Tax Notes: Draft Union Tax Law 2018–2019

Due to the change in financial year, the end of the six-month gap period is approaching and the Union Parliament (“Pyidaungsu Hluttaw”) has announced a draft Union Tax Law 2018–2019 (“Draft UTL”) which will be effective from 1 October 2018. A few interesting points from the Draft UTL are outlined below:

Financial year end

Under the Draft UTL 2018–2019, the income year for state-owned enterprises remains the same from 1 October to 30 September the following year, as well as for other taxpayers from 1 April to 31 March the following year.

Specific Goods Tax

Major changes under Specific Goods Tax (“SGT”) include an increase in SGT rates for cigarettes, liquor, and cheroot — especially for goods which fall under a lower price tier. As an example, 1 liter of liquor with a sales value of MMK750 that used to be taxed at MMK90 per liter will now be taxed at MMK122 per liter. On the other hand, 1 liter of liquor with a sales value of MMK1,000 that used to be taxed at MMK274 per liter will now be taxed at MMK122 per liter. We also note that the price ranges for cigarettes and liquor have been expanded, along with the increase in corresponding SGT rates as per summary provided in table below. In addition, it should be noted that diamonds and emeralds are no longer subject to SGT.

Commercial Tax

Raw materials for producing detergents, soap, and raw soap are now exempted from Commercial Tax (“CT”), increasing the total CT exempt goods list from 86 to 87. However, 1% CT will also be charged on imported gold jewellery.