EY-Global-oil-and-gas-tax-guide-2014

Myanmar
361
Notes:
(1) Payments to nonresidents are treated as final tax to such nonresidents.
(2) In the case where a payment is made to a treaty country, the relevant tax
treaty needs to be considered to find out whether reduction/exemption is
available.
(3) In the case where a payment is made to a treaty country, exemption may
be available under the relevant tax treaty if there is no permanent
establishment in Myanmar.
(4) Payment for goods or services in Myanmar that is less than MMK300,000
(around US$300) is not subject to withholding tax.
E. Financing considerations
The legally permitted debt-to-equity ratio of the JV is 9:1. Generally, interest
can be a deductible expense, from the date of commercial operations, for the
purposes of a JV company’s income tax calculation.
F. Transactions
Selling shares in a JV company
If any shareholder in a JV company disposes of or sells its shares to another
party and a capital gain is realized, the shareholder is required to pay Capital
Gains Tax (CGT) to the Myanmar Internal Revenue Department (MIRD) at the
rate of 40% to 50%, the rate depending on the amount of share capital amount
being sold.
G. Indirect taxes
Import duties
Generally, oil and gas companies incorporated under a permit from the MIC
need not pay import duties during the construction phase. In the case of a PSC
that is also incorporated under an MIC permit, it is exempt from import duties
on the importation of goods and equipment during the exploration and
production period.
Commercial tax
Commercial tax at the rate of 5% applies for domestic sale and 5% and 8% apply
on export of crude oil and natural gas, respectively. The Commercial tax on
export could be exempted under the MIC permit.
Export duties
Companies in the oil and gas business are exempt from export duties.
Stamp duties
A PSC is subject to a maximum stamp duty of MMK150,000.
Domestic supply obligations
Myanmar imposes an obligation on oil and gas production companies to supply
a certain percentage of production domestically, with a 10% discount to the
market price. Such an obligation is capped at a certain percentage of a
contractor’s production profit.