International Tax Review is part of the Delinian Group, Delinian Limited, 8 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2023

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Myanmar: Leasing of real estate by foreigners

herman.jpg

Cynthia Herman

Like everything right now in Myanmar, the real estate market is hot. Foreigners and foreign-owned companies are not able to hold land or property in Myanmar, however this looks set to change imminently with the passing of a new condo law. It is expected to be passed in April of this year, and drafts indicate that condominium owners will be able to sell up to 40% of their buildings to foreigners, including condominiums from the sixth floor up. Until then, foreign-owned companies are restricted to leases, with the maximum duration allowed depending on the type of company. If the company has approval from the Myanmar Investment Commission, a lease of up to 50 years, plus two additional terms of 10 years, is allowable. Otherwise, under The Transfer of Immoveable Property Act (1987), foreign-owned companies and foreign individuals are restricted to lease terms of a maximum of one year.

When entering into a rental contract, the lessee will have to consider stamp duty and withholding tax (WHT). Stamp duty rates vary with the type of lease, duration of lease, denomination of the contract and whether the property is located in a city area.

Table 1 shows stamp duty for normal rental contracts denominated in Myanmar Kyat only. Leases on property located in the city areas of Yangon, Mandalay and Naypyitaw are subject to an additional 2% levy under the Yangon Development Trust Act (1921), Mandalay Development Law (2002) and Naypyitaw Development Law (2009), respectively.

Table 1

Lease period

Stamp duty rate in Yangon, Mandalay and Naypyitaw

Stamp duty rate in all other areas

Less than 1 year

3.5% of whole amount

1.5% of whole amount

1 - 3 years

3.5% of average annual rental

1.5% of average annual rental

More than 3 years

7% of average annual rental

5% of average annual rental

Other rates apply to more unusual types of leases, such as a lease without a definite term, or one that purports to be in perpetuity.

Of particular interest to foreigners may be Notification 105/2012, which provides that lease contracts of any duration denominated in US dollars or other foreign currency are subject to stamp duty of 1% of the annual rental amount.

Stamp duty is payable on all real estate transactions, with an exemption for instance, where the party normally liable for stamp duty is a government organisation. Further, under Notification No. 18/97, an exemption may be applied for if the lease is held by a JV with a government organisation.

WHT should be deducted from rental payments. Lease fees are within the scope of contract-based service income sourced in Myanmar, and therefore are subject to WHT at a rate of 2% where the lease payment is made to a Myanmar resident.

When the purchase of condominiums becomes an option, foreign buyers must again consider stamp duty. The stamp duty levied on the transfer of property is 5% of the contract value, again with the 2% extra applied to properties in Yangon, Mandalay and Naypyitaw city areas, so in total, 7% stamp duty would apply in those areas.

Cynthia Herman (cynthia.herman@vdb-loi.com)

VDB Loi

Tel: +95 942 112 9769

Website: www.vdb-loi.com

more across site & bottom lb ros

More from across our site

Governments now have the final OECD guidance on how to implement the 15% global minimum corporate tax rate.
The Indian company, which is contesting the bill, has a family connection to UK Prime Minister Rishi Sunak – whose government has just been hit by a tax scandal.
Developments included calls for tax reform in Malaysia and the US, concerns about the level of the VAT threshold in the UK, Ukraine’s preparations for EU accession, and more.
A steady stream of countries has announced steps towards implementing pillar two, but Korea has got there first. Ralph Cunningham finds out what tax executives should do next.
The BEPS Monitoring Group has found a rare point of agreement with business bodies advocating an EU-wide one-stop-shop for compliance under BEFIT.
Former PwC partner Peter-John Collins has been banned from serving as a tax agent in Australia, while Brazil reports its best-ever year of tax collection on record.
Industry groups are concerned about the shift away from the ALP towards formulary apportionment as part of a common consolidated corporate tax base across the EU.
The former tax official in Italy will take up her post in April.
With marked economic disruption matched by a frenetic rate of regulatory upheaval, ITR partnered with Asia’s leading legal minds to navigate the continent’s growing complexity.
Lawmakers seem more reticent than ever to make ambitious tax proposals since the disastrous ‘mini-budget’ last September, but the country needs serious change.