“The Government collects taxes and duties not only to cover government expenditure but also […] to balance distribution of wealth and to facilitate economic development.[1]

The essence of the law of any fiscal policy is to facilitate revenue collection for governments to provide essential goods and services for the public, without any single preferential treatment to any single group. While most people all over the world are dissatisfied about the taxes they are obligated to pay, taxes are a necessary evil. In low income countries where the spending needs are significant, the need to raise revenues is even more imperative. There needs to be sustainable income to be independent from foreign aid[2] and the international community is pushing towards strengthening revenue mobilization in developing countries. A solid tax system is essential to alleviate income inequalities by redistributing wealth and an integral part of a strong government.

Myanmar’s current fiscal revenues stand at one of the lowest in the world: for the fiscal year 2014/2015, the tax to GP ratio is only at 8.2[3]%, one of the lowest in the Association of South East Asian Nations (“ASEAN”). Myanmar’s fiscal administration faces many challenges that are similar to many developing countries: low incentives to comply with the law, hard to tax economy as most of the economy is informal, weak administration and low tax culture, and reliance on receipts of multinational or state-owned enterprises, which are prone to abuse the tax system.

While the Government of Myanmar (“GOM”) is actively reforming the fiscal system, its current fiscal environment is still deeply rooted in its colonial origins[4] causing a lag in the development of the country. The outdated centralized fiscal administration is one of the causes for the government’s inability to provide the necessary budget for basic needs of the people and even impacting their human rights[5]. While at the Union level some reforms are starting to take place, at the local level, many reforms are needed in order to legitimize the taxation system that the military used as “extortion and a tool of repression.[6] There needs to be a reform of the administration for the people of Myanmar to believe in the system, something that has not been in people’s mind for a long time. The need to create a sensible “tax culture” is essential in the economic management reform, and would increase citizens’ awareness of their own system.

Over the last decades, the economic environment in Myanmar has experienced many changes in order to attract investments and growth after decades of stagnation. The international community is pushing for more accountability, and transparency in all sectors, especially the extractive industry.

This summary will present the current legal framework, the challenges and the current efforts around Myanmar’s fiscal environment.

I. Myanmar’s Fiscal Environment

The following section is a presentation of Myanmar’s fiscal environment legislative and legal framework.

A. Overview

The GOM’s current revenues at the Union level are broken down as follows:





Tax Revenue





Transfers from SEEs to Union Government





SEE Receipts net of transfers to Union Government





Other nontax revenue










Revenues and grants





Table 1 — Myanmar’s Revenues (% of GDP)[7]





Tax Revenue





Transfers from SEEs to Union Government





SEE Receipts net of transfers to Union Government





Other nontax revenue










Revenues and grants





Table 2 — Myanmar’s Composition of Revenues (% of Total Revenues)[8]

Following a policy change in the administration of SOEs in 2012, the GoM’s receipts have been on the rise. However, as noted in the above table, the GoM’s receipts come mostly from the transfers from SEEs, and not tax revenues. Nontax revenues refer to the licenses and fees, and other bonuses resulting from the lease of land in SEZs; grants, and foreign aid.

State and Region revenue for the Fiscal Year 2013/14 account for only 8% of overall government revenues.

Figure 1–2013–14 State and Region Revenue by Budget Type[9]

Tax revenues from local taxes are at a low rate of 5%, making the State and Region administration reliant on the GOM’s transfers for operation.

B. Institutional Framework

1. At the Union Level

The legislative system in Myanmar is vested in the Pyidaungsu Hluttaw, Myanmar’s National Parliament, which is comprised of the Pyithu Hluttaw, the House of Representatives, and the Amyotha Hluttaw, the National Assembly[10]. Most of the fiscal policies are passed through the Pyidaungsu Hluttaw. Laws passed by the Pyidaungsu Hluttaw and signed by the President, then published in the Myanmar Gazette. Additionally, the Internal Revenue Department issues notices and explanations as necessary on a yearly basis.

The GOM’s fiscal policy is administered through the Internal Revenue Department within the Ministry of Finance. The Internal Revenue Department handles the income tax collection and assessment for both individuals and entities. It has recently created the Large Taxpayer Office, designed to facilitate the collection and assessment of large taxpayers. The Company Circle Tax Office is in charge of the Corporate Income Tax, Commercial Tax and the more recent Special Goods Tax.

The GOM also receives non-tax revenues through tariffs administered by the Customs Department within the Ministry of Finance.

Figure 2 — Union of Myanmar Revenue Institutions

2. At the State and Region Level

The 2008 Constitution[11] grants local economic governance to three different government agencies: the Development Affairs Organizations (DAOs), the General Administration Department (GAD) and different ministries.

(1) The Development Affairs Organizations

The DAOs are the primary urban governance entity in Myanmar and play a major role in the local economy and the providing urban services[12]. The DAOs’ main responsibility is the licensing organization of businesses in both rural and urban areas, but also give a wide range of services to the local community, such as road construction and maintenance, sewage and sanitation, street lighting and water supply. The DAOs are also responsible to issue construction permits.

