|Daw Khin Cho Kyi
The new Myanmar Investment Law (MIL) was enacted on
October 18 2016, replacing the previous Foreign Investment Law
(2012) (FIL 2012) and Citizens Investment Law (2013).
Myanmar Investment Commission application process
There will be a new type of Myanmar Investment Commission
(MIC) approval process, referred to as the MIC
endorsement. Consequently, it is
expected that there will be two types of MIC approval under the
new law, depending on the nature of the investment: either (i)
approval by way of MIC permit, which will be similar to the
approval process under the existing investment regime; or (ii)
approval by way of MIC endorsement (which, over time, is
expected to become a simpler and more efficient approval
process than under the existing investment regime).
Tax holidays and incentives are no longer automatic.
Instead, they depend on various factors, including the
geographic location of the investment within Myanmar, the
business sector, and to some extent, the MIC's discretion.
Investors must now apply to the MIC separately for any tax
exemptions. In theory, tax exemptions under the MIL will still
be available, but will be granted to investors at the
discretion of the MIC.
A new zoning system has been introduced, under which
investments in certain regions or zones within Myanmar (the
locations and details of which had not been issued at the time
of writing) may be granted different corporate income tax
exemptions. Under the new zoning system: Zone 1 (representing
the least developed areas of Myanmar), will attract the
greatest potential income tax holiday of up to seven years;
Zone 2 will attract an income tax holiday of up to five years;
and, Zone 3 (representing the most developed areas of Myanmar)
will attract the shortest potential income tax holiday of up to
Comments from the Directorate of Investment and Company
Administration in October 2016 suggest that any tax exemptions
granted to investors will also depend on whether the relevant
investment project falls within a promoted sector specified by
the MIC. However, at the time of writing, further official
guidance on this matter had not been issued and it is not
certain which sectors will be deemed to be 'promoted'.
Land use rights
Foreign-invested companies are still generally prohibited
from leasing premises for more than one year, however (i) a
lease of up to 50 years, with the option of two 10-year
extensions, may be granted to MIC permit holders and MIC
endorsement holders, and; (ii) longer lease terms may also be
granted in certain less-developed and remote regions, although
the details on this type of arrangement are not yet clear.
Remittance of funds
The MIL clarifies the categories of funds that can be
remitted offshore by investors, provided that the entity
remitting the funds has complied with all tax obligations in
respect of the transfer, among other things.
The MIL contains express guarantees against both
expropriation and nationalisation, although it does cite
certain exceptions, including for the protection of public
Foreign investors now appear to have more flexibility in
their approach to employees, since the required local employee
hiring ratios which were contained in the 2012 FIL have been
revoked. The MIL retains provisions on recruitment and capacity
building of local employees.
Daw Khin Cho Kyi