Financial Crime World

Myanmar: Compliance Risk Assessment Key for Foreign Investors

Compliance with audit and regulatory requirements is crucial for foreign investors in Myanmar to avoid potential risks and penalties. The country operates two assessment systems - self-assessment system (SAS) and official assessment system (OAS) - which are governed by the Myanmar Companies Law of 2017 and Myanmar Accountancy Council Law.

Understanding the Assessment Systems

Under the SAS, companies are not required to submit audited financial statements to the Internal Revenue Department (IRD). On the other hand, under the OAS, they must submit their audited financial statements to both the IRD and the Directorate of Investment and Company Administration (DICA). Small companies with less than 30 employees and revenue of less than 50 million kyat ($37,000) are exempt from submitting financial statements to DICA.

Importance of Compliance

Foreign investors should utilize the services of registered local advisors to ensure compliance with regulations. The Myanmar Companies Law requires companies to hold their first annual general meeting (AGM) within 18 months of incorporation, and subsequent AGMs every 15 months.

Key Compliance Requirements

During an AGM:

  • Directors will be elected
  • Auditors appointed
  • Financial statements approved by shareholders
  • Director’s report approved

The financial year in Myanmar runs from October 1 to September 30. Companies must file corporate income tax returns and audited financial statements with the IRD.

Additional Compliance Requirements

Companies are also required to:

  • Maintain proper books of accounts
  • Appoint an auditor by the company’s directors
  • Hold a certificate from an authorized body entitling them to act as an auditor for companies

The Myanmar Accountancy Council (MAC) has implemented accounting standards, including:

  • Myanmar Accounting Standards (MAS)
  • Myanmar Financial Reporting Standards (MFRS)
  • MFRS for SMEs

Consequences of Non-Compliance

Companies are required to file annual returns with DICA within two months of incorporation and at least once annually after. Failure to comply with these regulations can result in penalties, including fines or imprisonment.

Conclusion

In conclusion, compliance risk assessment is critical for foreign investors in Myanmar to ensure they stay on the right side of the law and avoid potential risks and penalties. It is essential to seek professional advice from registered local advisors to navigate the complex regulatory landscape in Myanmar.