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Tax Notes: Draft Union Tax Law 2018–2019

Tax Notes: Draft Union Tax Law 2018–2019

September 19, 2018

Due to the change in financial year, the end of the six-month gap period is approaching and the Union Parliament (“Pyidaungsu Hluttaw”) has announced a draft Union Tax Law 2018–2019 (“Draft UTL”) which will be effective from 1 October 2018. A few interesting points from the Draft UTL are outlined below:

Financial year end

Under the Draft UTL 2018–2019, the income year for state-owned enterprises remains the same from 1 October to 30 September the following year, as well as for other taxpayers from 1 April to 31 March the following year.

Specific Goods Tax

Major changes under Specific Goods Tax (“SGT”) include an increase in SGT rates for cigarettes, liquor, and cheroot — especially for goods which fall under a lower price tier. As an example, 1 liter of liquor with a sales value of MMK750 that used to be taxed at MMK90 per liter will now be taxed at MMK122 per liter. On the other hand, 1 liter of liquor with a sales value of MMK1,000 that used to be taxed at MMK274 per liter will now be taxed at MMK122 per liter. We also note that the price ranges for cigarettes and liquor have been expanded, along with the increase in corresponding SGT rates as per summary provided in table below. In addition, it should be noted that diamonds and emeralds are no longer subject to SGT.

Type of specific goodsPrice ranges under UTL 2018Price ranges under draft UTL 2018 – 2019Tax Rate Under UTL 2018Tax Rate Under Draft UTL 2018-2019
Cigarettes– MMK500 and below – MMK 901 and above per pack of 20 cigarettesMMK600 and below – MMK 1,001 and above per pack of 20 cigarettesMMK4 – MMK 16 per cigaretteMMK6 – MMK 21 per cigarette
Liquor– MMMK 750 and below – MMK 26,000 per liter
– MMK 26,001 and above
MMMK 1,000 and below – MMK 29,000 per liter
MMK 29,001 and above
MMK 91 – MMK 5,911 per liter
60% per liter
MMK 122– MMK 6,703 per liter
60% per liter
Cheroot25 Pyas per cherootMMK 1 per cheroot

Commercial Tax

Raw materials for producing detergents, soap, and raw soap are now exempted from Commercial Tax (“CT”), increasing the total CT exempt goods list from 86 to 87. However, 1% CT will also be charged on imported gold jewellery.

AUTHORS

Jean is one of the region’s most experienced tax and regulatory specialists with more than 12 years of experience in Indochina, Myanmar and Singapore. She has advised on a large number of project transactions and tax disputes in the specialties of structuring, power plant projects and oil & gas. As the managing partner of VDB Loi, Jean has extensive experience with projects related to the market entries of companies in the infrastructure, telecommunications and financial services industries in the region, as well as with supply chains. She lives in Yangon.
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Ngwe Lin has a master’s degree in finance from Umea University in Sweden and a bachelor degree in Commerce from the University of Newcastle Australia. She has extensive experience in energy, communications and foreign investment She is a Manager in our Tax team, advising mostly multinational clients in a wide range of industries.


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