Advanced income tax on imports, exports reinstated after one year

Companies involved in imports and exports will be required to pay an advanced income tax (AIT) of 2 percent from May 1, according to Notification 38/2019 issued by the Ministry of Planning and Finance on April 8.

This voids a previous notification issued on January 22, 2018 exempting companies under the self-assessment system (SAS) from the 2pc AIT.

The move “is likely to mean greater tax costs, even in the short term, for exporters that are under the large taxpayers office and medium tax office 1,” said Thomas Chan, Partner, Tax and Regulatory at KPMG Myanmar.

U Min Htut, director general at the Internal Revenue Department (IRD), said the 2pc AIT exemption had been revoked after some traders were found to be exporting goods at the border using the names of companies under the SAS to take advantage of the exemption.

“We have also received requests from small businesses claiming that there the exemption on larger taxpayers is unfair competition. Therefore the government has revoked the exemption on exports by large tax payers and medium tax payers and since May 1 and AIT will be levied equally on all exporters,” he said.

U Nay Lin Zin, secretary of the Myanmar Rice Federation Association, said levying the same amount of AIT on all companies can be burdensome, particularly for some small and medium enterprises who struggle to stay above water.

“The government should reconsider its move and implement a more comprehensive system of tax based on profit levels,” he said.

AIT are collected by the IRD every three months and are meant to offset against annual corporate income taxes.

Source: Myanmar Times

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