expenses Myanmar SEZ Law and the Dawei With respect to land use under incurred in Myanmar on research SEZ Law is the Central Body for the the Dawei SEZ Law, land use may and development relating to the Myanmar Special Economic Zone be granted under an initial lease business of the enterprise from which was formed by the President’s of at least 30 years (or 60 years), assessable income. Office in April 2011. Subordinate renewable as follows: regulatory bodies are the Central - The right to carry forward and Working Body and the Dawei SEZ - for another 30 years (plus 15 set off losses for up to three Temporary Supporting Working years) for a large-scale business; consecutive years from the year Body, as formed by the President’s or the loss is sustained. Office in April 2011. - for another 15 years (plus 15 - Exemption or relief from The Myanmar SEZ Law and years) for a medium-scale customs duty or other internal Dawei SEZ Law contain, inter alia, business; or taxes on machinery equipment, provisions relating to developers and instruments, machinery investors, exemptions and reliefs, - for another five years (plus five components, spare parts and restrictions, duties of developers or years) for a small-scale business. materials used in the business, investors, land use, banks and finance and items which are imported management and insurance business, The additional years may be granted and required to be used during management and inspection on a discretionary basis, depending the construction period of the of commodities by the customs on the investment amount and business. department, quarantine, labour and success of the business. guarantee of non-nationalisation. - Exemption or relief from customs In general, the investment projects With the approval of the Union duty or other internal taxes on in the Dawei SEZ must be approved government and the Central Body, imported raw materials for the by the Central Body. Tax exemptions and pursuant to the Dawei SEZ first three years of commercial or relief may be granted under the Law and existing Myanmar law, production following the Dawei SEZ Law upon application by developers/investors may rent, completion of construction. the investor. mortgage or sell land and buildings to another person for investment Special economic zones Incentives under the Myanmar SEZ purposes within the term granted for Law include: operating in the Dawei SEZ. In addition to foreign investment under the MFIL, foreign investors - tax holidays for the first five years The rules and procedures relating may invest under the Myanmar to the Myanmar SEZ Law and Special Economic Zone Law of 2011 - 50% income tax relief on revenue Dawei SEZ Law have not yet (Myanmar SEZ Law) and the Dawei from products sold overseas for been prescribed. Further detailed Special Economic Zone Law of 2011 the next five years provisions are expected once such (Dawei SEZ Law). rules and procedures are prescribed.16 PwC
  17. 17. 3.4. Investment Guaranteeand ProtectionInvestment Guarantee andProtectionThe MFIL provides an explicitguarantee that an economicenterprise with an MIC permit cannotbe nationalised during the term ofthe contract or during any extendedterm. The MFIL also includes aprovision which expressly providesthat upon the expiry of the contractterm; the government guaranteesthat an investor may remit hisinvestment and profits in the foreigncurrency in which such investmentwas made, as specified.Investment businesses in theDawei SEZ are guaranteed againstnationalisation under the DaweiSEZ Law. Under the Dawei SEZ Law,foreign investors may be allowed toexchange and remit their own foreigncurrency within the Dawei SEZ andabroad.Investment protection agreementsMyanmar has investment protectionagreements with China, India,Kuwait, Laos, the Philippines,Thailand and Vietnam. 17 Myanmar Business Guide
  18. 18. 4. Taxation in Myanmar 4.1. Corporate Income Tax from any capital assets within Myanmar and from any source of Scope income within Myanmar is deemed to be income received within Myanmar. Resident companies are taxed on a The income is generally subject to tax worldwide basis, and as such, income under the normal rules for residents, from sources outside of Myanmar except that different tax rates apply. is taxable. A resident company is a company as defined and formed Newly established economic under the Myanmar CA 1913 or enterprises and MFIL companies are any other existing law of Myanmar. entitled to enjoy exemptions and MFIL companies are treated as relief from taxes. resident companies. However, MFIL companies are not taxed on their A partnership is taxed as an entity foreign income. and not on the individual profit share of the partners. Partnership income Non-resident companies are taxed is not taxed in the hands of the only on income derived from sources partners. within Myanmar. A non-resident company is a company that is not Tax rates formed under the Myanmar CA 1913 or any other existing law Corporate tax rates vary depending of Myanmar. Generally, foreign on the type of taxpayer and broadly, branches are deemed to be non- nature of income. resident companies. Income received18 PwC
