The Myanmar government has enacted a Special Economic Zone Law that includes several tax incentives for investors.
State-owned media reported that President Thein Sein signed it into law on January 23. It allows for income tax exemptions for up to seven years for local and foreign investors and up to eight years for construction in “exemption areas”. The law consists of 96 sections organised in 18 chapters, which include forming the central authority of Special Economic Zones (SEZs) and the management committee, and establishing new zones.
Myanmar currently has three SEZs – Kyauk Phyu SEZ, Dawei SEZ and Thilawa SEZ. New zones will be established based on eight criteria that include being accessible to international borders or local markets, being a part of the regional development programme area, and having water resources, electricity and enough land.
For investors operating in exemption zones, income tax exemption is allowed for up to seven years from the date of launch. For builders in exemption zones, income tax exemption is up to eight years. Businesses that operate in promotion zones are also allowed tax exemptions to varying degrees. They are exempted from customs duties on imported machinery and materials to be used for building infrastructure within a five-year period.
The law also stipulates that disputes in SEZs are to be settled in a friendly manner referring to original contracts and existing laws.
The management committee will be responsible for setting wage levels and monitoring the ratio of local and foreign labour. Local skilled labour should compose a minimum 25 per cent in the first year, 50 per cent in the second year and 75 per cent in the third year, according to the law.
By enacting this law, the Dawei Special Economic Zone Law and Myanmar Special Economic Zone Law (2011) have been revoked.