The DAOs raise their own revenues through a wide range of taxes, fees, transfers from the IRD and fines.

(2) The General Administration Department

The most powerful and central authority at the township level. According to the GAD’s website, its principal functions are the following:

· Land administration

· Excise administration

· Collection of four kinds of taxes

· Village development work

· Association law administration

· Function to restrict the transfer of irremovable properties

· Assignment of titles and medals.

The GAD holds township meetings, and serves as a liaison between citizens and other government bodies. It issues licenses to businesses, regarding alcohol and property services. The GAD also administers the issuance of construction permits, operating licenses and is responsible for giving land grants, registration and oil and gas concessions’ leases.

The GAD is responsible for the administration of the land, excise, mineral and irrigation taxes. However, some of these taxes are collected on behalf of other ministries, such as the land tax.

(3) The Ministries

There are several sectorial ministries that are important for Myanmar’s private sector and the governance of certain sectors is shared between the State and Regional government and the Union. Those departments are mostly concerned with the licensing and taxation of business, and ensuring that the business complies with the terms of their license, such as limits on production.

The Department of Forestry for example has a shared responsibility between the Union and the State and Regional department. The department administers Myanmar’s forests, and the harvesting of timber. Some of the taxes it collects are as follows:

· Tax on hardwoods — collected on behalf of the Union government

· Tax on bamboo and softwood — collected for the State and Region government

· Tax on shops that sell furniture or wood

· Tax on elephants used.

Other ministries are in charge of licensing and directing the local economies.

Figure 3 — State and Region Tax Collection Points[13]

C. Legal Framework

1. Overview

The legal system in Myanmar is based on the British common law, with its roots in the Burma Code. Throughout the different governments, laws have been changed and amended, however, some still remain. There are 14 different types of taxes collected by the GoM and the fiscal laws at the Union level relevant for our discussion are the following:

· The Myanmar Stamp Act (1891)

· The Companies Act (1914)[14]

· The Special Company Act (1950)

· The Income Tax Law (1974)

· The State Owned Enterprise Law (1989)

· The Commercial Tax Law (1990)

· The Law Amending the Income Tax Law (2014)

· The Law Amending the Commercial Tax Law (2014)

· The Union Tax Law (2014)

· The Union Tax Law (2015)

· The Union Tax Law (2016)

· The Special Goods Tax Law (2016)

2. Union Taxes

a) Direct Taxes

(1) The Income Tax Law

First enacted through the Burma Code, the current Income Tax Law (1974) has been amended throughout the years to reflect the current need of the GoM. The Pyidaungsu Hluttaw, usually issues the amendments every April. The Income Tax Law comprises the personal income tax, the corporate income tax, and is affected by any foreign treaties that are in place.

The current Income Tax is governed by the Income Tax Law (1974), The Union Tax Law (2014), the Law Amending the Income Tax Law (2014), the Union Tax Law (2015) and the Union Tax Law (2016). It administers the income tax on individuals and entities.

(a) The Individual Income Tax

The Individual Income Tax Law states that a person is taxed on all its income according to his residency status[15]. The Income Tax Law states that resident nationals and resident foreigners are taxed on their total income described as “total amount of income, profits and gains wherever accruing or arising[16].” Similar to other income tax law around the world, individuals and entities can enjoy deductions to get to their taxable income.

Taxable income is described as:

· Employment income:

o Includes salary, wages, annuity, pension, benefits in kind, gratuity, and commissions,

· Non-employment income:

o Includes business income, income from self-employment, capital gains and other income from investments.

No tax is payable if the total income is only employment income and does not exceed MMK 4,800,000 in the fiscal year.

(i) Residency Rules

There are four different categories of residency status[17]:

· Resident Citizen: citizens of the Union of Myanmar, who resides more than 183 days a year,

· Non-Resident Citizen: citizens of the Union of Myanmar, who resides and earns income outside of Myanmar for any time in a year,

· Resident Foreigner:

o a foreigner, who resides in Myanmar for more than 183 days in a year,

o a foreigner who earns income from working at a company formed under the Myanmar Foreign Investment Law (“MFIL”)[18].

· Non-Resident Foreigner: any foreigners in the Union of Myanmar[19].

(ii) Tax Administration

The fiscal year for an individual is from April 1st to March 31st.Personal income tax returns must be filed within three months of the end of the fiscal year; however, if a person has only employment income and is subject to withholding taxes, there is no need for filing.

Tax returns for capital gains must be filed within one month of the sale or discontinuation of business.

(iii) Tax Rules

The following tables summarizes the tax rules governing income tax law for individuals:

Sr. No.

