Tax Newsletter | Issue 18 : Tax Administration Law ... · Overview Based on the Tax Reform Plan for FY 2017-18 to FY 2021-22 published by the Internal Revenue Department (IRD), it

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Update on

Tax Administration Law effective from

1 October, 2019

Tax Administration Law, effective

from 1st October 2019 PwC Myanmar | Tax services

Issue 18 l 24 July 2019

The Pyidaungsu Hluttaw enacted the law i.e. Pyidaungsu Hluttaw No.

20/2019 known as Tax Administration Law (“TAL”) on 7 June, 2019. TAL

shall be effective from 1 October 2019 (“Effective Date”). TAL aims to provide

a proper guide and simplification of the administrative procedures in

relation to tax matters for all the taxpayers in Myanmar.

Overview

Based on the Tax Reform Plan for FY 2017-18 to FY 2021-22 published by the Internal

Revenue Department (IRD), it is the Government Economic Outcome to establish an

effective and fair tax system in order to increase the Country’s revenue by enacting tax laws

and procedures. In order to achieve the Government Economic Outcome above, the IRD

has set four areas of focus below as part of the tax reform plan.

Figure 1: IRD Strategic Outcomes

Source: Reform Journey, A Plan to Mobilise Domestic Revenue 2017-18 to 2021-22 published by the IRD

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In line with the IRD’s goals above, TAL has been enacted as part of the IRD’s strategic reform

initiatives with an aim of (i) modernising tax administration based on the international good

practice tailored for the needs of Myanmar; and (ii) maintaining and improving compliance

by taxpayers through the improved/simplified tax systems, processes and practices.

Executive Summary

The objective of TAL is to maintain consistency in the administration of various tax laws (as

listed hereinbelow), collect tax efficiently, define the rights and obligations of the taxpayers

and IRD accurately, making self-assessment system (“SAS”) more efficient and

comprehensive for taxpayers.

TAL is relevant to the following laws, unless otherwise prescribed:

(i) Income Tax;

(ii) Commercial Tax;

(iii) Specific Goods Tax;

(iv) Any other tax law that is assigned to the Director General (“DG”) of the IRD in new

legislation.

TAL provides for various provisions inter alia anti-avoidance of tax, evaluation on

administration, interest for underpayment and overpayment of tax by the taxpayers in

detail and inclusion of many other provisions, with an aim of avoiding ambiguity in the

procedures relating to tax filing and payment of tax by the taxpayers.

TAL shall be effective from 1 October 2019 (“Effective Date”). Under the transitory

provisions of TAL, any legal proceeding, appeal or other prosecution started

before the Effective Date shall be governed by the provisions of the relevant

laws. However, IRD can collect tax from the taxpayers for unsettled cases from

the periods before TAL being in force, under the provisions of TAL. The rules,

regulations, notifications, order, directives and procedures issued under

Income Tax Law, Commercial Tax Law and Specific Goods Tax Law shall be

applicable until the required rules and procedures are issued for TAL.

In this Newsletter, we have set out below the major changes introduced under the TAL and

the salient key features of TAL.

- Part A – New key features of TAL

- Part B – TAL’s provisions relating to tax administration

- Part C – TAL’s provisions relating to penalty as compared to that of current tax laws

- Conclusion

- Appendices I and II outlining the comparison between the provisions in TAL and that

of current tax laws

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Part A - New key features of TAL.

Key areas

Descriptions PwC point of view

1) Public Rulings The DG may issue clarification statements for the public on how specific laws will be dealt with in practice. Public rulings are binding on the IRD but not binding on the taxpayer. Public rulings can be amended by the DG on a prospective basis only.

The current tax legislation is thin and therefore subject to interpretation by both tax officers and taxpayers. There are currently many gaps and problems. In practice, the tax officers may assess tax based on internal directives that were not published to taxpayers. The IRD has recently acknowledged the gaps by publishing its interpretation of tax laws through issuance of interpretation and practice statements to the public since October 2018. The introduction of public rulings under TAL will help to provide greater certainty for taxpayers especially those assessed under the SAS by: - ensuring consistency in

implementation of tax laws; and

- providing guidance to public and tax officers, especially on complex or controversial tax matters (e.g. finance lease, operating lease rentals and the impact of the introduction of International Financial Reporting Standard (IFRS) 16).

The public rulings should also help to build the knowledge base of both, the taxpayers and IRD to pay and collect the right amount of taxes over time.