  19. 19. Table 5: Corporate Tax Rates Type of Taxpayer or Income Tax Rates Companies incorporated in Myanmar under Myanmar Companies Act - Trade/business income 25% - Rental income from movable or immovable property 25% Enterprises operating under MFIL 25% Foreign organisations engaged under special permission in State-sponsored 25% projects, enterprise or any undertaking Non-resident foreign organisations such as a branch of a foreign company 35% Capital gains tax (except transfer of shares in an oil and gas company where the rates ranging from 40% to 50% will apply on gains) 10% - Resident companies 40% - Non-resident companies Administration within one month from the date of of fraud default. Mere filing of discontinuance of business. the income return and paymentTaxable period of advance tax in time will not The failure of a taxpayer to file constitute a final tax assessment.The taxable period of a company is income tax returns, knowing thatthe same as its financial year (income assessable income has been obtained, Taxable profitsyear), which is from 1 April to 31 is deemed to have “fraudulentMarch. Income earned during the intention”. Income is categorised as incomefinancial year is assessed to tax in the from a profession, business, property,assessment year, which is the year Payment of tax capital gains, other sources andfollowing the financial year. undisclosed sources. Income from Advance payments are made either capital gains is assessed separately.Tax returns and assessment in monthly or quarterly instalments Income from movable property is based on the estimated total income treated as business income. InterestIn general, income tax returns must for the year. The advance payments income is also treated as businessbe filed within three months from and any taxes withheld are creditable income, even if it is not derived fromthe end of the income year, i.e. by 30 against the final tax liability. The a business source.June after the end of the income year. date for settling the final tax liabilityTax returns for capital gains must be is specified in the notice of demand Tax is levied on total income, afterfiled within one month from the date by the Inland Revenue Department deduction of allowable expenditureof disposal of the capital assets. The (IRD). and depreciation.date of disposal refers to the dateof execution of the deed of disposal Statute of limitation Dividends received from anor the date of delivery of the capital association of persons are exemptassets, whichever is earlier. The statue of limitation to raise an from tax. assessment is three years after theIf a taxpayer discontinues his financial year end. The statute ofbusiness, returns must be filed limitation does not apply in case 19 Myanmar Business Guide
  20. 20. The Ministry of Finance and Revenue Non-deductible items include include shares, bonds and similar with the approval of the government capital expenditure, personal instruments. If intangibles fall within may, by notification, prescribe, expenditure, expenditure that do the definition of capital assets, capital amend and add assessable income not commensurate with the volume gains arising from such assets would and rates of income tax for each class of business, payments made to also be taxable. of income in Kyats and in foreign any member of an association of currency. persons other than a company Capital gains from the sale, exchange or a cooperative society, and or transfer of capital assets in the oil Deductions inappropriate expenditure. and gas sector are taxed at different rates from those in other sectors. In respect of business income, Capital gains deductions are allowed for Withholding tax expenditures incurred for the Income tax is levied on gains from purpose of earning income, and the sale, exchange or transfer of Any person making the following depreciation allowance. capital assets. Capital gains are payments are required to withhold calculated based on the difference income tax at the time of payment at Income from movable property is between sale proceeds and the cost the rates mentioned below. The tax considered business income, and of assets and any additions, less tax so withheld is to be paid to the IRD a depreciation allowance can be depreciation allowed. within seven days from the date of deducted. Income from immovable withholding. property is generally computed in the For the purpose of income tax, same way as business income, except “capital asset” means any land, The withholding tax rates are as such: that no depreciation allowance can building, vehicle and any capital be deducted. assets of an enterprise, which Table 6: Withholding Tax Rates Resident National Non-resident or or Foreigner (%) Foreigner (%) (1) (3) Interest 0 15 Royalties for the use of licences, trademarks, patent rights, etc. 15 20 Payments made under contracts or agreements or any other 2 3.5 agreement made by a State organisation, local authorities, co-operatives, partnership companies, entities formed under any existing laws for procurements and for services render. Payments for services and procurements made within the 2 3.5 country. Note: 1) For residents, deductions as above shall be set off against tax due on final assessment. 2) Dividends, branch profits and share of profits of an association of persons which have been taxed are exempt, and therefore withholding tax is not deductible. 3) For non-residents, the above withholding tax from payments to non-resident companies is a final tax (Ministry of Finance and Revenue notification No. 41/2010 of 10 March 2010).20 PwC
