The Myanmar Investment Commission has released a list of townships that will be able to offer investors special income tax exemptions under the new investment law, due to come into effect next month.
The commission has divided the country’s townships into three categories from Zone 1, least developed, to Zone 3, most developed.
Investors who pursue projects in Zone 1 townships will be eligible for tax breaks of up to seven years. The government hopes the new scheme will help direct some of the billions of US dollars now flowing into the country annually towards the regions most in need of development.
Fourteen of the 18 townships in conflict-torn Kachin state qualify for least developed status under the new bylaws, with the notorious jade mining region of Hpakant falling into Zone 2.
Every township in Chin and Rakhine states, considered the two least developed in the country, has been included under Zone 1.
Only townships in Mandalay and Yangon, the country’s two largest cities, qualified for Zone 1 status. However, even in those regions several peripheral townships fall into Zone 2. None of Yangon’s townships are classified as least developed but two in Mandalay – Ngazun and Myingyan – have been granted Zone 1 status.
Ventures that carry out more than 65 percent of their operations in townships with least developed status will be eligible for a seven-year income tax break.
Zone 2 investments are eligible for a five-year break while those in Zone 3, which only includes townships in Mandalay and Yangon, can apply for three-year breaks.
However, the decision to grant a tax break will depend on the nature of the investment, as well as the region targeted.
Under the old rules, all new ventures automatically qualified for a five-year exemption.
U Aung Naing Oo, the investment commission’s secretary, has said that this was a “mistake”. At a seminar last year he singled out alcohol and cigarette companies that had benefitted from the scheme and argued they should not have received any tax breaks.
The new investment law is designed to give the government more power to grant exemptions to ventures that benefit particular sectors and regions.
Source: Myanmar Business Today
