On 18 June 2018, the Ministry of Planning and Finance (“Ministry”) implemented its most recent reforms to Myanmar’s withholding tax laws under Notification № 47/2018 (“Notification”). The new Notification repeals and replaces the Country’s previous withholding tax law, Notification № 51/2017. The decision of the Ministry to reform Myanmar’s withholding tax laws follows the Ministry’s January announcement to remove some withholding taxes on exports.
The key changes under the new Notification that you need to know about are summarized below:

1. As of 1 July 2018, the existing two per cent (2%) withholding tax will be removed for Myanmar tax residents. This will apply to payments involving cooperative businesses with the Myanmar Government, partnerships, joint ventures, companies, registered associations, organizations, cooperative societies, foreign companies, and foreign enterprises involved in the purchase of goods and services performed or services rendered within Myanmar under a contract;
2. “Local” (Myanmar) small and medium enterprises and companies will be exempt from paying the existing two per cent (2%) withholding tax;
3. Withholding tax payments made by state organization and enterprises for the purchase of goods and services within Myanmar under a contract will still be subject to pay the existing two per cent (2%) withholding tax;
4. Non-Myanmar tax residents will still be subject to pay withholding tax at two point five per cent (2.5%);
5. Myanmar tax residents will be exempt from paying withholding tax on loan interest;
6. Non-Myanmar tax residents will not be exempt from paying withholding tax on loan interest, thus Non-Myanmar tax residents will be required to pay fifteen per cent (15%) on loan interest;
7. Myanmar tax residents must pay a ten percent (10%) withholding tax on royalties for any use of licenses, trademarks and patents;
8. Non-Myanmar tax residents must pay a fifteen percent (15%) withholding tax on royalties for any use of licenses, trademarks and patents.

The recent withholding tax reforms are part of the Myanmar Government’s positive efforts to attract increased foreign investment into the Country. We see the withholding tax reforms as a step in the right direction for both foreign and local investors.

Through our office in Yangon, Duane Morris & Selvam advises corporations on investment, business and regulatory processes in Myanmar. For further information, please contact
Mr Krishna Ramachandra (kramachandra@duanemorrisselvam.com),
Ms Babita Ambekar (bambekar@duanemorrisselvam.com),
Mr Rory Lang (rjlang@duanemorrisselvam.com)
or Ms Bei Wang (BWang@duanemorrisselvam.com)
or visit www.duanemorrisselvam.com.
Duane Morris & Selvam is recognised as a leading law firm for Myanmar related Corporate and M&A Work – The Legal 500 (2018).