This content is from: Myanmar

Myanmar: Myanmar introduces 2% advance income tax collection on imports and exports

Edwin Vanderbruggen
Ngwe Lin Myat Chit
In a move to improve tax compliance by a wide base of taxpayers with business activities, the Internal Revenue Department (IRD) has released a notification imposing a 2% tax collection on nearly all imports and exports of goods.

From June 14 2013, importers will need to pay a 2% tax on the value of the goods they import. It does not matter whether the goods are intended for resale or for own use. The same rule is mutatis mutandis applied for exported goods.

The tax which is collected is in fact an advance payment for income tax. It is counted as an advance payment of the income tax which is annually payable by the importer or exporter in question, and can also be reimbursed.


A new notification of the Internal Revenue Department slaps a 2% income tax on the value of nearly all imported and exported goods.

The key points are:

  • Importers must pay an advance income tax assessment of 2% on the customs value of the goods for import;
  • Exporters must pay an advance income tax assessment of 2% on the value of all exported goods;
  • There are a few exceptions, including import of materials and equipment during the construction period of projects with an Investment Permit from the Myanmar Investment Commission (MIC);
  • Implemented as from June 14 2013; and
  • The tax collected is counted as an advance payment of the income tax payable by the importer or exporter in question, and can also be reimbursed.

Exceptions for investors

The advance payment does not apply for investors with an MIC permit, the investment licence issued by the Myanmar Investment Commission. The tax is not levied during the construction period of an importer with an MIC Permit. Goods that a company with an MIC permit imports which are not materials or equipment falling within the scope of the MIC permit's tax exemptions are likely to be subject to the 2% advance tax as well.

Another exception has been created for CMP (cut-make-pack) contracts which are common in the garment and footwear business.

Temporary import or import meant for drawback (such as drilling rigs and vessels) are exempt from the new 2% tax.

Special rules for vehicles

Against the background of the government's reconsideration of the car importation policy, the IRD will apply the 2% tax to personal vehicles as well. However, the notification does provide a number of exceptions, and one particular exception relates to vehicles. A number of conditions are imposed to import vehicles without the new 2% tax.

Importation of used cars is also subject to commercial tax and customs duties. There is no excise duty at this time in Myanmar, a role that is largely taken over by the commercial tax.

The Customs Department will be responsible for collecting the 2% advance income tax in cases of importation vehicles, and for that matter for all other imports of goods as well.

Who will collect the tax?

A number of agencies have been given the duty of collecting the new tax, notably:

  • Directorate of IRD performing duties in Border Trade Camp (OSS) group for exporting or importing from border trade;
  • Customs Department if importing with normal trade system;
  • Company Circle Tax Office (CCTO), if exporting from Yangon sea port, airport; and
  • Pyi Gyi Ta Kun Directorate of Township Internal Revenue Office, if exporting from Mandalay airport.


The collection of a new advance tax payment features in an IRD policy to improve compliance with the country's system of advance tax payment.

Income tax is assessed on a yearly basis but is actually payable in advance through monthly or quarterly instalments. However, these instalments are not paid by every taxpayer. In fact, a large group of taxpayers only pay this tax as a lump sum at the end of the tax year.

As a result, the IRD has been seeking to strengthen the advance collection of taxes through other means. Another notable example, introduced last year, was the 30% advance tax payment for purchase of real estate.

The new notification states that the IRD expects that the collection of 2% on imports and exports will lead to a more evenly spread out collection of income tax.

Are you impacted?

A 2% cash leakage for all imports will likely impact every business and consumer in Myanmar, but in most cases rather marginally. Trading companies working on high volumes with very tight margins might be affected if their contractual framework does not allow the company to pass on any unforeseen costs to their customers, and if they have difficulty financing the missing 2%. In some types of commerce, the margin may actually be less than 2% and that might easily cause problems for the importer/distributor.

In theory, exporters should not be adversely affected by the new 2% rule, unless of course they are not compliant with their tax situation as it is, or when they are operating without generating a profit. The 2% paid at the border can be refunded to companies that do not turn a profit at the end of the year, but the cash loss will remain.

Investors should not be impacted if your project secures an MIC permit. However, not everybody does, or is able to do so. For those without, the cost of doing business just went up. Besides paying customs duties (at various rates) and commercial tax (at 5%), you will now also bear the temporary cost of 2% income tax.

Edwin Vanderbruggen ( and Ngwe Lin Myat Chit (
Tel: +95 942 112 9769

The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms and Conditions and Privacy Policy before using the site. All material subject to strictly enforced copyright laws.

© 2019 Euromoney Institutional Investor PLC. For help please see our FAQ.

Instant access to all of our content. Membership Options | One Week Trial