2) Advance Rulings

An advance ruling is an interpretation of law for a particular matter for a taxpayer. The taxpayer is required to provide a complete scenario in order to make the ruling binding. The DG has a right to amend or revoke part of the rulings or the whole, but the amendment or revocation will not have retrospective effect. Any part of the ruling that is not consistent with the new or amended law shall be void automatically and the DG

In current practice, taxpayers may seek a tax ruling from the IRD. The tax ruling sought from the IRD is, however, not legally binding for both, the taxpayers and the IRD. The advance ruling system introduced under TAL allows taxpayers a platform for raising issues with the IRD and receiving binding private rulings on

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shall inform the taxpayer. The DG may publish advance rulings as public rulings without specifying the name of the taxpayer and other unnecessary information. The DG may set a fee for advance rulings. It is important to note that, any agreement made by the tax officer regarding the tax payables of the taxpayer, except the advance rulings or anything assigned by the law, is not binding on the IRD.

proposed tax treatments especially those on complex or controversial tax matters. It should engage taxpayers and encourage them to pay the right amount of tax. To have an effective advance ruling regime, the IRD should build the knowledge base in order to improve the timeliness and quality of tax rulings to be issued to taxpayers. The outcome of rulings should also be capable of appeal. To the extent that, old ruling a taxpayer has obtained, cover continuing transactions and remains relevant in the future, the taxpayer may wish to consider updating them with a binding advance private ruling covering the earlier transactions.

3) Anti-Avoidance of Tax and Evasion

TAL provides that the DG, can now deny considering transactions that are fake or fraudulent and lacking economic substance. This means that the DG, during an assessment, can deny transactions that are suspicious or fraudulent and found that such transactions are recorded to avoid payment of tax. Tax evasion is defined as an intentional act in order not to get assessed, pay tax or get tax collected or in order to get refund that is not entitled.

The current tax legislation is thinly legislated. It lacks international tax concepts like transfer pricing regulations, General Anti-Avoidance Rules (GAAR) etc. Inclusion of the GAAR provisions in the TAL will help improve the robustness of the Myanmar tax legislation and level of tax compliance by taxpayers. In order to improve the tax compliance level by taxpayers, tax audits should be mandated in law and the IRD should be allowed to focus on audits of taxpayers on certain common tax issues, for example, companies whose revenue or effective tax rate is significantly at variance with industry norms.

4) Assessment and Re-assessment

The DG can conduct an assessment or re-assessment of the taxpayer within a period of six (6) years after the end of the relevant assessment year. However, if the assessment is made based on the incomplete information provided by the taxpayer or if the assessment is made on the incorrect information due to intentional negligence or fraudulent act of a taxpayer, the DG can conduct a new

Under the current Income Tax and Commercial Tax Laws, the statute of limitation is three (3) years after the end of the relevant assessment year. The statute of limitation of three (3) years does not apply to tax fraud cases. With TAL enacted, the statute of limitation of three (3) years will be

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assessment or a re-assessment within a period of twelve (12) years after the end of the relevant assessment year. Any tax return filed by the taxpayer shall be regarded as an assessment carried out by the DG. This however shall not deter the DG from making a new assessment or re-assessment.

increased to six (6) years and for the intentional negligence or fraudulent cases, infinite statute of limitation will be replaced with twelve (12) years period. It appears that there were problems with tax compliance in emerging countries including Myanmar. In order to push the Country forward, the IRD may consider introducing a cooperative compliance program. This has been introduced by a number of countries including Australia and Singapore. It can take different forms and is often voluntary on the part of the taxpayer. It allows taxpayers a forum for raising issues with the IRD and getting clarity on proposed tax treatments. It engages companies and encourages them to pay the right amount of tax within the statute of limitation. There is a provision in TAL stating that the tax return and computation lodged by the taxpayers shall be deemed assessed by the DG. Currently the tax offices are adopting both SAS and OAS. It is not clear in the TAL on whether the provision relating to “deemed assessment” by the DG shall apply to both SAS and OAS. Further clarification is required from the IRD.

5) Communication Any notice, statement or agreement from the DG to the taxpayer or other person will be valid only if the duty and function are legally assigned to the DG, it is in writing and is signed by a tax officer and delivered to the relevant taxpayer or addressed person. If the taxpayer is an individual, the DG may deliver the notice in hand, send to last known address via registered mail or the address that the DG knows as currently in use electronically. If the taxpayer is a company, the DG may deliver the notice in the hand of or electronically to the person that is assigned for tax matters, send to principal business address in Myanmar,

There is no provision in the current tax laws for effectiveness of communication. In practice, taxpayers have to submit the tax returns and letters in person and get acknowledgement from the tax officer. Under TAL, taxpayers and the IRD officers are allowed to communicate electronically (i.e. fax or email) and registered mail as well. It is important for the taxpayer to get their mailing address and contact information updated at the IRD so that they receive all the communication from the IRD. If

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send to the address registered at DICA via registered mail or the address that the DG knows as currently in use electronically. It is important to note that the following: - electronic communication is deemed

as delivered on the same day; - registered mail posted is deemed as

delivered on the 21st day from the date of postage if it is posted to the address in Myanmar; and on 30th day if it is posted to the address outside Myanmar.

The taxpayers must notify DICA and the IRD if there is any change in business address in order to avoid the situation where the IRD may send the notice to the address that is no longer in use but deemed delivered.

the taxpayer does not update its contact information and does not receive communication from the IRD, it shall still be deemed as communicated to the taxpayer if the IRD has sent to the contact registered with the IRD.

