Company incorporation is carried out by DICA in accordance with the provisions of The Myanmar Companies Law(2017) and investment proposal applications are subjected to MIC (DICA is MIC secretariat).
DICA shall issue the certificate of company incorporation and then MIC’s approval will subject to investment project.
There are several ways to conduct businesses in Myanmar, as outlined below:
In case of limited liability company, foreign ownership is allowed up to 35% in local companies.This is a significant liberalization measure as foreign investors can now own up to 35% of the equity in Myanmar owned companies (directly or indirectly) without changing the company’s status to a “foreign company”
There are no restrictions on the transfer of shares in companies between local and foreign shareholders, but any change in a “foreign company” status of a company will need to be notified to DICA.
The law allows companies with a single shareholder and single director to be established. It requires all companies established in Myanmar to appoint at least one director who is “ordinarily resident” in Myanmar. A person will be considered to be ordinarily resident if they hold permanent residency or is resident in Myanmar for at least 183 days in each 12 month period. The period of residency will be calculated from the date of incorporation of a company (or the date of commencement of the new law for existing companies).
Public companies must appoint at least 3 directors, and at least one of the directors must be a Myanmar citizen who is ordinarily resident in Myanmar.
No minimum capital requirements for the incorporation of company.
New company registration is allowed in new electronic platform called MyCo- Myanmar Companies Online with the commencement of the Myanmar Companies Law 2017.To provide a convenient and integrated service, “MyCO” will be launched on 1st August, 2018. DICA-MyCO is more efficient and requires minimal material documents.
sources from DICAhttps://dica.gov.mm/en/how-register-your-company%20
The President of the Union of Myanmar signed the Myanmar Companies Law (“the new company law”) on 6 December 2017. This new law will replace the existing Companies Act that has been in use since 1914. The details of the implementation will be further announced via notifications, and expected to be in force in late-2018. The new law encompasses a wide range of regulations which provides new opportunities for local and foreign companies including shareholding authorities, reduction of share capital, and share transactions. The law streamlines company management and administration, strengthens governance and enforcement, and makes firms more competitive. It will make it easier for Myanmar public companies to attract new investment technology and expertise by permitting foreign investors to own shares. The new definition allows foreign investors to take a minority stake in companies incorporated in Myanmar to access business activities that were previously restricted to Myanmar nationals only and thereby indirectly helping to create foreign interest in companies listed on the Yangon Stock Exchange (YSX).
By combining the Myanmar Foreign Investment Law 2012 with the Myanmar Citizens Investment Law 2013, the new Myanmar Investment Law 2016 (“MIL”) came into effect in October 2016 to foster a transparent investment environment and fulfil the requirements for local and international investments. Further to the enactment of MIL, which lays down the legal framework and core principles of the investment regime, the more detailed Myanmar Investment Rules 2017 (“Rules”) was announced on 31 March 2017 followed by the MIC Notification 13/2017 on Classification of Promoted Sector on 1 April 2017. The Rules and Notifications provide further information about the types of promoted investments, investment assessment criteria and process, tax investment applications and land rights authorization applications.
On the taxation front, the 2018 Myanmar Union Tax Law (an update of the 2017 Union Tax law) was approved on 20 March 2018 without a tax amnesty clause which is to be drafted separately
Commercial tax, at rates ranging from 0% to 8%, is levied as a turnover tax on goods and services. Generally, commercial tax is imposed at the rate of 5% on a wide range of specified goods and services produced or rendered within the country, and on imported goods. All products and services are subject to 5% commercial tax except for 86 products and 30 services that are specifically exempt from commercial tax. Commercial tax is zero-rated on all exports, except for electricity (8%) and crude oil (5%). Companies registered under the MIC/SEZ may, at the discretion of the MIC/SEZ Committee, be granted exemption from commercial tax during certain stipulated periods.
With effect from 1 April 2016, the Specific Goods Tax Law was introduced to replace commercial tax on a list of specific goods that are imported into Myanmar, manufactured in Myanmar, or exported to a foreign country. There are 17 specialist goods with tax rates from 5% to 80%. Under the Specific Goods Tax Law, only a manufacturer or exporter of specific goods can claim and offset the specific goods tax incurred on purchase of raw materials/semi-finished goods against the specific goods tax charged on sale of specific goods. On top of specific goods tax, a commercial tax of 5% will also be imposed. Specific goods tax is exempt on all exports.
