If you have existing contracts or are contemplating execution of new contracts in Myanmar, you should be aware of a recent announcement made by the Internal Revenue Department (IRD). The announcement addresses the requirement that a contracting party affix proof of paid stamp duty to all dutiable contracts made within Myanmar in accordance with the Myanmar Stamp Act.
In the past there has been little or no enforcement of the requirement that parties to dutiable contracts pay stamp duty at the time of contract execution. In fact, prior practice has even allowed for payment of stamp duty up to one month after contract execution, an allowance not provided for specifically in the law. This created an environment in which many business operators may have unintentionally neglected their obligations to pay such duty.
Recently, however, the IRD has indicated that it intends to begin strict enforcement of the requirement that parties pay stamp duty at the time of contracting. In anticipation of strict enforcement, some businesses have approached the IRD about making late payment, only to learn that the penalty for late payment is ten times the outstanding unpaid amount—a penalty that actually dissuades these parties from resolving their previous nonpayment. To help encourage compliance, the IRD has issued this important announcement, which introduces a grace period for payment of stamp duty.
According to the announcement, any private party who has failed to pay stamp duty on contracts entered into with other private parties or government entities will be exempt from penalties on the unpaid stamp duty if payment is made before March 31, 2016. When payment is made, IRD officers will not actually issue stamps for the contracts, but will record that the payment has been duly made.
If payment is not made by the deadline of March 31, the penalty of ten times the outstanding unpaid amount will apply. In addition, contracts may be impounded if they are not correctly stamped, and these documents will not hold any evidentiary value before a court of law if the stamp duty and related penalties are not paid.
If you have any questions about the stamp duty exemption and how it impacts your existing contracts in Myanmar, please contact Tilleke & Gibbins at [email protected] or +95 1 255 208.