With effect from 14 May 2018, the daily minimum wage in Myanmar is MMK4,800 (approx. US$3.60), for an eight-hour workday. The increase is based on Notification 2/2018, which replaced Notification 2/2015 setting the minimum wage at MMK3,600 (approx. US$2.70). The new minimum wage rate does not apply to small businesses with less than 10 workers.
The increased minimum wage was determined following meetings, consultation and discussions among the relevant national, regional and state committees, along with employer and employee organisations.
The Ministry of Commerce issued Notification 25/2018 ("Notification") on 9 May 2018 which aims to liberalise Wholesale and Retail restrictions imposed on foreign entities in Myanmar. The Notification allows wholly-owned (100%) foreign companies and joint venture ("JV") companies to undertake wholesale and retail activities in Myanmar, subject to the terms and conditions.
For wholly-owned foreign companies seeking to undertake wholesale activities, the initial investment capital (excluding land lease fees) must be at least US$5 million and for retail activities, the initial investment capital (excluding land lease fees) must be at least US$3 million.
For foreign-Myanmar joint venture companies seeking to undertake wholesale activities, the initial investment capital (excluding land lease fees) must be at least US$2 million; for retail activities, the initial investment capital (excluding land lease fees) must be at least US$700,000. In addition, if a Myanmar citizen holds less than 20% direct equity ratio in the JV company, the requirements will be the same as those with a wholly-owned foreign company.
The Notification prohibits wholesale and retail of restricted and prohibited goods subject to existing laws, notifications and regulations, and restricts undertaking of mini-markets and convenience stores where the floor areas is below 929 square feet.
The Myanmar Government enacted on 30 March 2018 Union Tax Law 2018 ("UTL 2018"), which came into force on 1 April 2018.
Key changes:
- Financial Year for 2018 – Private companies and businesses will continue to follow the old financial year for reporting purposes (i.e. 1 April to 31 March). State-owned enterprises shall follow the new financial year, 1 October to 30 September, in order to come into alignment with Myanmar's new budget year.
On a related note, the Central Bank of Myanmar ("CBM") on 30 March 2018 issued Letter No. 2224 instructing all financial institutions to prepare financial statements for six months from 1 April 2018 to 30 September 2018. Following this, the Internal Revenue Department ("IRD") issued an announcement (under LTO letter No. 5274 dated 9 May 2018) mandating banks and financial institutions to adopt the new financial year for reporting purposes (i.e., starting 1 October 2018), in order to come into alignment with CBM's new reporting requirements.
- Commercial Tax – There have been changes in Commercial Tax ("CT"), more specifically with respect to the list of exempt goods and services. With effect from 1 April 2018, 86 types of goods and services are now exempt from CT. The new additions to the list are: (i) pure bulk gold (standard gold bars, bulk gold, gold coins); (ii) jet fuel sold for domestic flights (previously applicable to overseas flights only); and (iii) service for the publication of books, magazines, journals and newspapers.
- Income Tax – Personal income tax remains at graduated rates of 0-25%, and corporate income tax rate remains at 25%. However, UTL 2018 clarifies that Business Partnerships will now be taxed at graduated rates of 0-25%. “Remuneration awarded by the State on finding ancient artefacts” is now exempt from income tax with effect from 1 April 2018.
