Financial Crime World

Myanmar’s Finance Industry Struggles with Compliance Issues

The financial sector in Myanmar has been grappling with compliance issues, as many companies find it challenging to navigate the complex regulatory landscape.

Entity Forms and Regulatory Framework

According to a recent report by KPMG, the most common entity form used in Myanmar is a private company limited by shares and a branch office. Foreign investors often prefer to operate through a private company limited by shares to limit their liability. The report highlights that certain businesses require approval or licenses from relevant ministries, and companies with more than 35% foreign ownership are regarded as foreign companies.

Investment Incentives

Investment incentives are available for foreign and Myanmar investors who are granted an MIC permit or endorsement in engaging certain businesses. These incentives include:

  • Tax exemptions
  • Customs duty exemptions
  • Accelerated depreciation on fixed assets

Compliance Challenges

However, compliance with these regulations can be a challenge. The report notes that Myanmar has no formal transfer pricing regulations, and stamp duty is an instrument-based tax that applies to dutiable instruments executed according to the Myanmar Stamp Act.

Tax Complexity

The report also highlights the complexity of taxes in Myanmar, including:

  • Income tax
  • Capital gains tax
  • Commercial tax

Payers of assessable income are liable to deduct tax at source from certain domestic and cross-border payments.

Attractive Destination for Investors

Despite these challenges, Myanmar is an attractive destination for investors, with a growing economy and vast natural resources. The government has been working to improve the business environment, but more needs to be done to simplify compliance and reduce bureaucracy.

Expert Advice

Experts say that companies operating in Myanmar need to stay up-to-date with changing regulations and tax laws to avoid penalties and fines. “It’s essential for businesses to have a thorough understanding of the regulatory landscape and seek professional advice when needed,” said Sie Htun, Partner in Charge of KPMG in Myanmar.

Conclusion

The report is part of KPMG’s ongoing efforts to provide insights into the business environment in Myanmar. The firm’s experts are available to offer guidance on investment regulations, tax laws, and compliance issues.