6) Representative

(i) Through Prescription by TAL ; and

(ii) Through Appointment by the taxpayer.

(i) Representative by Prescription under TAL

- Individual: Any individual who does

not have legal capacity, the guardian or the manager who receives or has a right to receive the income or benefit on behalf of such an individual;

- Company: Main responsible person;

- Partnership: Partners;

- Trust: Trustee;

- (a) Association of Persons other than companies or partnerships; (b) Union Government; (c) Nay Pyi Taw Council and Division or State or Regional Government: Person responsible for recording receipts and payments;

- Foreign Government or the Embassy of Foreign Government or the Branch: Person responsible for recording receipts and payments within Myanmar;

- National or Foreigner staying overseas: Manager or person responsible for the business

There is no such requirement under the current tax laws. However, the IRD may appoint a representative for a taxpayer with the consent of that person under the relevant Tax Laws. Under TAL, the respective taxpayers (as identified herein) are required to make sure that a representative or an agent is appointed to discharge taxpayer’s tax obligations on its behalf. The representatives either through prescription by TAL and/or through appointment by the taxpayers should be aware of their responsibilities and duties under TAL as well as the consequences on them if the taxpayers fail to comply with the relevant Tax Laws. For a non-resident foreigner, it is not clear on what criteria/situations that will trigger the requirement for the taxpayer to appoint a resident representative for income tax (e.g. under section 27 of Income Tax Law), commercial tax (e.g. under section 47 of Commercial Tax Regulations) and specific goods tax purposes.

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operations within Myanmar.

(ii) Representative through Appointment by the Taxpayer

- The company directors shall

appoint a company secretary or any other officer to record and maintain all the necessary accounts and supporting documents.

- In case of a partnership or an

association that has to discharge tax obligations under the tax laws, any partner or an officer shall be appointed to discharge such tax obligations.

- Any non-resident citizen or non-

resident foreigner liable to pay tax under the tax laws, shall appoint an agent, who is a resident, in order to perform duties required by the tax laws.

7) Administrative Review and Appeal

If the taxpayer is not satisfied with assessment or other decision of the IRD, the taxpayer can make an application to the DG for an administrative review within a period of thirty (30) days from the date of receipt of notice. The DG shall review the application of the taxpayer and notify its decision with reason in writing to the taxpayer. However, if the taxpayer is not satisfied with the decision of the DG, the taxpayer can make an appeal to the Revenue Appellate Tribunal within a period of ninety (90) days from the date of the decision of the DG. If there is no response from the DG on the administrative review requested by the taxpayer within ninety (90) days from the date of the application, the taxpayer can file an appeal to the Revenue Appellate Tribunal within a period of thirty (30) days after the expiry of the ninety (90) day period from the date on which administrative review was requested. If the decision of Revenue Appellant Tribunal is found unsatisfactory by one party, an application can be made to the Union Supreme Court under section 12 of Revenue Appellant Tribunal Act and a copy of application shall be sent to the other party.

Under the current tax laws, the taxpayer can lodge an appeal if they are not satisfied with the assessment or other decision of IRD. Under TAL, the taxpayer can make an application for an administrative review first before making an appeal to the Revenue Appellate Tribunal. To make the tax appeal process effective, the government may consider introducing a tax skilled judiciary to hear tax cases.

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8) Maintaining Records and Accounts

Taxpayers who are required to file tax return as per the tax laws or perform a business or profession shall maintain and keep accounts and records in Myanmar in order for the IRD to examine the taxable income or loss. Besides these accounts and records, the taxpayer shall also maintain and keep the original acknowledgement and information. The original documents include sales and purchase invoices, valuation working sheets, daybooks, sales and purchase orders, delivery notes, bank statements, agreements, other related documents, including all supporting documents of import and export by the Customs Department, the manufacturer, service provider or importer. The taxpayers are required to maintain and keep the records for a period of seven (7) years from the date of transaction. TAL further provides that a financial institution or a bank shall also properly maintain and record the identity of the financial service receiver and all the transactions as well as Tax Identification Number (TIN). Further, all the financial statements, invoices, books of prime entry, all the correspondence between the taxpayer and the IRD, shall be maintained either in Myanmar or English language. Taxpayers are required to provide translation of those that are not prepared in Myanmar or English into Myanmar or English upon request made by the IRD.

Under the current tax laws, the relevant assesses shall keep the accounts, receipts, vouchers and not to damage until three (3) years after the expiry of the relevant year. Under the TAL, the taxpayers are required to maintain and keep the records for a period of seven (7) years from the date of transaction.

Please refer to Appendix I for the comparison between the provisions under current laws and

TAL.

