Problems relating to Trade and Investment on Myanmar
14. Taxation Systems |
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Issue |
Issue details |
Requests |
Reference |
| (1) Non-conclusion of Tax Treaty | - Due to the absence of Japan Myanmar tax treaty the majority of Japan's investment into Myanmar goes through Singapore, while double taxation is a matter of concern on the staff for a long term business trip of less than 180-days. | - It is requested that GOJ and GOM ratify the tax treaty as soon as possible. | - SEZ Act |
| (2) Nebulous Taxation Systems | - Nebulous taxation calculation basis. - Corporate taxation system does not reflect the actual financial status. - Nebulous basis of tax levy on personal income tax (especially as regards welfare expense). - Vexatiously complex business tax scheme. - Nebulous tax base of property tax scheme. |
- It is requested that GOM improves transparency in tax amount calculation. - It is requested that GOM corrects discrimination in domestic vs. foreign. - It is requested that GOM clearly identifies the exact taxable scope of income tax. - It is requested that GOM shifts business tax to VAT with single tax rate. - It is requested that GOM expressly states the tax base for the property tax. |
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| (3) Difficult Set-Off of Business Tax | - Business tax of Myanmar resembling VAT in other countries prohibits offset between receipt and expenditure, so that in multi-layer subcontracting business, the tax levy snowballs into a substantial high cost. - While GOM allows setoff in manufacturing and distribution businesses only as regards setoff against purchase business tax. However, only setoff practically allowed is against only import business tax so that it takes the form of sales tax, rather than VAT. In effect, it pushes up the expenses. |
- It is requested that GOM amends the current practice to allow setoff between receipt and payment. - It is requested that GOM shifts its tax system into (internationally (accepted) value added tax |
- Business Tax Act |
| (4) Ambiguous Tax Consequences of Business Tax under ODA Free of Charge Projectc | - According to "EN-GA", it is expressly stated: "Normally all domestic taxes are exempted on ODA free of charge projects." However, the treatment on business tax (BTX) is nebulous. Negotiation with GOM is underway for BTX exemption, together with the Myanmar customer, embassy of Japan in Yangong, and JICA. By right, the seller (i.e., subcontractor/supplier) is responsible to file tax returns and pay tax. However, it has been a customary trading practice to pass on the equivalent amount to purchaser so that the corresponding amount equals cost to purchaser. | - It is requested that GOM expressly states exemption of business tax in the tendering phase. (Consequently, it is incumbent upon the consultant responsible for tendering to use its best efforts to resolve the issues over the tax consequences). | |
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