Major Changes in the Union Tax Law 2023

The Union Tax Law 2023 (the “UTL 2023”) was enacted on 30 March 2023 by the State Administration Council. The UTL 2023 applies to financial year (“FY”) 2023-2024 starting from 1 April 2023 and ending on 31 March 2024. The effective date of the UTL 2023 is 1 April 2023. The major changes in the UTL 2023 include an increase in specific goods tax rates for liquor; commercial tax exemptions for battery electric vehicles and photovoltaic/solar-related equipment; and a raise in the income tax exemption threshold for newly established small and medium-sized enterprises.

A summary of the changes in the UTL 2023 is provided below:   

Changes in Specific Goods Tax Rates

In the UTL 2023, the Specific Goods Tax (“SGT”) rates for liquor are increased. The lowest price range of liquor subject to SGT is MMK200 – MMK1,400 to which the SGT rate of MMK209 per liter applies. The highest SGT rate of 60% of value per liter applies to MMK19,851 per liter and above.

Please refer below table for the differences between UTL 2023 and UTL 2022 in respect of SGT rates applied to liquor.

Type of Specific Good	UTL 2023		UTL 2022
	Different Tiers ranging from:	SGT Rates	Different Tiers ranging from:	SGT Rates
Liquor	MMK 200 to MMK 19,850 per liter; and MMK19,851 per liter and above	MMK 209 to MMK 5,071 per liter; and 60% of value per liter	MMK 200 to MMK 15,400 per liter; and MMK 15,401 per liter and above	MMK 190 to MMK 4,610 per liter; and 60% of value per liter

Changes in Corporate Income Tax

In the UTL 2023, the income tax exemption threshold for newly established small and medium-sized enterprises is increased from the annual net profit of MMK 10 million to MMK 15 million for three consecutive years, including the year in which the business operation has started.

The Corporate Income Tax (“CIT”) rate of 22% applied to other business entities and 17% to listed companies on the Yangon Stock Exchange remain unchanged. The CIT rate of 25% applies to companies operating in the oil and gas exploration and production sector. Notification 11/2023 dated 2 February 2023 issued by the Ministry of Planning and Finance clarifies the meaning in relation to the activities covered by the expression “oil and natural gas exploration and production sector” in Myanmar.

Changes in Commercial Tax

There are no major changes in imposition of Commercial Tax (“CT”). However, the following new category of goods and services are added to the CT-exempted list:

1. Photovoltaic (“PV”) Module, Solar Module, PV Panel, Solar Panel, Solar Panel 92 Watt CIGS (Copper Indium Gallium Selenide), PV/Solar (Hybrid/Smart Array) controller, charge controller for PV/Solar, PV/Solar Inverter (String/Hybrid/Battery/Bidirectional/ Central), PV/Solar mounted structure, Solar/PV mounted frames, Solar/PV mounted kits (Rodd and Ground mounted), PV/Solar mounted system (Floating), PV/Solar Controller and Battery box (only if the PV/Solar controller and battery are imported together);
2. Battery electric Vehicles (“BEVs”), and its associated batteries and accessories to be used particularly for BEVs; and
3. Charging services for BEVs’ batteries.

Jewelry Tax

The UTL 2023 removed the jewelry tax exemption of raw gemstones of diamonds and emeralds. Therefore, the sale of raw gemstones of diamonds and emeralds are now subject to jewelry tax at 9%. The jewelry tax will be based on the sales price of the seller or the sales price determined by the Myanma Gems Enterprise in line with the actual sales prices, whichever is higher.

The Jewelry Tax rates in the UTL 2023 are provided as below:

No.	Type of gems	Tax rate
1	Raw gemstones of jade	11%
2	Raw gemstones of ruby, sapphire, and other precious raw gemstones	9%
3	Finished gemstones of jade, ruby, sapphire and other finished precious gemstones, either loose or in jewelry, except diamonds and emeralds	5%
4	Goods made with gemstones	5%

Conclusion

The UTL 2023 largely provides favorable tax exemptions to taxpayers who are engaging in trading activities particularly for photovoltaic/solar equipment and battery electric vehicles, and taxpayers who are providing services relating to charging of batteries for electric vehicles. Moreover, the income tax exemption threshold is raised in order to support the development of the newly established small and medium-sized enterprises. It should be noted that tax rates and exemptions in the UTL 2023 are only applicable to the period from 1 April 2023 to 31 March 2024.