14.11.2019

Myanmar News November 2019

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Update on Tax Exemptions for Development Projects

I. Introduction

In 2018, the Ministry of Planning and Finance and the Union Government Cabinet issued two Notifications (Notification No. 38/2018 and Notification No. 49/2018), which stipulated that national development projects carried out with Grant Aid or Development Assistance Loans provided to the Union may be entitled to enjoy exemptions from income tax and commercial tax. Both Notifications made it mandatory to apply with the Ministry to the Ministry of Planning and Finance for recognition that such projects are in fact implemented with Grant Aid or Development Assistance Loans. No further details were provided (e.g. on the necessary documents/information and assessment procedure).

On 23 August 2019, the Ministry of Planning and Finance published Notification No. 69/2019, further clarifying the requirements for organizations and their staff carrying out national development projects with Grant Aid and Concession Loans to enjoy tax exemptions. The new Notification will come into effect on 1 September 2019 and supersede Notification No. 38/2018.

Please find below a short summary of the new Notification.

II. Notification 69/2019

1. Grant Aid Projects

Companies, consultants and service providers participating as primary contractors or sub-contractors in projects being implemented with Grant Aid shall be granted exemption from income tax or commercial tax as follows: „

  • Exemption from income tax on salary income of project staff other than Myanmar citizens; „
  • Exemption from corporate income/profit tax for relevant companies involved in the projects; „
  • Exemption from commercial tax on goods, machinery and auxiliaries imported for use in the projects; and „
  • Exemption from commercial tax for the projects.

2. Concessional Loans

Companies, consultants and service providers participating in projects being implemented with Concessional Loans shall be granted exemption from Income Tax as follows: „

  • Exemption from income tax on interest payments on the loans taken by the Union; and „
  • Exemption from corporate income/profit tax on income of companies which participate as primary contractors (not sub-contractors) in project activities.

Further, foreign nationals working on such projects may be granted income tax exemption on salaries received related to this project.

3. Application Process

To ensure that requests for tax exemptions are systematic, applications shall be submitted through the Ministry of Planning and Finance to the Internal Revenue Department.

Projects carried out with both Grant Aid and Concessional Loans shall be deemed as Concessional Loan projects and shall be entitled only to those exemptions allowed to Concessional Loan projects.

3.1 Personal Income Tax

For personal income tax exemptions, companies shall submit the following: „

  • Evidence by the primary contractors or sub-contractors that the staff concerned is actually working on the project (including recommendation letters from the relevant government department or government organization in case of a primary contractors; sub-contractors shall provide recommendation letters of the primary contractor); „
  • Evidence by the primary contractor that the project is carried out with Grant Aid or Concessional Loan; and „
  • Recommendation letter from the relevant ministry and budget department (through the Ministry of Planning and Finance) that the project is carried out with Grant Aid or Concessional Loan.

3.2 Corporate Income Tax, Commercial Tax and Customs Duties

Applications by the primary contractors or sub-contractors of Grant Aid projects or by primary contractors of Concessionary Loan projects shall include the following documents: „

  • Evidence that the relevant activity is a Grant Aid project or a Concessional Loan project (i.e. letter of representation from the company concerned, recommendation letter from the relevant ministry and recommendation letter from the budget department in case of aid taken by the Ministry of Planning and Finance with the recommendation from the relevant ministry, and recommendation from the Treasury Department in case of loans); „
  • In case of a primary contractor, the project agreement concluded with the relevant department; „
  • In case of a sub-contractor, the agreement concluded with the primary contractor and recommendation of the primary contractor; „
  • Import permit and opinion remarks of the Customs Department in respect of exemption from custom duties; and „
  • Agreement of the Development Assistant Coordination Unit for procurement of vehicles, machinery and equipment. Comment Luther: Application for such tax exemption is offered as part of Luther’s Legal Services.

4. NGOs

Projects being carried out, not with Grant Aid or Development Assistance Loans provided to the Union, but by foreign/domestic organizations, non-governmental organizations, or programmes being carried out by companies with assistance from those entities, shall not be eligible under this Notification.

