On 17 November 2022, the State Administration Council (“SAC”) enacted the Law Amending the 2022 Union Tax Law (“2022 UTL Amendment”). This law provides tax exemptions for Battery Electric Vehicles (“BEVs”) and increases the corporate income tax rate of companies engaged in the oil and gas exploration and production sector in Myanmar.
We highlight below the major changes under this law:
- Tax Exemptions for Battery Electric Vehicles
The 2022 UTL Amendment provides exemptions on specific goods tax and commercial tax for BEVs (and their batteries) starting 1 October 2022. This move aims to encourage the use of BEVs in Myanmar and to develop the electric vehicle industry and related businesses.
Prior to the 2022 UTL Amendment, the Ministry of Commerce issued Notification 90/2022 dated 2 November 2022 in which it reduced the customs tariffs on BEVs imported under the categories of Completely Built Up, Completely Knocked Down, and Semi-Knocked Down to 0% starting 2 November 2022 and lasting until 31 March 2023.
- Increase in Corporate Income Tax (“CIT”) Rate for Companies in the Oil and Gas Upstream Sector
The 2022 UTL Amendment added a new clause stating that companies engaged in the oil and gas exploration and production (upstream) sector will be subject to a special CIT rate of 25% effective from 1 April 2022.
Before this amendment, companies engaged in the oil and gas upstream sector, after their income tax exemption period, were subject to the general CIT rate of 22% (and 25% prior to April 2022). This change in tax rate effectively aligns with the previous CIT rate used by oil and gas companies before the enactment of the 2022 UTL.
Please note that there are no changes in the taxation of capital gains for the oil and gas upstream sector as per the 2022 UTL Amendment. Companies engaged in the upstream oil and gas sector remain subject to the higher capital gains tax of 40-50% based on net profit or taxable capital gains.
For further information or assistance on this matter, please contact Jack Sheehan, Partner, Head of Regional Tax Practice at [email protected] and Diberjohn Balinas, Tax Director, Myanmar at [email protected]