Duties, royalties and taxesDuties, royalties and taxes payable by private parties
What duties, royalties and taxes are payable by private parties carrying on mining activities? Are these revenue-based or profit-based?
Royalty and dead rent
The holder of a mineral production permit must pay royalties to the government according to the Myanmar Mining Law. The rates are as follows.
Royalty rates are the following:
- for gold, platinum, uranium and other precious metallic minerals the Ministry may, with the approval of the government, prescribe and publish by notification from time to time at the rate of 5 per cent;
- for silver, copper, tin, tungsten, nickel, heavy-earth, molybdenum, iridium, osmium, palladium, ruthernium, rhodium, tantalum, columbium, niobium, thorium, cadmium, rare earth element, beryllium, titanium and other precious metallic minerals the Ministry may, with the approval of the government, prescribe and publish by notification from time to time at the rate of 4 per cent;
- for iron, zinc, lead, antimony, aluminium, arsenic, bismuth, chromium, cobalt, manganese, magnesium and other precious metallic minerals the Ministry may, with the approval of the government, prescribe and publish by notification from time to time at the rate of 3 per cent; and
- for industrial mineral or stone, at the rate of 2 per cent.
The holder of the permit shall pay dead rent for the land related to the permit in accordance with the rate specified. The dead rent shall be paid yearly in two instalments, which shall be within the rates mentioned in the Mining Law. The rates are subject to the types of operation and minerals.
Income tax rates depend on whether the joint venture company is a ‘resident’ (ie, formed under Myanmar law) or a non-resident formed under a law other than Myanmar law, such as a ‘branch office’. For resident companies, the income tax rate is 25 per cent of profits. For non-resident companies, the income tax rate has been 25 per cent since April 2015. For enterprises or individuals permitted and operating under MIL, and foreign organisations engaged by special permission in a state-sponsored project, enterprise or undertaking, the income tax is 25 per cent. Foreign individuals engaged by special permission in a state-sponsored project, enterprise or undertaking are subject to income tax at a 20 per cent rate.
Notification No. 117/2012, last amended in April 2015, prescribes commercial taxes of between 5 and 100 per cent depending upon the different goods and services businesses concerned. The application for registration must be in the prescribed form and filed one month before the commencement of business. Irrespective of the level of its sales at any time, a registered enterprise is required to comply with all the provisions of the law including submitting returns, paying tax monthly and keeping records, until its name is removed from the register. Only registered enterprises are allowed to deduct input taxes incurred on their purchases.
The commercial tax on services (all types of services except 30 services) is 5 per cent.
Stamp duties collected from the sale of judicial and non-judicial stamps represent fees payable under the Court Fees Act 1870. Non-judicial stamp duty is levied on various types of instruments required to be stamped under the Myanmar Stamp Act 1899 and its amendments in 1957, 1990, 2011, 2014 and 2017.
Type of income
Witholding tax deduction
0 per cent
15 per cent
Royalties for the use of licences, trademarks, patent rights, etc
10 per cent
15 per cent
Payments made for buying goods, rendering services, conducting businesses, by contracts or agreements, or businesses called by tender or auction or market competition by government-level organisations, government ministries, Naypyi Pyi Taw council, regional and state organisations and state-owned enterprises
2 per cent
2.5 per cent
Payment made to contractors for goods and services purchased or performed in Myanmar by agreements or contracts or any other means in joint ventures with the state, partnerships, joint ventures, company, organisations formed by individuals, any organisation or association formed by the existing law, cooperatives with the state between the foreign companies or foreign-owned businesses
2.5 per cent
What tax advantages and incentives are available to private parties carrying on mining activities?
MIL covers many activities with the exception of those reserved for the state under the SEE Law. However, if a foreign investor is interested in an activity not specified in a notification or defined in the SEE Law, the investor can apply to MIC stating its interest and demonstrating that such an enterprise would be beneficial to the state. Once satisfied, MIC may approve the application.
MIC may scrutinise and grant the following exemptions and relief, as required, to the investor if applied:
- exemption or relief from income tax if the profit obtained from the investment business that has obtained a permit or an endorsement is reinvested in such investment business or in any similar type of investment business within one year;
- right to depreciation for the purpose of income tax assessment, after computing such depreciation from the year of commencement of commercial operation based on a depreciation rate which is less than the stipulated lifetime of the machinery, equipment, building or capital assets used in the investment; and
- right to deduct expenses which are incurred for the research and development relating to the investment businesses carried out within the country and actually required for the economic development of the country from the assessable income.
Additionally, the new MIL offers a large range of incentives and guarantees to foreign investors including the guarantee against nationalisation.Tax stablisation
Does any legislation provide for tax stabilisation or are there tax stabilisation agreements in force?
No tax stabilisation agreements are in force. However, MIL allows the Myanmar Investment Commission to grant exemptions from income tax (see question 20).Carried interest
Is the government entitled to a carried interest, or a free carried interest in mining projects?
The government is not entitled to a carried interest or a free carried interest.Transfer taxes and capital gains
Are there any transfer taxes or capital gains imposed regarding the transfer of licences?
A licence is not considered a capital asset and is thus not subject to capital gains tax in Myanmar. However, the sale of a permit could be considered an ‘other source of income’ and under Union Tax Law 2018, the net profit realised would be taxed at 25 per cent.Distinction between domestic parties and foreign parties
Is there any distinction between the duties, royalties and taxes payable by domestic parties and those payable by foreign parties?
See question 19. Liability for income tax and withholding tax can vary between domestic and foreign parties.