III. Annex – Unofficial English Translation of Notification No. 69/2019

Government of the Republic of the Union of Myanmar
Ministry of Planning and Finance
Notification No. 69/2019
23 August 2019


1. Exercising the powers conferred under section (15) sub-section (a) and section (31) sub-section (b) of the Union Tax Law
(2018-2019), the Ministry of Planning and Finance, with the agreement of the Union Government Cabinet, hereby issues this
Notification to facilitate tax exemptions with respect to national development projects carried out with Grant Aid and Concession
Loans in accordance with the law.

2. All companies, consultants and service providers involved in projects which are implemented with Grant Aid provided to the
Union are exempted from taxation as follows:
a. Exemption from income tax on salary income of project staff other than Myanmar citizens;
b. Exemption from corporate income/profit tax for relevant companies involved in the projects;
c. Exemption from commercial tax on goods, machinery and auxiliaries imported for use in the projects; and
d. Exemption from commercial tax for the projects.

3. All companies, consultants and service providers involved in projects which are implemented with Concessional Loan provided
to the Union
a. are exempted from income tax as follows:
i. Exemption from income tax on interest payments on the loans taken by the Union; and
ii. Exemption from corporate income/profit tax on income of companies which participate as Main Contractors (not subcontractors)
in project activities.
b. Employees, excluding Myanmar nationals, who work on the project mentioned in the Concessional Loan Agreement may
be granted income tax exemption on salaries received related to this project.

4. With regard to commercial tax in respect of projects implemented with Concessional Loans, the relevant government departments
and government organizations must allocate and request budget for commercial tax payable on projects undertaken by
them, and make payment to the Internal Revenue Department.

5. To ensure that requests for tax exemptions for projects implemented with Grant Aid or Concessional Loans are systematic, applications
for tax exemption “certification” must be submitted through the Ministry of Planning and Finance to the Internal Revenue
Department, supported by “substantiating documents” as prescribed on a case-by-case basis.

6. Companies applying for salary income tax exemption “certification” for staff other than Myanmar citizens must comply with
the following:
a. Submission by the main or sub company that [the staff concerned] is actually working on the project (attaching recom
mendation from the relevant government department, government organization in case of a main company, and also
attaching the recommendation of the main company in case of a sub company);
b. Submission by the main company that the project is carried out with Grant Aid or a Concessional Loan; and
c. Recommendation by the relevant ministry and by the Budget Department (through the Ministry of Planning and Finance)
that the project is carried out with Grant Aid or a Concessional Loan.

7. Applications by the main contractor and sub-contractors of Grant Aid projects or by the main contractor in Concessionary Loan
projects for “certification” toward tax exemption in respect of their activities must include the following documents:
a. Regarding the fact that its activity is a project under a Grant Aid project or a Concessional Loan project:
(1) Letter of representation from the company concerned;
(2) Recommendation from the relevant ministry; and
(3) Recommendation from the Budget Department in case of aid taken by the Ministry of Planning and Finance
with the recommendation from the relevant ministry, and recommendation from the Treasury Department in
case of loans;
b. The project agreement concluded with the relevant department, in case of a main contractor;
c. The agreement concluded with the main company and recommendation of the main company, in case of a subcontractor;
d. Import permit and opinion remarks of the Customs Department in respect of exemption from custom duties; and
e. Agreement of the Development Assistant Coordination Unit for procurement of vehicles, machinery and equipment.

8. Where a project is carried out with both Grant Aid and Concessional Loans, it shall be deemed as a Concessional Loan project
and shall be entitled only to those exemptions allowed to Concessional Loan projects.

9. Projects carried out by domestic and foreign organizations or non-governmental organizations, or programmes carried out by
companies with the assistance of such entities shall not be eligible under this Notification.

10. This Notification supersedes Notification No. 38/2018 dated 21 May 2018 of the Ministry of Planning and Finance.

11. This Notification shall be effective commencing from 1 September 2019.


Soe Win
Union Minister
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Letter No.: SaBa/Banda-2/1/295(3707/2019)
Date: 23 August 2019
Distribution
Office of the Union President
All divisions under this Minister’s Office
By Order
_signed 23 August 2019_
(Tun Tun Naing)
Permanent Secretary

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