Part B – TAL’s provisions relating to tax administration

Key areas Description

1. Tax Identification Number (TIN)

Every taxpayer (individuals, companies, groups, cash disbursement officer for withholding tax) will have a tax identification number (TIN). Failure to register or deregister shall result in penalty equivalent to 10% of tax payable. TIN should be mentioned on all the returns, declarations or records submitted by the taxpayers and on all correspondence issued by the DG to the taxpayers.

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Any change must be informed to the DG, within fifteen (15) days for Commercial Tax and one (1) month for Income Tax Law. Failure to inform any change shall result in 10 percent of the tax payable as a penalty.

The TIN is intended to align with the company registration number provided by DICA and for individuals, their personal identification number. We are unaware of any specific provision to identify common ownership of companies.

2. Tax Clearance Certificate (TCC)

Under the Income Tax Law 1974, there is no provision for a taxpayer to get a tax clearance certificate. Only people who are leaving Myanmar require a tax clearance certificate under the Income Tax Law 1974. Under TAL, taxpayers can request the DG to issue a tax clearance certificate. The situations that require tax clearance certificate may be prescribed in the Regulations. In order for the DG to issue a tax clearance certificate to a taxpayer, the DG will make sure that there is no outstanding tax and that the tax in dispute are paid or the taxpayer has made arrangement for the DG to believe that the outstanding tax will be paid and the taxpayer has made instalment payment due.

3. Rights and Duties of the Taxpayer

The taxpayer shall notify any change in the name, address, business location or nature of the business activity to the DG within:

- Fifteen (15) days for Commercial Tax Law and Specific Goods Tax Law.

- One (1) year for Income Tax Law. Failure to notify the change shall result in penalty equivalent to 10% of the tax payable. Resident taxpayers are required to appoint an agent/officer in order to record and maintain all necessary accounts and records and to perform duties required by the tax laws. Non-resident taxpayers are also required to appoint an agent in order to perform duties required by the tax laws. Any notice, statement or agreement addressed by the DG to the taxpayer or its agent/ officer, will be valid only if the duty and function are legally assigned to the DG, it is in writing and signed by a tax officer and delivered to the relevant taxpayer or its agent/ officer. The taxpayer has a right to receive information on the tax payment and also procure a copy of the tax return.

4. Filing of Tax Return, Payment of Tax, Due Date and Extensions thereof

The taxpayer must file the return either on the prescribed time and place under a tax law or with the prescribed instructions given by the DG. The taxpayer shall file the revised tax return not later than six (6) years after the due date of the original return. The DG may grant extension of time for submission of the tax return, upon request of the taxpayer. If the due date for submitting the tax return falls on a public holiday, the tax return can be submitted on the following working day after the public holiday. The statements, tax return or other records of the taxpayer is deemed to be submitted on the date the IRD affixes its stamp on it. If they are sent by post, it is deemed as submitted on the date the post office affixes its stamp. If they are sent electronically, it is deemed as submitted on the

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date the IRD receives it. The DG may send a notice for tax due, if the taxpayer fails to pay tax due. However, if the taxpayer does not pay tax due within thirty (30) days of the notice, the taxpayer will be regarded as a defaulter. The DG may grant extension of time for payment of tax or allow payment in instalments. If there is no response from the DG on the request for extension of tax payment within thirty (30) days, the extension is deemed to be granted. If the DG does not extend the tax payment due date for the administrative review or appeal, the taxpayer shall pay the undisputed tax amount. The DG may request the taxpayer to make a security for the disputed tax amount. The taxpayer shall follow the following order of payment of tax:

- Penalties; - Interest; - Principal tax due.

All tax payments must be made in Myanmar Kyat i.e. MMK, unless otherwise provided by the tax law.

5. Tax Refund The taxpayer can request refund or offset, with respect to the excess tax amount paid, within a period of six (6) years from the relevant assessment year. For the refund, the following amount shall be offset: - Assessed tax, interest or penalty payable by the taxpayer; - The tax liability of the taxpayer within next 12 months shall be offset as

advance income tax from remaining refund amount.

6. Interest on Late and Over Payment of Tax

Interest is payable on the tax payable by the taxpayer from the date of tax due till the date of actual payment of tax, if the taxpayer does not make tax payment on time. In the case of a new assessment or a reassessment, it is important to note that the interest will be computed from the original due date. Interest on the refund will be paid from the date refund is confirmed till the date the refund is made. Excess payment that is used for offsetting against the tax payable in the following twelve (12) months will not be entitled for interest. The rate of interest is yet to be determined by the Ministry of Planning and Finance (“MoPF”).

7. Advance Tax Assessment due to Risk of Non-collection

In order to mitigate tax revenue loss, the DG shall assess tax based on the available information, before the prescribed period of assessment. In addition to the administrative review and appeal, the taxpayer can file an appeal to the Revenue Appellate Tribunal if: - The tax assessed is excessive; - There is reliable situation indicating no advance tax assessment

necessary.