  21. 21. years (Sec. 20 ITL). has concealed income or particularsDouble tax agreements Capital losses relating to income, the taxpayer may be permitted to fully discloseThere is no provision for unilateral Capital losses and a share of losses the facts within the specified time.relief. from an association of persons cannot In addition, the taxpayer must be set off against income from other pay a penalty equal to 50% of theThe Income Tax Law (ITL) provides sources, or carried forward. tax increased on account of thethat if the government enters into concealment. If the taxpayer failsan agreement with any foreign Anti-Avoidance to disclose the particulars withinstate or international organisation the specified time or discloses lessrelating to income tax, and if the General than the income concealed, theagreement is notified, the terms of taxpayer will also be subject tothe said agreement will be followed Under the ITL, if it is found that there prosecution, in addition to payingnotwithstanding anything to the is a fraudulent intention to evade the tax and penalty. If found guilty,contrary contained in any other tax, the assessment or reassessment the taxpayer may be punishable withprovisions of the ITL (Sec. 31 ITL). of income tax can be made at any imprisonment for between three to time on the income that has escaped ten years.Tax treaties have been concluded assessment of tax. Failure by awith Bangladesh, India, Indonesia, taxpayer to file a return of income Transfer pricingMalaysia, Singapore, Korea (Rep.), knowing that assessable income hasThailand, United Kingdom,Vietnam, been obtained, and failure to comply There are currently no transferLaos and Bangladesh, but only the with the notice of the IRD to submit pricing rules in Myanmar.treaty with the United Kingdom accounts and documents includinghas been notified in the Myanmar the tax return and profit and loss Thin capitalisationgazette. The treaties with India, accounts within the time prescribed,Korea (Rep.), Malaysia, Singapore, or submitting forged instruments and There are currently no thinThailand, the United Kingdom and other documents, are included within capitalisation rules.Vietnam are notified on the IRD the meaning of fraudulent intention.website. In general, it is suggested Controlled foreign companyby the Company Circle Tax Office If the tax authority in the course of(CCTO) under the IRD that enquiries investigation finds that a taxpayer There are currently no controlledbe made with the CCTO first before foreign company rules.deducting withholding tax frompayments made to non-residentcompanies from India, Korea (Rep.),Malaysia, Singapore, the UnitedKingdom and Vietnam (the treatywith Thailand is not yet in effect).As such, the application of the taxtreaties is at the sole discretion of theMinistry of Finance and Revenue.Tax lossesOrdinary lossesLosses from any source may be setoff against income accruing fromany other sources in that year,except where the loss is from capitalassets or a share of a loss from anassociation of persons. Losses thatare not fully deducted in a year canbe carried forward and set off againstprofits in the next three consecutive 21 Myanmar Business Guide
  22. 22. 4.2. Personal Income Tax resident foreigners working for MFIL Taxable income companies are not taxed on their Scope personal foreign income not arising Employment income out of Myanmar. Resident nationals are taxed on The definition of taxable employment all income derived from sources Non-resident foreigners are taxed income is broad and includes salary, within and outside Myanmar. only on income derived from sources wages, annuity, pension, benefits Resident foreigners are taxed on within Myanmar. Foreigners who in kind, gratuity, and any fees, all income derived from sources reside in Myanmar for less than commissions or perquisites received within Myanmar. Foreigners who 183 days during an income year are in lieu of or in addition to any salary reside in Myanmar for at least 183 considered non-resident foreigners. and wages. days during an income year are considered resident foreigners. Tax rates Resident foreigners are subject to a Expatriates working for MFIL monthly deduction of tax on salary. companies are treated as resident Personal tax rates vary depending on There are no deductions available for foreigners regardless of their period the type of taxpayer and income. costs related to employment income. of stay in Myanmar. However, Non-employment income Table 7: Personal Tax Rates Taxable non-employment income includes: Type of Taxpayer or Income Tax Rates - business income (e.g. income from moveable properties, Salaries royalties and interest) Foreigners engaged under special permission 20% - income from a profession. in State-sponsored projects, enterprises, “Profession” means the rendering received in Kyats of a service with one’s skill for fees, and includes services rendered by doctors, nurses, Foreigners working for MFIL companies Progressive rates lawyers, engineers, architects, from 1% to 