Republic of the Union of Myanmar

Ministry of Planning, Finance and Industry (MoPFI)

Order 65/2020

17 June 2020

***Unofficial Translation***

As part of the efforts to execute the COVID-19 Economic Relief Plan, MOPFI, in accordance with Union

Taxation Order Paragraph 5, hereby issues the following orders and procedures.

Chapter 1

Terms and Definitions

1) These procedures shall be called as Procedures Concerning the Union Taxation Order.

2) These shall go into effect in the 2020-2021 assessment year.

3) The terms mentioned in these procedures shall have meanings in accordance with the Income

Tax Law and the Union Tax Law.

4) These procedures are issued with the purpose of realising the CERP Goal 2, Action Pan 2.1.5

on Tax Credits, and providing further clarifications on the claiming the tax relief benefits as

according to Order the Union Taxation Law.

Chapter 2

Terms and Definitions on Non-refundable tax credit from additional salaries and wages

5) The term “Additional Wages and Salaries” is defined as the increase in wages and salaries in

the 2019-2020 Fiscal Year as compared to that of the previous fiscal year, due to any of the

following circumstances:

a. The increase in salary and wages payment to the employees (with the same number of

employees as the previous year).

b. The increase in salary and wages expenditure from increasing employee capacity.

6) The amount equivalent to 10% of the additional wages and salary can be claimed as non-

refundable tax credit. For instance, if a taxpayer incurred 500,000 kyats in wages and salary

payment in 2018-2019 fiscal year and then incurred 800,000 kyats for the same payment in

2019-2020 fiscal year, then 10% of additional wages and salaries of 300,000 kyats can be

claimed as Non-refundable Tax Credit (30,000 kyats).

Instructions to be practiced concurrently

7) Even though calculations for the additional wages and salaries amount in the current income

year are typically based on the 12 months period, but if the length of time is different from

the previous year, the calculations should take the number of months into consideration. If

the duration for the additional wages and salaries for the previous fiscal year is 6 months, the

additional wages and salaries must be calculated as follows:

(Total wages in the 12 months income year)- (2 x total wages in 6months long income year)

8) If any refundable amount arises from this tax credit on additional wages and salaries, the right

to this tax credit will be limited to the amount that could equate the tax amount to zero.

9) Since this is a non-refundable tax credit, requesting refunds and tax relief in other tax

categories will be prohibited and prevented from being brought forward and set off to the

next year.

10) Before gaining approval for the non-refundable tax credit, the refund credit carried over from

the previous year and the initial income taxes filed in accordance with the income tax law

must be done first.

11) The non-refundable tax credit can be calculated using the following example:

Sample Calculation- 1

Before taxes, a company has net profit of 1,000,000 Kyats and based on the income tax law,

they estimated 50,000 kyats in the income taxes. Additionally, they are eligible for 30,000kyats worth of

tax credit.

1) Net profit (income) 1, 000,000 Kyats

2) Deductible taxes (25%) 250,000 Kyats

3) Refundable credit from previous year (if any) xxxxxxxxxxxx

4) Paid income taxes/initial taxes (if any) 50,000 Kyats

5) Non-refundable tax credit (10%) 30,000 Kyats

6) Net taxes to be paid 170,000 Kyats

Sample Calculation 2

(Granting tax credit to the amount that makes net tax amount zero)

Before tax assessments, a company has net profits of 1,000,000 kyats and estimated 240,000 kyats of

income tax. Assume they are eligible for 30,000 kyats in tax credit. That tax credit will be non-refundable

tax credit, they can claim the tax credit worth of 10,000kyats to equate the tax to paid amount to zero.

1) Net profit (income) 1, 000,000 Kyats

2) Subtract Deductible taxes (25%) (250,000) Kyats

3) Refundable credit from previous year (if any) xxxxxxxxxxxxxxxxx

4) Paid income taxes/initial taxes (if any) 240,000 Kyats

5) Subtract Non-refundable tax credit (10%) (10,000 )Kyats

6) Net taxes to be paid 0

Chapter 3

(Increasing Deduction of the additional salaries and wages as expenses)

Definitions

12) The definition of additional salaries and wages shall be understood in the same meaning as

point 5 in previous chapter.