8. Recovery of Tax The tax recovery proceedings shall commence within a period of six (6) years from the date the taxpayer is determined a defaulter. However, the recovery of unpaid tax, interest or penalty shall not be deterred or affected by any of the provisions related to the statute of limitation of this law or any other laws.

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9. Control, Seizure and Sale of Asset

If the taxpayer fails to pay the tax within the specified period, the DG has the right to take possession of the assets of the taxpayer that have an equivalent value for the amount payable by the taxpayer including interest, penalty and collection expenses associated with the unpaid tax. The DG shall have the assets in possession until settlement from the midnight of the payment due date to the actual settlement date. However, this right shall not affect the interest of those who have acquired the asset through purchase or a lien before it was known as a lien or before the DG send the letter of objection on the registration to the concerned government agency. The DG can, anytime, release a letter regarding the power to maintain the asset in possession, when the taxpayer does not pay or makes a partial payment of tax until the credit was settled. The DG shall seize the asset of the taxpayer within a period of thirty (30) days from the date of notice of seizure for failure to pay tax and commence the seizure within a period of six (6) years from the date the taxpayer was declared as a defaulter. The DG may sell the seized asset through an auction if the DG does not see any situation in which the seized assets are returned. The sale proceeds shall be used towards costs for seizure and selling the assets and then used to make payment for interest, penalty and tax. The balance of sale proceeds, if any, shall be handed over to the taxpayer. Seized assets except the perishable or those that the taxpayer requests to sell otherwise, shall not be sold within fourteen (14) days from the date of the seizure of the asset.

10. Shareholder’s Liability

Shareholders receiving dividends in cash or kind in a year before winding up of the company, shall be liable to pay the tax due and payable of the company equivalent to the amount of dividend received by the shareholder. In case of different shareholders, the shareholders that had shares in the period of which tax will be liable. If the tax clearance certificate is received at the time of winding up, there shall be no tax liabilities of those that are liable for tax under Section 42 of TAL.

Please refer to Appendix I for the comparison between the provisions under current laws and TAL.

Part C – TAL’s provisions relating to penalty as compared to that of current tax laws

TAL provides a comprehensive penalty regime for all breaches of tax law and administration.

Penalties for breach of law that does not result in criminal offense is different from that

resulting in criminal offense. TAL continues to provide high penalties and criminal prosecution

of fraud and evasion. Statute of limitation for penalties is seven (7) years from the date of

offence but is twelve (12) years if the offence involves fraudulent or misrepresentation with

intentional negligence.

Under TAL, the DG has the right to grant a relief from whole or part of penalties. TAL also

introduces scale of penalties depending upon the gravity of the offence. For example, a lower

penalty or no penalty should apply where a taxpayer has taken a reasonably arguable position

under tax law but it is ultimately determined that this position is incorrect.

The details of each type of non-compliance and penalty thereof are set out in Appendix II

below.

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Conclusion

Myanmar has undergone a significant political and economic transformation in recent years.

Political change coupled with the lifting of US sanctions is providing the platform for the

economic growth of the Country. This will come from both increased foreign direct investment

and the further development of local businesses. Growth requires investment by both the

private and public sectors. To play its role the Government needs to increase its finances in an

economically responsible manner.

Raising government revenue could be a key priority and a priority could be raising more tax

revenue. Immediate focus should then be on compliance, in particular with respect to direct

taxes (including corporate income tax, personal income tax and withholding tax) and indirect

taxes (commercial tax and specific goods tax). Tax administration, and compliance can be

improved significantly through the introduction of TAL if it is implemented effectively by the

IRD.

In order to implement TAL effectively, the IRD should provide additional guidelines and rules

to taxpayers on how certain key provisions of TAL will be implemented, including but not

limited to:

- The procedures including forms to be completed for obtaining TIN from the IRD by

each taxpayer;

- Detailed procedures relating to the application for advance ruling from the IRD,

including the timeline and whether the outcome of advance ruling is capable of appeal;

- How the changes introduced under the TAL (e.g. statute of limitation, penalties, period

of reassessment and maintenance of accounts/records) will apply to the period prior to

the Effective Date;

- Whether all the tax offices including Large Taxpayers Office, Medium Taxpayers Offices

1 to 3, Township Revenue Offices will apply the TAL consistently and what will be the

efficient resolution platform if what applied in practice differs from what is enacted in

the Law;

- Whether the provision relating to “deemed assessment” by the DG on tax returns and

computations submitted by taxpayers shall apply to both SAS and OAS;

- What will be interest rates applicable to overpayment and underpayment of tax;

- For the requirement to appoint a local representative by a non-resident foreigner, what

criteria/situations that will trigger this requirement, e.g. income tax under section 27

of Income Tax Law, commercial tax under section 47 of Commercial Tax Regulations

and specific goods tax purposes and what are the procedures to follow;

- For tax appeal cases, who will be formed part of the Administrative Review and

Tribunal Revenue Committee for hearing tax appeal cases. Given the tax judiciary is

still developing and there is limited number of court cases in the Country, whether the

Government will introduce a tax skilled judiciary to hear tax cases and whether the

Committees and Supreme Court will make reference to legal precedent set in tax court

cases in other countries.

