The Ministry of Planning and Finance has recently reduced the rates of withholding tax (Notification 2/2017) on 10 January 2017. The changes will take effect on 1 April 2017.
There are four significant changes:
- Significant reductions in WHT on royalty payments and for certain branches: There is a 5% reduction in WHT on royalties and also a 1% reduction in WHT paid on certain goods or services provided to non-residents. If the non-resident is taxed in Myanmar then the WHT may be deducted from income tax due. However, if the non-resident is not taxed in Myanmar then the WHT is considered final.
- WHT applies to leases of land and hiring machinery: Under the previous notification it was not clear whether WHT applied to leases of land and machinery. By including the concept of hiring arrangements the new notification makes it clearer that WHT will be payable on leases of land and hiring of machinery.
- WHT is not to apply to services performed abroad: The old notification was clear that WHT did not apply to exported goods but was not clear in respect of services. The new notification makes it clear that WHT does not apply to services performed abroad.
- WHT does not apply to interest payments made to branches of licensed foreign banks: WHT does not apply to payments between government organisations or to interest payments to branches of licensed foreign banks.
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