Under the Income Tax Law (1974) as amended in 2016, the Ministry of Planning and Finance regulate the deduction and payment of tax at the time of disbursement of money, commonly referred to as “Withholding Tax”.
The new Notification No. 47/2018 sets out how tax shall be withheld and paid for certain classes of income.
Any kind of interest payment to a non-resident foreigners shall be subject to 15% Withholding Tax. No Withholding Tax shall apply for interest payments for resident citizens and/or resident foreigners.
Royalty payments to non-resident foreigners for the use of licenses, trademarks, copy rights, etc., shall be subject to 15% Withholding Tax. Royalty payments to resident citizens and resident foreigners shall be subject to 10% Withholding Tax.
Payment by governmental organizations and state-owned enterprises to resident citizens and resident foreigners for the purchase of goods, work performed or supply of services within Myanmar shall be subject to 2% Withholding Tax. Similar payments by the Myanmar government to nonresident foreigners shall be subject a Withholding Tax of 2.5%.
Payment by private enterprises registered in Myanmar to non-resident foreigners for the purchase of goods, work performed or supply of services within Myanmar shall be subject to Withholding Tax of 2.5%.
Comment Luther: No Withholding Tax shall apply for payments to resident citizens and resident foreigners.
If the total payment within an income year does not exceed MMK 1,000,000, no Withholding Tax shall be imposed and deducted when making payment.
If however the total payment exceeds this threshold later or if the sum of individual payments exceeds the prescribed amount, Withholding Tax shall be imposed at the prescribed rates.
Comment Luther: This minimum threshold shall now apply to all tax payers (self-assessment tax system as well as official-assessment system).
Kindly note that a list of the payments not exceeding the prescribed threshold amount shall be submitted to the relevant tax office as information.
In practice, many tax authorities preferred quarterly filings and payments of Withholding Tax.
In this respect, the Internal Revenue Department (“IRD”) recently published a new notice, instructing payment in accordance with the law. According to this notice:
If the tax is not paid within the prescribed period, a penalty of 10%of the delinquent amount shall be paid.
Further, the details of the amount withheld must be submitted to the relevant Township Revenue Office within seven days from the date of withholding. Failure to submit information within the prescribed period shall be subject to an additional fine of up to MMK 500,000.
Our Services: The computation, filing and payment of Withholding Tax is offered as part of our accounting and tax compliance services. We would be happy to assist you and provide you with some further information on the services in relating to filing and payment of Withholding Tax.
Unofficial English Translation of the Notice on Withholding of Income Tax and on Criteria Related to Information to Be Reported in Respect of the Amount Withheld
(by) Minn Htut