20% film stars, theatrical artists, writers, painters, sculptors, Foreigners working for non-MFIL and 35% accountants, auditors, astrologers companies: Progressive rates and teachers - Resident foreigners from 1% to 20% - capital gains from the sale of - Non-resident foreigners capital assets - other income from investments, Other income 2% to 30% except dividends received from an Nationals 2% to 30% association of persons which are Resident foreigners 35% exempt from income tax. Capital gains tax If non-employment income is not - Resident 10% more than MMK1,200,000 (except - Non-resident 40% capital gains), no tax is liable. In the case of capital gains, no tax is liable if Note: No tax is payable if total income under salaries does not exceed MMK1,440,000 the sales proceeds are not more than in a year. MMK5,000,000.22 PwC
  23. 23. Social Security Contributions Payment of tax on the sales proceeds. The tax is also levied on imported goods, based onThe Social Security Act 1954 requires Advance payments are made either the landed cost which is the sum ofan employer with more than five in monthly or quarterly instalments the cost, insurance and freight (CIF)workers to provide Social Security based on the estimated total income value, port dues calculated at the rateScheme benefits to his workers, for the year. The advance payments of 5% of the CIF value of goods, andsuch as general benefit insurance and any taxes withheld are creditable customs duties. Collection of theseand insurance against employment- against the final tax liability. The date taxes is made at the point of entryrelated injuries. for settling the final tax liability is and the time of clearance. specified in the notice of demand byThe rates of contribution by the IRD. Commercial tax ranges from 0% toemployees and employees are 1.5% 100%, depending on the nature ofand 2.5% of the total salaries and An employer is responsible for the goods and services describedwages respectively. The contribution deducting income tax due from in the schedules appended to themay be in Kyats or in US Dollars, salaries at the time of payment to Commercial Tax Law.depending on the currency in which employees, and must pay the amountthe employee is paid. within seven days from the date of Services such as trading, transport, deduction. If the employer fails to entertainment, insurance, printingContributions are not deductible by deduct and pay the tax, he is deemed etc are subject to commercial tax atthe employee for tax purposes. The to be a defaulter and held responsible 5% of the total receipts.employer is obligated to withhold the for such payment. In addition, theemployees’ contributions from their employer is also responsible for filing No commercial tax is imposed ifsalaries. the statement of annual salary within the amount of sales or receipt from three months after the end of the services for a financial year is notAdministration income year and the failure of filing more than MMK10,000,000. within stipulated deadline may beTaxable period subject to 10% penalty of the amount Commercial tax is exempt on all of tax to be deducted on annual exports of goods except for fiveThe taxable period of an individual salaries. natural resource items which areis from 1 April to 31 March. Income natural gas, crude oil, jade, gemearned during the financial year is 4.3. Commercial Tax stones and wood.assessed to tax in the assessmentyear, which is the year following the There is no value added tax in The commercial tax that a businessfinancial year. Myanmar. Commercial tax is charges and collects is known as levied as a turnover tax on goods output tax which has to be paid toTax returns and assessment and services. The commercial tax the tax authorities. Commercial tax is an additional tax upon certain incurred on business purchases andIn general, income tax returns must commercial transactions, but it has expenses are known as input taxbe filed within three months from not been expanded to the concept of except 18 items of special goods asthe end of the income year, i.e. by a value added tax. It applies only to per Schedule 6 of the Commercial30 June after the end of the income the specific transactions listed in the Tax Law. Businesses which areyear. Tax returns for capital gains Commercial Tax Law. commercial tax registered can claimmust be filed within one month from input tax if conditions for claimingthe date of disposal of the capital The tax is imposed on a wide range are satisfied.assets. If a taxpayer discontinues of goods and services produced orhis business, returns must be filed rendered within the country, basedwithin one month from the date ofdiscontinuance of business. 23 Myanmar Business Guide