We will provide further updates once the IRD issues more guidelines/rules relating to

TAL.

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Tax Health Check for Taxpayers

With the enactment of TAL, it is important for the taxpayers to be up to date with the tax

laws and rules, in order to comply with the tax obligations in a proper manner and address

the issues carefully. In order to be organized and avoid any future fines or penalties, the

taxpayers may also consider conducting tax health checks for the financial period

prior to the Effective Date to understand if there is any non-compliance on the part of

the taxpayers. This exercise will help the taxpayers to be up to date with tax compliance

procedures and comply with the tax obligations on time.

Please get in touch with your usual PwC contact should you require any clarifications on

TAL and support on tax health checks/advice.

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Appendix I – Comparison of provisions under current laws & TAL

The information contained in this document is for general guidance on matters of interest only and is not meant to be comprehensive. This section contains a high level technical description and analysis of Myanmar’s current tax regime and our corresponding comments on the changes under TAL. The comments cannot be regarded as a technical opinion or advice.

Key Sections Income Tax Law

Commercial Tax Law Specific Goods Tax Law

TAL

1. Tax

Identification Number (TIN)

There is no prescribed provision. Currently only taxpayers assessed under SAS are required to obtain TIN from the Myanmar tax authorities.

Currently a taxpayer providing taxable supplies for commercial tax is required to register itself with the IRD for commercial tax and subject to renewal each financial year.

There is no prescribed provision. Currently a taxpayer manufacturing special goods is required to register with the Township Revenue Officer (TRO) and the TRO shall issue a business registration certification for the respective financial year.

Every taxpayer will have a TIN.

TIN to be mentioned on returns, declarations or records and also on all correspondence between the taxpayer and the DG.

Any change must be informed to the DG within fifteen (15) days for Commercial Tax Law and one (1) month for Income Tax Law.

2. Tax Clearance Certificate (TCC)

Under the Income Tax Law 1974, there is no provision for a taxpayer to procure a TCC. Only people who are leaving Myanmar require a TCC. Currently the IRD issues only demand notice/self-confirmation letter for each financial year to taxpayers.

There is no prescribed provision. Currently the IRD issues only demand notice/self-confirmation letter for each financial year to taxpayers.

Under the Specific Goods Tax Law, there is no provision for a taxpayer to procure a TCC. Only people who are leaving Myanmar require a TCC. Currently the IRD issues only demand notice/self-confirmation letter for each quarter to taxpayers.

Under TAL, the taxpayer can request the DG to issue a TCC. The reason to procure TCC may be prescribed in the Regulation.

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TAL

3. Public Rulings

There is no prescribed provision



The DG shall issue a clarification statement on practicing tax laws for the public, with an objective to: - ensure consistency in implementation of tax

laws; and - provide a guidance for public and tax

officers.

4. Advance Rulings

There is no prescribed provision.



The DG shall issue an advance ruling in order to interpret a law to the taxpayer in case of a special matter.

5. Maintaining Records and Accounts

The accounts relating to a period of more than three (3) years prior to the income year shall not be called for examination.

The relevant assesses shall keep the accounts, receipts, vouchers and not to be damaged until three (3) years after the expiry of the relevant year.


The taxpayer shall keep and maintain the records and accounts for a period of seven (7) years from the date of transaction.

6. Assessment and Re-assessment

The statute of limitation is three (3) years after the end of the relevant assessment year.

In the event of fraud, assessment or re-assessment may be made at any time after the end of the relevant assessment year, with the prior approval of the Ministry of Planning and Finance.

The statute of limitation is three (3) years after the end of the relevant assessment year.

In the event where the tax authorities are of the view that fraud is committed, assessment or re-assessment may be made at any time after the end of the relevant year, with the prior permission of the DG.

In the event, the taxpayer fails to furnish the return for the production and sale of commodity, the Township Revenue Officer shall assess the tax on the special commodity producer within one (1) month after the end of the month in which the special commodity is produced and sold.

The statute of limitation is six (6) years after the end of the relevant assessment year.

In the event of fraud, the DG can conduct an assessment or re-assessment within a period of twelve (12) years after the end of the relevant assessment year.

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TAL

7. Communication There is no prescribed provision for effectiveness of communication. In practice, taxpayers have to submit the tax returns and letters in person and get acknowledgement from the tax officer.

There is no prescribed provision for effectiveness of communication. In practice, taxpayers have to submit the tax returns and letters in person and get acknowledgement from the tax officer.

There is no prescribed provision for effectiveness of communication. In practice, taxpayers have to submit the tax returns and letters in person and get acknowledgement from the tax officer.

Under TAL, taxpayers and the IRD officers are allowed to communicate electronically (i.e. fax or email) and registered mail as well.

8. Representative and Officer

There is no such requirement. However, the Township Revenue Officer may appoint a representative with the consent of that person.



