Even though the MSA has been in place since 1899, the Internal Revenue Department (“IRD”) has enforced the compliance of SD payment strictly starting from 2016. For instruments executed in Myanmar, SD is due before or on the day of being executed; for instruments executed outside of Myanmar, SD is due within three months after the instruments are brought into Myanmar. We note that previously late SD payment was subject to a penalty of ten times the amount of unpaid/underpaid SD.
The Union Parliament (“Pyidaungsu Hluttaw”) issued the Law Amending Myanmar Stamp Act on 26 November 2019 to amend the penalty provisions of the MSA; late SD or underpaid SD payment is now subject to either MMK500 or three times the amount of the unpaid/underpaid SD from 26 November 2019 onwards. This is a significant penalty reduction from the previous penalty amount of ten times the unpaid/underpaid SD.
There are two ways to stamp instruments in Myanmar: (i) self-assessment and (ii) through government assessment. Both processes are legally correct. For self-assessing a document, the taxpayer assesses the applicable SD as per Schedule 1 of the MSA and purchases the stamps from government-licensed stamp vendors in order to affix them to the documents. However, there is no official endorsement of the stamp officer on stamps under self-assessment. While in a government assessment process, the documents are submitted to the stamp office and the stamp officer will review the documents and determine the applicable SD.
The benefit of government assessment is that at a future point in time, the government will be estopped from challenging their own assessment since the assessor’s decision is final. Therefore, the SD penalty can also now be settled at MMK500 if the assessor allows so.