Updates regarding the New Myanmar Companies Law
Commencement Date: The President Office has issued Notification 48/2018 announcing that the new Myanmar Companies Law will come into force on 1 August 2018.
MyCo and re-registration: Once the new law comes into effect, existing companies that are registered in Myanmar will have until 31 January 2019 to re-register. There will be a new electronic registry system known as the Myanmar Companies Online registry system ("MyCo"). The Directorate of Investment and Company Administration will be temporarily closed and registrations suspended between 23 – 31 July to allow for the implementation of MyCo. If an existing company fails to re-register using MyCo before the 31 January deadline then the registrar may strike its name from the register and announce the company’s dissolution.
The Myanmar Companies Law adopts international best practice in relation to company formation, business registration processes and corporate governance. We have produced a Myanmar Companies Law guide to provide clarification on some of the key changes and possibilities arising from the implementation of the New Companies Law and to recommend steps investors can take to maximise the benefits brought about by the new law.
Government launches Myanmar Law Information website
The Union Attorney General Office has recently launched the Myanmar Law Information System (“MLIS”), which is intended to act as an online library for Myanmar laws. The MLIS will facilitate the public’s access to Myanmar laws and will likely serve as a useful resource for business (both foreign and local) as well as being a resource for local legislators and law enforcement.
The website, which already has over 5,000 files of legal data on it, has been implemented in conjunction with the Korean International Cooperation Agency ("KOICA") and is available in both English and Myanmar. The MLIS is based on the Korean equivalent, which has been praised for its quality of information, as well as its accessibility. A mobile service of the MLIS is also being developed.
The MLIS, which was also developed as a transparency measure, will host primary legislation (including the Burma Code Volumes 1 to 13), international treaties and subordinate legislation (such as rules, regulations, bylaws, orders, instructions, procedures) and precedents. The MLIS will also include laws and rules enacted by state and region Hluttaws, information on abolished laws, details of amendments to existing laws and rulings by the Union Supreme Court.
Removal of withholding tax on certain payments for goods and services
From 1 July 2018, many payments made to Myanmar resident citizens, resident foreigners and resident companies for the purchase of goods and services rendered within Myanmar will no longer attract a 2% withholding tax.
The change comes pursuant to Notification (47/2018) (“Notification 47”) issued by the Ministry of Planning and Finance on 18 June 2018 and which replaces Notification (51/2017) released in May 2017. Payments by non-Myanmar tax residents for the purchase of goods and supply of services within Myanmar will continue to attract the 2% withholding, as will payments by state owned enterprises, governmental organisations and Ministries.
Notification 47 also amends the minimum threshold for withholding tax payments where a withholding would apply. Resident Myanmar taxpayers will now only need to apply the 2% withholding for aggregate payments in excess of MMK 1 million (approximately US$700) per year. Notification 47 does not change the withholding tax position within respect to payments to non-resident foreigners where the equivalent withholding rate remains 2.5%. Notification 47 also removes the reference to “hiring” which could be interpreted as excluding lease and hiring arrangements from withholding tax.
The changes come as part of ongoing reforms to the Myanmar tax system and it is thought that these will facilitate increased numbers of onshore transactions and to encourage foreign investors to register their businesses in Myanmar.
Myanmar Investment Commission reformed
The Chairman of the Myanmar Investment Commission (“MIC”) has announced that the MIC, has been reformed and is now under a new management regime, which he states will be transparent, take a proactive approach and promote responsible investment.
The reforms have increased the number of MIC members from 9 to 13, and the Minister of the Office of the Union Government, U Thaung Tun, has been appointed as Chairman. U Thaung Tun has been quoted saying that the MIC will impose strict time limits on approving foreign investments, will eliminate unnecessary procedures and operate in a more efficient and investor-friendly manner.
Potential amendments to the terms of Production Sharing Contracts
It has been reported that the Ministry of Electricity and Energy is looking to review the fiscal terms and conditions in its oil and gas production-sharing contracts ("PSCs") in order to make them more internationally competitive and to draw new investments into the sector. The intention of officials is to make the PSC terms more flexible and in tune with current market conditions, and any adjustment to these will also apply to existing PSCs.
The PSCs are being reviewed ahead of potential tenders for up to 31 Myanmar oil and gas blocks which will be opened up to domestic and foreign investors. The last tenders for Myanmar’s oil and gas blocks were conducted in 2014. At that time 16 onshore blocks were awarded and 20 offshore blocks were awarded. For the onshore blocks there was a requirement to partner with a Myanmar company.