Under TAL, the respective taxpayers (as identified hereinabove) are required to make sure that a representative or an agent is appointed to discharge taxpayer’s tax obligations on its behalf. The representatives either through prescription by TAL and/or through appointment by the taxpayers should be aware of their responsibilities and duties under TAL as well as the consequences on them if the taxpayers fail to comply with the relevant Tax Laws.

9. Anti-Avoidance of Tax




The DG can deny considering transactions that are fake or fraudulent and lacking economic substance.

10. Advance Tax

Assessment due to Risk of Non-collection




In order to mitigate tax revenue loss, the DG shall assess tax based on the available information, before the prescribed period of assessment.

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TAL

11. Submission of Tax Return

Taxpayer shall file a return of income for that year within three (3) months from the end of that year.

Taxpayer shall furnish its annual return for a financial year within three (3) months after the end of the relevant year.

Taxpayer shall furnish quarterly returns within ten (10) days after the end of every quarter.

The taxpayer must file the return either on the prescribed time and place under a tax law or with the prescribed instructions given by the DG.

The taxpayer shall file the revised tax return not later than six (6) years after the due date of the original return.

12. Extension for Submission of Tax Return




The DG may grant extension of time for submission of the tax return, upon request of the taxpayer.

13. Extension of Time for Payment of Tax




The DG may grant extension of time for payment of tax or allow payment in instalments.

14. Administrative Review for Tax Appeal




If the taxpayer is not satisfied with the assessment or other decision of IRD, the taxpayer can make an application for an administrative review.

15. Tax Refund The taxpayer must claim the refund within a period of one (1) year from the date of receipt of the letter requesting the refund.

The taxpayer must claim the refund within a period of one (1) year after receiving the intimation of refund.

The taxpayer must claim the refund within a period of one (1) year after receiving the intimation of refund.

The taxpayer can request refund or offset, with respect to the excess tax amount paid, within a period of six (6) years from the relevant assessment year.

16. Interest on Underpayment and Refund of Tax




The taxpayer has to pay interest on the tax amount due and the taxpayer will receive interest on excess tax amount paid.

17. Recovery of Tax




The tax recovery proceedings shall commence within a period of six (6) years from the date the taxpayer is determined a defaulter.

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Appendix II –Penalties under current laws and TAL

The information contained in this document is for general guidance on matters of interest only and is not meant to be comprehensive. This section contains a high level technical description and analysis of Myanmar’s current tax regime and our corresponding comments on the changes under TAL. The comments cannot be regarded as a technical opinion or advice.

Type of Non-Compliance Income Tax Law

Commercial Tax Law Specific Goods Tax Law TAL

Failure to register

Failure to inform any changes in information of a taxpayer

Failure to apply for deregistration


A penalty equivalent to 10% of the additional tax payable in the relevant assessment shall be caused to pay for failure to register

A penalty of MMK 5,000,000 shall be fined for failure to register

A penalty equivalent to 10% of tax payable shall be imposed

Using incorrect TIN

Issuing incorrect invoice or sales memo

Issuing incorrect debtor ledger or creditor ledger

Failure to provide or providing invoices, receipts, debtor ledger or creditor ledger, not in accordance with a tax law




A penalty of up to MMK 250,000 shall be imposed

Failure to file tax return

A penalty equivalent to 10% of the tax payable shall be imposed for each default

A fine equivalent to 10% of the additional tax payable in the relevant assessment shall be caused to pay

A penalty equivalent to 10% of the tax payable for the respective month shall be paid

The higher of:

5% of tax payable** and 1% of the tax payable for each month or proportion of the month that the taxpayer fails to file up to the time of assessment

MMK 100,000

** tax payable includes tax payable in instalment

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Underpayment of tax and either due to negligence or intentionally submitting wrong information, with an intention to cheat

A person shall be punishable with a penalty equivalent to 100% of the tax underpaid.

A person shall be punishable with imprisonment for a term which may extend from three years to ten years.

A person shall be punishable with a penalty equivalent to 100% of the tax underpaid.

A person shall be punishable with a penalty equivalent to 100,000 MMK or imprisonment upto one (1) year or both, if he submits wrong information negligently.

Anyone shall be fined with an amount equivalent to three times of the tax payable and be sued.

A person shall be punished with an imprisonment of not more than three (3) years; or

with a fine not exceeding MMK 3,000,000; or

Both

A penalty of 25% of the underpaid tax shall be paid;

A penalty of 70% of the underpaid tax shall be paid, if the underpaid tax is more than MMK 100 million or if the underpaid tax exceeds 50% of the tax payable

Tax evasion and concealing or providing incorrect information

If the person discloses the concealed information, a penalty equivalent to 50% of the tax payable shall be paid;

If the person fails to disclose information within stipulated time, the taxpayer: - shall pay the actual tax

payable and a penalty equivalent to the tax payable; and

- may be punished with an imprisonment for a term which may extend from three to ten years.

