Financial Crime World

Myanmar Compliance Management Framework: A Guide for Businesses

The Myanmar government has implemented a comprehensive compliance management framework to regulate audit and accounting requirements for businesses operating in the country. This framework is governed by two main pieces of legislation, the Myanmar Companies Law of 2017 and the Myanmar Accountancy Council Law.

Requirements for Companies Incorporated in Myanmar

  • Maintain proper books of accounts
  • Appoint an auditor by directors
  • If there is a conflict between requirements set out under both laws, the requirements under the Myanmar Accountancy Council Law will take precedence

Foreign Investors Operating in Myanmar

  • Seek the services of registered local advisors to ensure compliance with regulations
  • Familiarize themselves with the two assessment systems:
    • Self-Assessment System (SAS): companies are not required to submit audited financial statements to the Internal Revenue Department (IRD)
    • Official Assessment System (OAS): companies must submit audited financial statements to both IRD and Directorate of Investment and Company Administration (DICA)

Exemptions

  • Small companies with less than 30 employees and revenue of less than 50 million kyat (US$37,000) are exempt from submitting their financial statements to DICA

Annual General Meetings

  • Companies incorporated in Myanmar must hold an Annual General Meeting (AGM) within 18 months of incorporation and subsequently every 15 months
  • During the AGM:
    • Directors will be elected
    • Auditors will be appointed
    • Financial statements will be approved by shareholders
    • Director’s report will be approved

Fiscal Periods

  • The financial year in Myanmar runs from October 1 to September 30, which is mandatory for all businesses
  • Companies must file their corporate income tax returns and audited financial statements with the IRD during this period

Appointing Auditors

  • Companies incorporated in Myanmar are required to appoint an auditor by directors
  • The auditor must be a certified public accountant or hold an accountancy degree from a foreign country recognized by the Myanmar Accountancy Council (MAC)
  • The auditor’s report must state whether:
    • The company’s books and accounts have been maintained in accordance with the law
    • The balance sheets represent the true financial position of the company
    • Necessary information was obtained from relevant parties

Accounting Standards

  • Financial statements in Myanmar are prepared in accordance with the Myanmar Accounting Standards (MAS) and the Myanmar Financial Reporting Standards (MFRS), implemented by MAC
  • Publicly accountable companies must use MFRS standards, while small and medium-sized enterprises may adopt MFRS for SMEs, which is based on IFRS for SMEs

Annual Reports

  • All companies incorporated in Myanmar are required to file annual returns with DICA within two months of incorporation and at least once annually after
  • The annual return must contain information on:
    • Directors
    • Capital structure
    • Shareholders
    • Date of the AGM

Penalties for Non-Compliance

  • Late filing of tax returns: fine of five percent of the tax due and an additional one percent of the tax due for each month
  • Deliberate provision of incorrect information or omission of vital information: penalties ranging from 25 to 75 percent of the underpaid tax

The Myanmar compliance management framework is designed to ensure transparency and accountability among businesses operating in the country. By understanding these regulations, companies can avoid potential penalties and maintain a strong reputation in the market.