  24. 24. 5. Other Taxes 5.1. Property Tax are provided in Schedule 1 of the Act. Some rates are given below: Foreigners are prohibited from the ownership of immovable property in - 5% of the amount or value of the Myanmar, in which case property tax consideration for conveyances would not be relevant. such as for the sale or transfer of immovable property, plus an Immovable property (land and additional 2% for immovable buildings) situated within the Yangon property situated in the Yangon development area is subject to development area property tax as follows: - 0.3% of share value for the - general tax not exceeding 20% of transfer of shares annual value - 2% of the amount or value - lighting tax not exceeding 5% of secured for bonds annual value - 2% of the amount or value of the - water tax not exceeding 12% of property settled for inheritances annual value under an arrangement of settlement. - conservancy tax not exceeding 15% of annual value. 5.3. Custom Duty The annual value is the gross Customs duty is levied under the annual rent for which the land and Customs Tariff of Myanmar (2007) at buildings may be expected to be let rates ranging from 0% to 40%. unfurnished. It also includes the value as a result of a percentage 5.4. Excise Duty determined by the Yangon City Development Committee from time Excise duty is levied on alcoholic to time on the value of the property drinks. The duty is collected by the to be taxed. General Administration Department under the Ministry of Home Affairs. 5.2. Stamp Duty Stamp duty is levied under the Myanmar Stamp Act 1891 on various types of instruments, and the rates24 PwC
  25. 25. 6. Human Resources and Employment Law 6.1. Employment of In the appointment of personnel in Foreigners an organisation formed under the Permit issued by MIC, preference shall be given to citizens. However, There is no restriction on the number MIC can consider the request of expatriate employees. However, for appointment of experts and foreigners cannot be appointed as technicians from abroad on a case-by- directors in companies formed under case basis. the CA and owned by Myanmar citizens. In addition, the employment An economic organisation formed of foreigners as experts, technicians, under a Permit shall make managers, general managers or arrangements for local and foreign managing agents in companies training so as to ensure its local owned by Myanmar citizens must be personnel are proficient in their work approved by the MIC. and are able to be promoted to higher ranks of services. 25 Myanmar Business Guide
  26. 26. Work Permit Processing and These laws govern labour relations Requirements (Managerial, problems and deal with subjects such Supervisor, Expertise) as work hours, holidays, leaves of absence, woman and child labour, Employment of foreign experts and wages and overtime, severance technicians by the enterprises formed pay, workmen’s compensation, under the Permit issued by MIC is social welfare, work rules and other allowed. The following procedures matters. There is a minimum wage. A would have to be completed Social Security Act established a fund to employ foreign experts and with contributions by employers, technicians: employees and the government. • The investor has to mention The Myanmar Special Economic the number of foreign experts/ Zone Law (2011) and Dawei Special technicians to be employed in Economic Zone Law (2011) prescribe the investment application form special rules applicable to foreign submitted to the MIC. employees, work permits, and minimum percentages of employees • After obtaining MIC permit, the which must be citizens. Myanmar has company has to apply for an been a member of the International appointment and stay-permit. Labour Organisation (ILO) since 1948. • With the endorsement of MIC, the company has to apply for a work permit from the Directorate of Labour under the Ministry of Labour, and for a stay permit and visa from the Immigration and National Registration Department under the Ministry of Immigration and Population. 6.2. Labour Laws in Myanmar Existing labour laws in Myanmar include: Employment and Training Act (1950), Employment Restriction Act (1959), Employment Statistics Act (1948), Factories Act (1951), Labour Union Law (2011), Leave and Holidays Act (1951), Minimum Wages Act (1949), Oilfields Labour and Welfare Act (1951), Payment of Wages Act (1936), Social Security Act (1954), Shops and Establishments Act (1951), Trade Disputes Act (1929) and Workmen’s Compensation Act (1923).26 PwC
  27. 27. 7. Other Considerations 7.1. Commercial registration commission basis or any business and licensing requirements representative employed to do any business transaction for any individual or organization abroad Export/import businesses or to represent another person in dealings with third person” (Para. According to a policy established in 1(a) of the Order). late 2001, export/import activities can only be carried out by MFIL A person who is not registered under companies with MIC permits, and the Order cannot carry on business as not by foreign companies registered a business representative in Myanmar under the CA. (Para. 2). The Order further provides that sales or marketing activities in Investors establishing a business Myanmar for which a commission or involving export/import transactions a salary is paid to an agent is limited are required to first register as an to Myanmar citizens/companies as exporter/importer and obtain a agents registered with the Ministry of Certificate of Exporter/Importer Commerce. Registration from the Directorate of Trade under the Ministry of Every business representative must Commerce. After receiving the have an established or registered certificate, the registered exporter/ office in Myanmar, and is required importer must