About the Myanmar Investment Law
The new Myanmar Investment Law is designed to promote and facilitate both foreign and domestic investment in the economy and open more economic sectors to private investment.
Implementation of the new Myanmar Investment Law - tax exemptions
The Myanmar Investment Rules (the “Rules”), necessary for the implementation of the new Myanmar Investment Law (the “Law”) which was enacted on 18 October 2016, are expected to be passed and implemented by 1 April 2017.
BLP is assisting the Myanmar Investment Commission and the International Finance Corporation in drafting the Rules. Provisions of the Law and draft versions of the Rules have highlighted the following key points:
- Income tax exemptions will only be available to businesses operating in promoted sectors.
- To encourage investment in less developed regions, the duration of the income tax exemption will depend on the location of the investment, with the least developed areas of the country being eligible for a 7 year exemption, while other areas being able to apply for 5 year and 3 year exemptions. We have included a link to the unofficial English language translation which sets out a detailed list of the length of income tax exemptions in different areas of the country, and a summary is provided in the table below. Source: Notification No.10/2017 issued on 22 February 2017.
- Any business which re-invests its profits in Myanmar is eligible to deduct such amounts from its assessable income.
- Other tax exemptions are available to businesses in general. Businesses importing equipment and materials for the construction of their investment in Myanmar are eligible to apply for import duty exemptions. Businesses exporting manufactured products will also be eligible to import their raw materials duty free or be able to claim a credit against duty paid.
- Companies will only be required to obtain an MIC Permit if the investment meets certain criteria, mostly based on potential social and environmental impacts, large scale land use requirements and the size of the investment. Tax incentives are decoupled from the MIC Permit and can now be applied for without obtaining an MIC Permit.
- Currently, only businesses with an MIC Permit can obtain approval to enter into a long term land lease. This will now be available to any business without the requirement of obtaining an MIC permit.
- Investors having difficulty dealing with other government agencies can take advantage of a specific procedure where MIC will assist in resolving issues with other government agencies. Investors will also have the right to request that grounds are provided for government decisions.
Myanmar Companies Law delayed
As mentioned in our January 2017 postcard, the new Myanmar Companies Law was submitted to the Pyithu Hluttaw for final approval in early January. At the time, it was expected that the new law would be ready by the beginning of the next financial year, 1 April 2017. However, we understand that the final approval could be delayed until at least the next session of Parliament in June 2017.
Members of the BLP team were engaged to undertake the drafting of the Myanmar Companies Law and to lead the consultation process. See our review of the Myanmar Companies Law (in English and Burmese) explaining its effects on companies operating in Myanmar.
Notification 11/2017 - determining the threshold of investment value at which State and Regional Committees can issue an Endorsement
Pursuant to Rule 37 of the draft Myanmar Investment Rules 2017 (the “Rules”), an investor shall make all submissions to the Myanmar Investment Commission in accordance with the Myanmar Investment Law 2016 (“MIL”) and the Rules i.e. either (i) submit a proposal to the Myanmar Investment Commission if the investment requires a permit under Section 36 of the MIL or (ii) apply for an endorsement (“Endorsement”) if the investor wishes to apply for a land use right and/or a tax or duty incentive.
On 22 February 2017, the Myanmar Investment Commission issued Notification 11/2017 (the “Notification”). Under the Notification, the Myanmar Investment Commission may delegate the authority for assessing the Endorsement application and issuing an Endorsement to a State or Regional Committee if the value of the investment is less than US$ 5 million, or to another officer of the Myanmar Investment Commission of director level or above or a committee of Myanmar Investment Commission officials formed for that purpose.
For our top picks for developments taking place in Myanmar, please go to our March 2017 postcard.