If the person discloses the concealed information, a penalty equivalent to the amount of tax payable shall be paid, in addition to the tax payable;

If the person fails to disclose information within stipulated time, the taxpayer: - shall pay the actual tax

payable and a penalty equivalent to the tax payable; and

- shall be punished with an imprisonment for a term not exceeding 0ne (1) year or fine not exceeding 100,000 MMK or both.

If the person furnishes false information, he shall pay a penalty equivalent to the amount of tax payable and shall be prosecuted.

On conviction, he shall be punished be with an imprisonment for a term not

If the person discloses the concealed information, he shall make the normal tax payment and the evaded tax amount, or the extra tax on the omitted quantity one more time as fine;

If the person fails to disclose information within stipulated time, both, the tax and fine shall be imposed and he shall also be sued. If convicted, shall be punished with imprisonment not more than three years of with a fine not exceeding MMK 1,000,000 or both.

MMK 150,000 and the higher of:

Difference between correct tax due and the tax assessed

Difference between correct amount of refund and the refund made

** If it is reasonable to assume that the person must not have known that it is incorrect or misleading, no penalty shall be imposed

For Tax Evasion cases

Seven years of

imprisonment; or

The higher of MMK

250,000 and 100% of the

tax amount evaded; or

Both of above

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exceeding three years or a fine not exceeding MMK 300,000 or both.

Failure to maintain records


A fine, by way of penalty, equivalent to 10% of assessed tax, may be directed by the Township Revenue Officer.


The following penalty shall be paid:

MMK 5,000 per day of failure for taxpayers with tax due of up to MMK 500,000

MMK 50,000 per day of failure for taxpayers with tax due of up to MMK 5,000,000

MMK 100,000 per day of failure for taxpayers with tax due in excess of MMK 5,000,000

** The DG may grant relief from penalty up to (30) days

Failure to comply by third party debtor




A penalty of 25% of the difference between the tax payable as a third party and the tax already paid on the date specified on the demand notice, shall be paid.

Failure to provide space, accessory and assistance




A penalty of not more than MMK 500,000 shall be paid.

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Failure to comply with notice of requesting information

A person shall be punishable with imprisonment for a term which may extend from one year to three years.



A penalty of not more than MMK 500,000 shall be paid.

Late payment:

Tax assessed or reassessed

Instalment payment of tax

Withholding tax

There is a general penalty for late payment of advance income tax, but there is no specific provision imposing additional penalty on late tax payment due to assessment/reassessment. For withholding tax compliance, there is no prescriptive penalty rate for non-compliance, the IRD may however impose penalty by way of issuing a penalty.

A penalty equivalent to 10% of the additional tax payable shall be paid.

In case of failure to pay tax within stipulated time or extended time, a penalty equivalent to 10% of the additional tax payable shall be paid

A penalty equivalent to 10% of the tax payable shall be paid

A penalty equivalent to 10% of the tax payable** shall be paid ** Not applicable for those who get extension for tax payment.

For persons deliberately trying to deter the tax administration. For the purpose of this section, the following activities are regarded as deterrence to the tax administration:

Failure to provide the documents or records as requested by the tax officer;

Failure to meet (or be present) when requested by tax office under the law;

Preventing the tax officers’ from visiting the business premises or any residential area;

Failure to submit tax returns;

There is no prescriptive penalty for deliberately trying to deter the tax administration, however some of the activities regarded as deterrence have penalties described hereinabove.



Over and above the penalty described below, the activities regarded as deterrence have penalties described above:

MMK 250,000; or

One year imprisonment; or

Both of above.

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Using incorrect TINs;

Issuing incorrect invoices, receipts, receivable, payable records;

Providing invoices, receipts, receivables and payables not according to the tax laws, or failure to provide;

Preventing the DG from surveying the land or refusing to provide the maps, forms, agreements, or other records for their inspection; or

Preventing the tax assessment or tax collection by any means.

Abetment




Same penalty as the offender

Failure to keep as confidential




Imprisonment up to one year; or

Up to MMK 200,000

Contacts If you would like to discuss any of the issues raised, please get in touch with your usual PwC

contact or any of the individuals listed below:

This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers Singapore Pte Ltd, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

© 2019 PricewaterhouseCoopers Myanmar Co. Ltd. All rights reserved. “PricewaterhouseCoopers” and "PwC" refer to PricewaterhouseCoopers Myanmar Co. Ltd or, as the

context requires, the PricewaterhouseCoopers global network or other member firms of the network, each of which is a separate legal entity.

Paul Cornelius

Tax Partner

+65 9173 0082

[email protected]

Ding Suk Peng

Tax Partner

+959 977 852 930

[email protected]

Documents

Tax Newsletter | Issue 18 : Tax Administration Law ... · Overview Based on the Tax Reform Plan for FY 2017-18 to FY 2021-22 published by the Internal Revenue Department (IRD), it