Myanmar Doing Business

Paying Taxes

At a Glance : Paying Taxes

2019 Ranking: 126

2019 Distance to Frontier Score*: 63.94 (unchanged from DB2018)

Regional Average (East Asia Pacific): 72.98

More information on Myanmar’s performance in Paying Taxes -Click Here

* The distance to frontier (DTF) measure shows the distance of each economy to the “frontier,” which represents the best performance observed on each of the indicators across all economies in the Doing Business sample since 2005. An economy’s distance to frontier is reflected on a scale from 0 to 100, where 0 represents the lowest per-formance and 100 represents the frontier. The ease of doing business ranking ranges from 1 to 190. (Source; World Bank)

What it measures

Payments, time and total tax rate for a firm to com-ply with all tax regulations as well as post-filing pro-cesses

Why does it matter?

Taxes are the price we pay for a stable, more equitable society

  • Funding for social programs and public investments.
  • Key to building effective government.

But tax rates and burdensome tax administration remain top obstacle to business
Challenges:

  • To choose level of tax rates and tax base.
  • To design tax compliance system that encourages taxpayer participation

 

Paying Taxes in Myanmar

Tax or Mandatory Contribution Payment (Numbers) Time (Hours) Statutory Tax Rate Tax Base Total Tax and Contribu-tion Rate (% of Profit)
Corporate income tax 4 64 25% as of April 1, 2013 Taxable profits 26.28
Stamp duty on property transfer 1   4% Point of sale 2.42
Property tax 1   13% Land and building 1.75
Capital gains tax 1   Net profit 10% Capital gains 0.51
Employer paid social security contributions 12 111 2% Gross salary 0.26
Commercial Tax 12 107 5.0% Turnover 0.00
Employee paid social security contributions (jointly) 0   3%   0.00
Employer paid  monthly social security  contributions for  Employer and  Employee in jointly  12 15 min  for one  time per  month  and  3hr per year  3% for  Employer and 2%  for  Employee  Gross  salary of  Employee  31.22
TOTALS 43 282     31.22

 

Measure of Quality

  Answer Score assigned to Myanmar in the Do-ing Business2019 report
Post Filing Index (0-100)   45.54
VAT refunds    
Does VAT exist? Yes  
Does a VAT refund process exist per the case study? No  
Restrictions on VAT refund process Input tax on capital purchase is irrecoverable  
Percentage of cases exposed to a VAT audit (%) Not applicable  
Is there a mandatory carry forward period? No  
Time to comply with VAT refund (hours) No VAT refund per case study scenario 0.0
Time to obtain a VAT refund (weeks) No VAT refund per case study scenario 0.0
Corporate Income Tax Audits    
Does corporate income tax exist? Yes  
Percentage of cases exposed to an income tax audit 0-24%  
Time to comply with a corporate income tax correction (hours) 10 84.40
Time to complete a corporate income tax correction (weeks) 0.7 97.77

 

What has improved

Taxpayers who registered at MyCo of DICA can pay tax online on July 2018
The Tax Administration Law has been enacted on 7th June 2019
Implement the Integrated Tax Administration System
Contract for a new IT system for social security payments signed in September 2018
Tender process of IT System for Social Security Board is submitted to the President Office in December 2018 

 

Action Plan

Action Item Timeline Status
Review and simplify tax forms and streamline tax submissions Short Term Internal Revenue Department (IRD) has developed an Integrated Tax Administration System to simplify tax forms and streamline tax submissions. It will be completed and introduced to SAS Offices as a first step .
Increase transparency of tax matters and procedures Short Term IRD have drafted eight brochures on tax matters in Myanmar language and already uploaded on www.ird.gov.mm. 
Provide legal basis for e-signatures to allow e-filing for taxpayers Long Term Ongoing ( After enacted the e-government law)
Devise a strategy to encourage/mandate e-payment for taxpayers Long Term

Negotiate the online payment transfer charges with Myanmar Central Bank.

- The IT Directorate of IRD explained online tax payment in UMFCCI stakeholders meeting in Yangon on 22nd May 2018. About 1000 people from 623 companies attended this meeting.

- In addition, IT Directorate explained online tax payment at a Thilawa SEZ stakeholders meeting on 14th August 2018. 

Educate taxpayers and tax professionals on the tax system Ongoing Educated pamphlets, publications, and other reducing law put in website. Tax Service Units are formed in Naypyitaw, Yangon, Mandalay and they are now answering the questions that are made by phones and in-person.
Conduct a taxpayer perception and cost compliance survey for SMEs Long Term Ongoing
Review audit processes and VAT refund processes Long Term VAT (policy development starts April 2020 through April 2022) 
Launch an information system that will allow for e-filing and e-payment of social security contributions Long Term ILO is supporting the Social Security Board to devel-op a system within the next three years
Review the Social Security Law of 2012  to identify areas for simplification and improvement Long Term Ongoing

 

Lead Person

U Min Htut,

The Paying Taxes Indicator Support Group is headed by the Director General of the Internal Revenue Department (IRD)

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