On April 25, 2023, Myanmar’s Ministry of Planning and Finance issued a standard operating procedure (SOP) requiring entities and individuals remitting foreign currency equivalent to more than USD 10,000 out of Myanmar to clear their tax payments prior to the remittance. The SOP took effect on May 1, 2023. This is the latest development since Myanmar began imposing restrictions in April 2022 on the remittance of foreign currency out of the country, implemented by the Central Bank of Myanmar and the Foreign Currency Supervisory Committee.
The SOP requires the remitters described above to obtain certain documents evidencing payment of all requisite taxes and duties, and to submit them to their licensed authorized dealer (AD) bank as part of the remittance process. The documents required as evidence differ depending on the purpose of the remittance. The SOP details three main categories, as summarized below.
Payments for Interest, Royalties, Trademarks, Copyrights, or Services
A remitter of foreign currency for payment of interest, royalties, trademarks, copyrights, or services, must first apply to the Internal Revenue Department (IRD) for evidence that all applicable withholding tax has been paid. In addition, if the country to which the payments are being remitted is party to an avoidance of double taxation agreement with Myanmar, evidence of the recipient’s tax residency must also be submitted to the AD bank.
Payments for Goods
A remitter of foreign currency to pay for goods must submit the necessary IRD forms along with evidence that corporate income tax and other applicable taxes have been paid. Evidence may include a tax clearance certificate for the fiscal year, the company name, the taxpayer name, and the taxpayer identification number (TIN).
A person remitting, in foreign currency, salary earned in Myanmar must submit the required form showing that they paid income tax in the applicable fiscal year. New taxpayers must also submit their TIN Registration Form to the AD bank.
Under the SOP, the IRD handles any inquiries about the requirement to conduct a tax audit on the remittance.
[Update July 24, 2023 – On June 28, 2023, the Ministry of Planning and Finance amended the SOP necessitating that the additional forms be submitted to the IRD. The amendment also clarifies the role of the IRD in issuing Tax Clearance Recommendations for Offshore Remittances.
The amendment of the SOP requires the IRD to issue Tax Clearance Recommendations for Offshore Remittances when a remitter is in the process of providing documents evidencing payment of all requisite taxes and duties, upon application by the remitter. The remitter is to submit the application to the relevant taxpayer office.]
For more details on the standard operating procedures for remittances, or on any aspect of financial regulations and currency restrictions in Myanmar, please contact [email protected].