Resident and non-resident foreigners’ salaries are taxed at the same progressive rate of 0 to 25%, with the only restriction for non-resident foreigners being their ineligibility to claim tax reliefs. A foreigner staying in Myanmar for 183 days or more during an income year is considered a resident. Tax reliefs applicable to resident foreigners:
Basic relief (20% of the total salary income), but limited to MMK 10,000,000 • Spouse relief of MMK 1,000,000 (limited to 1 spouse)
Child relief of MMK 500,000 (per child) • Premium paid for life insurance by the employee and his or her spouse • All contributions to social security funds
Special Economic Zones (SEZs) Tax Incentive Investments in the SEZ shall be applicable under the Myanmar Special Economic Zone Law 2014. Primary attractions of the SEZs include incentives such as a five to seven years corporate tax holiday depending on the zone, 50% relief on income tax for the second five years and investors can lease land up to 75 years, i.e. 50 years plus 25 years extension. Double Taxation Agreements
The Income Tax Law (ITL) provides that if the government enters into an agreement with any foreign or international organisation relating to income tax, and if the agreement is notified, the terms of the said agreement will be followed notwithstanding anything to the contrary contained in any other provisions of the ITL
Tax treaties have been concluded with India, Indonesia, Malaysia, Singapore, Republic of Korea, Thailand, United Kingdom, Vietnam, Laos and Bangladesh. The tax treaties with Indonesia and Bangladesh have yet to be ratified.
The existing Labour Laws in Myanmar include: Workmen’s Compensation Act (1923), Factories Act (1951), Leave and Holidays Act (1951), Employment Restriction Act (1959), Labour Organization Law (2011), Settlement of Labour Dispute Law (2012), Social Security Law (2012), Employment and Skill Development Law (2013), Minimum Wages Law (2013), Payment of Wages Law (2016), Shops and Establishments Law (2016), Oilfields (Labour and Welfare) Act (951), Income Tax Law (1974) as amended by Union Tax Law 2016. These laws govern labour-related matters and deal with subjects such as holidays, working hours, leave of absence, wages, overtime, social welfare, woman and child labour, compensation and work rules. When appointing personnel in an organisation formed under a permit or endorsement issued by the MIC, preference is given to citizens. Under the MIL, investors shall appoint only Myanmar citizens for unskilled labour. For the skilled citizen workers and technicians, the foreign investors must enter into an employment contract within 30 days of appointment in accordance with the Ministry of Labour, Employment and Social Security
In March 2018, the government set a new daily minimum wage at MMK 4,800 per day for eight working hours per day which is applicable to enterprises across all sectors and industries but small businesses with less than 10 employees are excluded. The previous rate is MMK 3,600 set in 2015. Although there has been an increase, the minimum wage rate is still the lowest in Southeast Asia. According to the National Wages and Productivity Commission in Manila 2018, Myanmar’s monthly minimum wages were estimated at around USD 80.28 per month which less than the monthly wage of USD 110.34 in Laos, USD 140 in Cambodia and USD 147.47 in Vietnam.2
Yangon, the logistics hub of Myanmar with roughly 85% of the imports and exports flowing through its various seaports, has about 53% of the total number of industrial estates in the country. Most of the industrial lands in Yangon are sold, many remain vacant after being left underdeveloped without any facilities or with modest temporary structures. In most cases, the bidding price of industrial land in Yangon should be treated with scepticism where rates are unrealistically high due to speculation. The Thilawa Special Economic Zone, with its high-standard infrastructure and facility provisions as well as its relatively reasonable land price compared to other industrial estate in Yangon, has seen an influx of investment into the zone. The Yangon Industrial Park and neighboring Mingalardon Industrial Park are regarded as good locations for logistics due to their proximity to the airport. From the recent figures, the increasing number of private industries and manufacturing Foreign Direct Investment (FDI) implies positive demand for future development with high quality infrastructure. The recent announcement by the YRG to start 11 new projects may be an indication of the increasing trend of moving industrial estates to less developed areas further away from the city centre such as Thongwa, Thanlyin, Kungyangon, Kawhmu and Twantay. In 2017, some international real estate firms such as CBRE, Colliers and Cushman & Wakefield reported that the average industrial land rental price per month were USD 0.47/ sq ft in Thailand, USD 0.57/sq ft in Indonesia and USD 0.26/sq ft in Cambodia. Meanwhile, Yangon had monthly rental prices ranging from USD 0.17–0.26 /sq ft/month in Hlaingtharyar and USD 0.13 sq ft/month in Thilawa in 2017, according to DICA. Alongside, the average sale price in Thailand was USD 9/sq ft and USD 18.20/sq ft in Indonesia, whilst the Thilawa SEZ offers around USD7/sq ft. In comparison with the of industrial land prices with neighboring peers, Myanmar offers a reasonable land price.