Myanmar has further eased restrictions on the importation of spirits and liquor, as part of its efforts to improve the safety and quality of alcohol products in the country, reduce contraband alcohol and ensure better tax transparency and collections.
On 25 May 2020, the Ministry of Commerce (MOC) announced, via Notification No. 38/2020 ("Notification 38"), a lifting of the restrictions on importation of alcohol, specifically spirits/liquor. The MOC also released, through Notification No. 39/2020 ("Notification 39"), information on the requisite procedure with regard to the applications for liquor import registration certificates and liquor import licences.
The lifting of the restrictions on importation of foreign liquor is a further step towards market liberalisation in the industry following the MOC's notification in March 2015 allowing foreign wine to be imported into the country. Importation of beer remains restricted under Notification 38.
Additionally, Notification 39 allows a "Myanmar company" incorporated under the Myanmar Companies Law (MCL) to apply for liquor import permits. Relevant authorities have clarified that a local company (i.e. a company incorporated under the MCL with no more than 35% foreign shareholding) should be entitled to apply for the permits.
Foreign investors who have been looking at expanding their market share in this area may take the opportunity to collaborate with reputable local partners and establish a business presence in Myanmar.
Applications for liquor import permits
The lifting of restrictions on the importation of alcohol was driven by the government's objectives to (a) ensure consumption of safe and high quality alcohol products; (b) curb importation via illegitimate means; (c) fulfil the domestic market demand; and (d) ensure accurate tax assessment and collection.
Notification 39 sets out detailed procedures regarding the importation of liquor. An applicant needs to be a "Myanmar company" incorporated under the MCL with an exporter/importer registration certificate issued by the MOC. For importation of ready-to-serve liquor, the applicant is required to show that, inter alia, it has (a) a director who has in his name a licence for the wholesale trading of foreign liquor (F.L. 11); (b) an agreement for exclusive dealership or exclusive distributorship with the foreign manufacturer or distributor of liquor; and (c) the required storage and distribution permits for the imported liquor. For importation of rectified spirits, the applicant is required to show that, inter alia, it has (a) a director who has in name a licence to combine, blend, flavour or colour imported foreign liquor (F.L. 4) and a licence to bottle the foreign liquor (F.L. 5); and (b) the premises for carrying out the mixing and bottling activities. The successful applicant will receive a liquor import registration certificate which will be valid for 1 year and any renewal has to be applied for 3 months prior to expiry.
Additionally, with regard to the liquor import licence, the applicant is required to produce supporting documents such as, inter alia, (a) the proforma invoice or sales contract with the import details; (b) a sample of how the applicant's name will be affixed onto the imported liquor bottle; and (c) the endorsement or approval of the liquor from the Department of Food and Drug Administration.
It bears highlighting that separate requirements regarding the importation of liquor by duty-free shops and hotels will be issued by MOC.
Taxation of the imported liquor
In order to facilitate efficient tax collection, Notification 39 also sets out certain conditions regarding the importation of liquor, including (a) the importation shall be undertaken through Yangon Port or Yangon Airport only; (b) the cost, insurance and freight (CIF) will be a minimum of USD 8 per one litre of liquor (forming the tax base under the Specific Goods Tax); (c) labelling requirements providing details of the importer; and (d) tax stamps are required to be affixed on the liquor bottles within 21 days of the importation before they are allowed to be released from the customs warehouse.
Notification 39 has broadly provided that a successful importer would need to comply with the relevant laws and regulations for transportation, distribution, sales and operations of the imported liquor. It appears that the importer would need to apply separately for a wholesale registration certificate from the MOC. Notification No. 25/2018 issued by the MOC provides details regarding the procedures for obtaining such a certificate, including the minimum investment and floor space requirements.
The lifting of the restrictions on importation of liquor has been long-awaited and is an encouraging development towards market liberalisation.