Examining legal and tax ramifications for working in Myanmar
August 22, 2014 01:00 By Mark Kuratana
Since March 2011, when Myanmar's first civilian government took office and gradually began opening up to the West, an increasing number of foreign visitors have entered the country. The reasons for these visits vary greatly, ranging from tourism to busine
As government policy reforms progress and foreign direct investment continues to pour into Myanmar, fuelling faster growth in the economy, the number of expatriates seeking employment in the country is expected to grow significantly. Expatriate assignments in Myanmar typically range from short-term visits to long-term stays that can last up to several years.
One’s first entry to Myanmar typically requires a visa for most foreign nationals. A tourist visa, valid for one month, normally allows a stay of up to 28 days, while a general business visa, valid for three months, allows individuals to stay in the country for up to 70 days at any one time. A multiple re-entry visa, valid for six months, also allows individuals to stay up to 70 days at any one time, but normally requires that the individual has previously been issued a general business visa.
For many other countries, having a business visa does not solely allow a foreign individual to work legally within that country, and a work permit is also required. Currently the concept of a work permit has not been widely used or observed in Myanmar. What is used in lieu of the work permit is what is typically known as the “stay permit”.
With a stay permit, the individual is allowed to stay in the country and therefore is granted permission to work there. There are a number of documents required when applying for the stay permit such as a valid visa, passport, employment agreement, job description and Myanmar Investment Commission permit, to name a few. Most important, however, the stay permit will need to be sponsored by a local employer.
While working in Myanmar, the individual will most likely be required to report his or her assessable income. The Myanmar tax year follows the fiscal year, starting on April 1 and ending on March 31. Generally if compensation is borne by the local employer, the local employer is obligated to file monthly tax returns. This monthly tax filing can also serve as the final tax return if the only income that is reported is employment income.
If compensation is not borne by the local employer, the individual must file an individual personal income-tax return. This individual should also file (estimated) quarterly tax returns to mitigate any issues or potential questions regarding tax clearance before exiting Myanmar.
People with income not borne by the employer may be exempt from personal-income-tax liability in Myanmar provided they are citizens of a country that has concluded a tax treaty with Myanmar and they met the conditions stipulated in that treaty. Currently, Myanmar has a tax-treaty network of eight countries: the United Kingdom, India, Laos, Malaysia, Singapore, South Korea, Thailand and Vietnam. It has also concluded tax treaties with Indonesia and Bangladesh that have yet to come into effect.
Similar to most countries, there are penalty provisions imposed for non-compliance relating to tax reporting as well as having the proper permit to work in Myanmar legally. The penalties generally vary from a fine to imprisonment. Currently we have observed that the Myanmar tax authorities are generally willing to work with the company and individual taxpayers when it comes to late filing and are not necessarily looking to impose penalties if there is a conscious effort to file the tax returns within a reasonable time.
Although the Myanmar tax authorities are not yet strictly imposing penalties for non-compliance, whether relating to having the proper permit to work or filing the tax returns by the due date, it is still advisable for those travelling to Myanmar to be aware of the existing requirements.
While recent updates in the regulations have focused primarily on revising the personal-income-tax code and social-security rates, we feel that it would be prudent to be as compliant as possible, since the Myanmar authorities can decide to enforce some of the penalty provisions at any time.
Mark Kuratana is a partner in Deloitte Thailand’s tax and legal department and leads the Global Employment Services team covering Thailand and Myanmar.