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Myanmar: Tax credits, other tax relief measures (COVID-19)

Myanmar: Tax credits, other tax relief measures

The tax authority in September 2020 issued guidance (65/2020) that provides tax relief in response to the economic challenges of the coronavirus (COVID-19) pandemic.

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Among the tax relief measures are the following:

  • Non-refundable tax credit on total incremental wages and salary: A 10% tax credit is available only on the incremental wages and salary cost spent in the current fiscal year as compared to the prior fiscal year. The tax credit will not be re-fundable, will not be offset against other types of taxes, and cannot be carried forward to future years. Tax credits carried forward from previous fiscal years and advance income tax paid during the year is to be set off against the income tax payable before the additional 10% tax credit can be applied.
  • Allowance for deduction on total incremental wages and salary: A deduction of 125% of the additional wages and salaries incurred during FY2019-20 is available even if the business is in loss-making position. The loss under this relief can be carried forward to next fiscal year in accordance with the law. This is also available to taxpayers currently benefiting under the tax exemption for the Myanmar investment law (MIL) and special economic zone law (SEZL).
  • Non-refundable tax credits on incremental investment on capital equipment: A 10% tax credit is available on incremental investment on capital equipment made within FY2019-20 when compared against the cost of capital equipment in the taxpayer’s depreciation schedule at the end of the prior fiscal year. Certain investments—in intellectual property rights; in the purchase, upgrade or expansion of land and/or building; and in the revaluation of the existing assets—will not be regarded as qualifying investments. Tax credits carried forward from previous fiscal years and advance income tax paid during the year is to be set off against the income tax payable before the additional 10% tax credit is used. Business enjoying reinvestment exemption incentives under MIL or SEZL will not be eligible for this tax credit. The tax credit may be “clawed back” if the capital equipment which the tax credit was granted is sold or transferred within three years.
  • Allowance for deduction on deprecation for the incremental capital assets: A deduction of 125% of the depreciation on incremental capital equipment (one-time depreciation) can be claimed even if the business is in a loss-making position. This deduction is also eligible for businesses enjoying the re-investment exemption under the MIL or SEZL. The depreciation allowance cannot exceed the cost of the capital equipment.


Read a September 2020 report prepared by the KPMG member firm in Myanmar

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