then apply for an to open a bank account in Myanmar export/import licence separately for for all earnings generated by the every export/import. business representation and keep true and accurate accounts relating Business representatives to his business together with relevant documents, invoices, and memos The Ministry of Commerce Order (Paragraphs 8 and 9). No. 2/89 of 13 October 1989 (the Registration of Business 7.2. Exchange control Representatives Order) details the requirements for business Foreign exchange is regulated by representatives. the Foreign Exchange Regulation Act 1947 (FERA), and the Central A business representative is defined Bank of Myanmar Law empowers the as “an agent engaged in accepting Central Bank of Myanmar (CBM) to indents and placing orders for goods administer FERA. Foreign exchange from the suppliers abroad on a control is managed by the CBM’s 27 Myanmar Business Guide
  28. 28. Foreign Exchange Management any currency or foreign exchange the MIC. The lease can be extended Department and the Foreign without the permission of the CBM. if the project is mutually beneficial to Exchange Management Board Except with the prior approval of the the investor and the state. (FEMB), in accordance with FERA CBM, all persons must transact with and instructions of the Ministry of an authorised dealer in respect of the A foreigner or foreign company Finance and Revenue. buying/borrowing, selling/lending, is required to apply to MIC with transfer or exchange of any foreign the land lease agreement or other “Foreign exchange” is defined in exchange. documents that evidence the FERA as including “foreign currency agreement to lease from the person and all deposits, credits and balances Dealings in foreign exchange are only who has the right to lease. The land in any foreign country or payable permitted at the rates of exchange lease agreement is concluded upon in any foreign currency, and any authorised by the CBM. receiving the approval from MIC and documents or instruments expressed shall be sent back to MIC. or drawn in Myanmar currency but Any contract or agreement made payable in any foreign currency”. by any person that would directly 7.4. Arbitration law or indirectly evade or avoid in any The CBM Law also defines “foreign way the operation of any provision There are two main laws in Myanmar exchange” as including foreign of FERA or of any rule, direction relating to arbitration, namely the bank notes and coins; deposits or order made thereunder will be Arbitration Act 1944 which relates in intergovernmental financial rendered void, unless permission is to local arbitration within Myanmar institutions, central banks, treasuries obtained from the CBM. Thus, the and the Arbitration (Protocol and and commercial banks abroad; use of, and payments and dealings in, Convention) Act which relates to foreign-currency-denominated foreign exchange are all subject to the foreign arbitral awards. According securities of, and instruments provisions of FERA and permission to the Myanmar Export/Import issued or guaranteed by, foreign or authorisation is required from the Rules and Regulations issued by the governments, foreign financial FEMB in connection with foreign Ministry of Commerce, entrepreneurs institutions and intergovernmental exchange dealings. having trade disputes with foreign financial institutions; and companies can only resolve the instruments used for the 7.3. Foreign ownership of disputes in accordance with the international transfer of funds. land and property Arbitration Act 1944, thus requiring contracts to be under Myanmar In general, citizens, foreigners Foreign ownership of land and arbitration. and companies in Myanmar must immovable property is expressly obtain permission of the FEMB in prohibited under the Transfer of 7.5. Economic and Trade all of their practical dealings with Immovable Property Restriction foreign exchange in connection with Agreements Law 1987. Under this law, transfer borrowing foreign exchange from of immovable property by any abroad and repaying the principal Myanmar has agreements with the person to a foreigner or a company following countries: and interest thereof, making any owned by a foreigner by way of sale, payment to persons abroad, opening purchase, gift, acceptance of a gift, accounts in foreign banks abroad and - economic agreements with China, mortgage, acceptance of a mortgage, Cuba, Kuwait, Malaysia and the remittance of profits. However, exchange or transfer and acceptance MFIL companies are permitted to Singapore of a transfer by any other means are repatriate investment and profits in expressly prohibited. the foreign currency in which such - trade agreements with investment was made, as specified Bangladesh, China, India, Israel, However, the recent notification Korea (Rep.), Laos, Malaysia, (see 3.3). (39/2011) released on 30 September Pakistan, the Philippines, Sri 2011 allows foreigners to lease land Lanka, Thailand and Vietnam FERA includes prohibitions on from the government for up to 30 payments made in foreign currency years, as well as a two continuous to any person resident outside - an economic and trade agreement extensions of 15 years if approved by with Turkey. Myanmar, as well as the export of28 PwC