13) 125% of the total additional wages and salaries shall be deducted as expenses. For instance, in

2018-2019 income year, the tax-payer’s salary bill is 100 Lakhs and 200Lakhs in 2019-2020

income year. Then, the 125% of the 100lakhs of additional wages and salaries will be deducted

as expenses (125 Lakhs). Therefore, even though the actual additional salaries and wages

payment is 200lakhs in 2019-2020 income year, deduction of 225lakhs will be permitted.

Additional Instructions to be practiced concurrently

14) If the taxpayers are suffering losses in their businesses, they can still deduct 125% of the

additional wages and salaries as expenses.

15) If losses are incurred from such deduction, these losses must be carried over to the next years

as deductions.

16) Taxpayers who are granted tax exemptions due to the Myanmar Investment Laws and Special

Economic Zone Laws, are eligible for such expense deductions and the deductions mentioned

above as well.

Chapter 4

(Non-refundable tax credits on Incremental Investments on Capital Equipment)

Definitions

17) Regarding Capital Equipment for Incremental Investments, investments for non-tangible gains,

Purchase, Renovation and Expansion of Land, Building or both are not included. Furthermore,

if there is no upgrade on Capital Equipment and revaluation on tangible assets (as owned in

the previous income year) is carried out, any additional amount cannot be considered as

incremental investment.

18) Non-refundable tax credit equivalent to the 10% of the incremental investment on capital

equipment.

Instructions to be practiced concurrently

19) Appreciation from the incremental investment on capital equipment should be determined

with reference to the depreciation table. For instance, in 2018-2019 income tax year, a tax-

payer’s capital equipment is valued 2,000 Lakhs based on his/her depreciation value table

(excluding the assets that do not fit point 17’s definition), and in 2019-2020 income year, the

value increased to 3,000Lakhs. This means that there is 1,000 Lakhs worth of incremental

investment on capital equipment, which results in 100 Lakhs worth of non-refundable tax

credit (10%) for the 2019-2020 income year.

20) This non-refundable tax credit is not eligible to business that are granted reinvestment

exemption according to the Investment laws and the SEZ laws.

21) Since this credit is applicable to incremental investments on capital equipment, if a refundable

amount arises, the credit will be applied in the way that it equates the payable tax amount to

zero.

22) Since this is a non-refundable tax credit, requesting refunds and tax relief in other tax

categories will be prohibited and prevented from being brought forward and set off to the

next year.

23) Before gaining approval for the non-refundable tax credit, the refund credit carried over from

the previous year and the initial income taxes filed in accordance with the income tax law

must be done first.

24) If the capital equipment on which the incremental investment is made on, is transferred or

sold within the next 3 years from the year the non-refundable tax credit was granted, this

credit will be revoked and reassessed.

Chapter 5

Increase in Depreciation value of Additional Capital Equipment

Definitions

25) Depreciation of the additional capital equipment refers to the equipment that is included in

the paragraph 17’s definition of capital equipments, that is further invested.

26) 125% of total depreciation value of the additional capital equipment can be deducted as

expenses for the 2019-2020 income year. This deduction can be only used one time. For

instance, capital equipment valued at 1,000 Lakhs is purchased in 2019-2020 income year and

if depreciation rate is 10% (100 Lakhs), 125 Lakhs can be deducted (one time) as expenses for

the 2019-2020 income year.

Instructions to be practiced concurrently

27) If the tax payers are suffering losses in their businesses, they can still deduct the full 125% of

the depreciation as expenses and if losses are still incurred from such deduction, these losses

must be carried over to the next years as deductions (in accordance with the income tax laws).

28) Taxpayers who are granted tax exemptions due to the Myanmar Investment Laws and Special

Economic Zone Laws, are eligible for such expense deductions and the deductions mentioned

above as well.

29) The increased depreciation value should not exceed the capita equipment’s original value.

Chapter 6

Miscellaneous

30) If the tax relief benefits listed in these procedures are found to be misused for tax evasion

purposes or fraudulent purposes, these benefits will be rejected, revoked or reassessed.

Soe Win

Union Minister