MYANMAR

Key Highlights from the Union Taxation Law 2023

The 2020 Union Taxation Law ("UTL 2023") was enacted on 30 March 2023, which includes updates on tax rates and procedures relating to income tax, commercial tax and specific goods tax. The UTL 2023 took effect starting 1 April 2023 at the new financial year of 2023-2024. Some of the key highlights of the UTL 2023 include the increase in specific goods tax rates for liquor, the commercial tax exemption on Battery Electric Vehicles ("BEVs") and photovoltaic/solar-related equipment, and the increase in income tax threshold for small and medium-sized companies.

1. Specific Goods Tax ("SGT"). Specifically, the UTL 2023 increased the SGT tiers and rates for liquor. Starting 1 April 2023, the lowest tier ranges from MMK200 to MMK 1,400 with SGT of MMK209 per liter, and the highest tier is now at MMK 19,851 with SGT of 60% per liter value.
2. Commercial Tax ("CT"). CT rates remain at 5% except for the following: (i) internet services and hotel and tourism services increase to 15%; (ii) sales of SIM card and related services increase to MMK 20,000 per SIM card; (iii) sale of buildings constructed in Myanmar increase to 3%; (iv) sale of gold jewelry increase to 1%; and (v) export sale of electric power increasing to 8%. The UTL 2023 also enumerated 46 exempt goods and 34 exempt services. Included in the exemption list are BEVs (including batteries, accessories, and related services) and photovoltaic/solar-related equipment.
3. Corporate Income Tax ("CIT"). The CIT rate generally remains at 22%, but the CIT rate for companies engaged in oil and gas exploration and production is now 25%. The UTL 2023 increased the income tax exemption threshold for new small or medium-sized enterprise, depending on the industry, from MMK10 million to MMK15 million (approx. US$ 7,100) per year for three consecutive years, including the year of commencement of the business. The capital gains tax (CGT) is still at 10%, except for companies in the oil and gas exploration and production sector, which now ranges from 40 to 50%.
4. Gemstone Tax ("GT"). Under the UTL 2023, the tax exemption for diamonds and emeralds has been removed, but the royalty/gemstone tax remains at 5-11%.

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Enactment of the Trademark Law

On 10 March 2023, the Department of Intellectual Property of Myanmar ("DIPM") issued Notification 82/2023 that the new Trademark Law (2019) will come into effect starting 1 April 2023.

DIPM has also announced that the new online trademark filing system will be officially open on 26 April 2023. New trademarks, transfers and licences must be registered under the new system, as unregistered transfers and licences are void. Mark owners who (i) registered a paper-based declaration of ownership with the Registration of Deeds Office or (ii) can otherwise prove use of their mark in the country prior to 1 April 2023, may apply for (re-) registration under the newly created online filing system before 1 April 2023. Owners of existing marks who have not yet applied for (re-) registration under the newly created online filing system may still be able to do so within six months from the grand opening date (rule 12 of the Mark Registration Rules), i.e., until 26 October 2023. Owners of new marks will be able to apply for their registration from the grand opening date on 26 April 2023.

Compared to the old paper-based mark protection system, the new online trademark registration system is compulsory.  The registered trademarks are protected for 10 years and can be renewable.  Transfers and licensing of the trademarks shall only be valid if registered, with at least 60 days required for registration. Further, cautionary notices will no longer be needed.

In addition to the above, there is also an avenue for an opposing party to file  a form called "Opposition for Registration of the Mark (TM-8)" in the following instances: (i) in case of a dispute where the mark does not meet the definition of a mark; (ii) there is a ground for rejection which was overlooked during the initial examination by the Trademark Office; or (iii) there is a relative ground for rejection such as identity or similarity with an earlier mark, mark causing reputational damage or a mark which violates a person's intellectual property rights. The applicant who filed the trademark is given the opportunity to file a defence against the opposition.

In this regard, the Union Supreme Court issued various notifications to confer jurisdiction over intellectual property ("IP") disputes to various courts.

1. Yangon Region High Court has jurisdiction over civil miscellaneous applications made by a person who is not satisfied with the decisions of IP Agency and Customs Department.
2. Kyauktada District Court in Yangon Region is a special IP Court for Myanmar to decide TM infringement cases.
3. Other Districts-level Courts have jurisdiction over criminal complaints for offences under the IP laws.

The Union Supreme Court also issued a notification setting out the procedure to be followed in IP disputes before the Courts.

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Myanmar's State Administrative Council Extends State of Emergency

On 2 February 2023, the State Administrative Council extended its nationwide state of emergency for another six months, until 1 August 2023. This occurs two years after the February 2021 military coup and effectively delays the general elections initially required to be held by August 2023 in accordance with the Constitution. The National Defense and Security Council, which consists of senior members of the military, agreed to prolong the state of emergency and stated that it will be working towards holding the elections in the following year.

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Foreign Companies Exempted from Mandatory Conversion of Foreign Currency

The Central Bank of Myanmar has issued Letter No. FE-1/2861 (Ka) ("Letter") on the application of mandatory foreign currency conversion rules. The Letter, released on 30 December 2022, provides that foreign companies holding shares of more than 35% are exempted from complying with the requirement of mandatory currency conversion. These foreign companies can use and sell the currency to authorised dealing banks (or AD Banks). However, if they intend to carry out outward bound remittance, they should seek the consent of the Foreign Exchange Supervisory Committee.

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