Taxable Income after deduction of prescribed relief

Income tax rate


























30,000,001 and above


Table 3–2016 Individual Income Tax Rate[20]

Residency Status

Income Tax Base

Tax Rates[21]

Resident Citizen

Worldwide Income

Progressive from 0% to 25%

Resident Foreigner

Worldwide Income

Progressive from 0% to 25%

Non-resident Foreigner

Myanmar-Source Income

Flat rate of 25% except for salary income progressive from 0% to 25%

Foreigner working for MFIL company

Myanmar Source Income

Progressive from 0% to 25%

Table 4–2016 Individual Income Tax Rate

(iv) Withholding Tax and Double Tax Agreements

The GoM requires a withholding tax on certain transactions. For individuals, the rates are dependent on the type of transaction and the residency status of the individual. The GOM seeks to collect taxes on a non-resident foreigner regardless on the Myanmar sourced income via the withholding tax, whether the individual has a permanent residence or not. Subject to the relevant tax treaty, a foreigner who is a tax resident of a treaty country may not be subject to Myanmar taxes if he does not have a permanent residence.

The ITL also provides that if the GoM enters an agreement with any state or international organization relating to income tax, the agreement will be followed notwithstanding anything to the contrary contained in any other provisions of the ITL[22].

The current treaties are with India, Indonesia, Malaysia, Singapore, Korea, Thailand, United Kingdom, Vietnam, Laos and Bangladesh.

There is currently no provision for unilateral relief.

Resident Citizen/Foreigner

Non-resident Foreigner










Payments made under contracts made within the country



Table 5–2016 Individual Withholding Tax Rate[23]

(b) The Corporate Income Tax

Starting April 1, 2016, the corporate income tax was simplified and is a flat 25% of the net taxable profits, regardless of residency status.

Taxable profits are described as total income after deduction of the allowances described in the income tax law, such as:

· In respect to business income, deductions are allowed for expenditures related to the production of income,

· Depreciation on qualifying assets for the use of the business[24],

· Non-deductible items are capital expenditures, personal expenditures, expenditures not related to business. Donations are also non-deductible expenses for tax assessment purposes.

Ordinary tax losses can be offset against income accruing from any sources in that year and can be carried forward for the next three consecutive years. Capital losses cannot be offset against any types of income or capital gains, and hence cannot be carried forward.

(i) Tax Administration

The fiscal year for companies is from April 1st to March 31st. Income tax return are due within three months of the fiscal year end and capital gains returns must be filed within one month of the disposition of the asset.

Taxes are paid to the IRD through advance payments in quarterly installments.

© The Capital Gains Income Tax

Capital gains refer to the gains from the sale, exchange or transfer of capital assets. Capital assets refer to land, building, vehicle, and intangibles, such as patents and goodwill.

The current rate of taxation for capital gains is 10% for all individuals and entities not in the oil and gas industry. Entities in the oil and gas industry are subject to a capital gains tax varying between 40% and 50%, depending on their income level[25].

Profits assessed

Income Tax Rate

Up to kyats 100 billion


Between kyats 100 billion to 150 billion


Kyats 150 billion and above


Table 6 — Oil and Gas Industry Capital Gains Rate

(d) Tax Audit Procedures

The Income Tax law states that if a tax return is found to be fraudulent with the intention to evade tax, the reassessment can be made at any time. The penalty is equal to 50% of the tax increase, and the taxpayer can be furthered prosecuted with punishable imprisonment between three to ten years. Once the final assessment has been made, the statute of limitation is three years, unless fraud was discovered[26]. The tax audit process exists, very few are actually being done, which results in low incentive for compliance.

While the ITL provides guidance for tax audits in the event of error or fraudulent tax returns, in practice the tax audits are extremely rare. The general guidance for taxpayers is to defer to the IRD and collaborate on the tax return preparation. The return does not get filed until the authorities agree that the return prepared is accurate and complete. Hence, there is little chance of under or over paying income taxes for a given period in theory.

The last tax audit occurred several years ago, where two distillery companies were subject to an audit and had to pay additional income taxes and penalties[27].

b) Indirect Taxes

(1) The Commercial Tax Law (1990) (a) Scope

The Commercial Tax Law is aimed to collect a use tax on certain transactions, such as supplies of goods and services that are produced or consumed in Myanmar, the importation of goods in Myanmar and the sale of a building developed in Myanmar. The commercial tax is not a value added tax, as it does not cover all types of goods or transactions.
 The current commercial tax is governed by the Commercial Tax Law (1990), the Union Tax Law (2014) and the Law Amending the Commercial Tax Law (2014). The Union Tax Law (2016) amends the Commercial Tax Law by creating a new schedule of goods, as described under the Special Goods Law[28], and goods that are exempt from Commercial Tax.[29]

(b) Stakeholders

Importers of goods and any person or entity that has some taxable proceeds of sale of goods, receipt from service or sale of a building after developing is subject to the commercial tax.

© Rates

Rates for the commercial tax range from 0% to 8% depending on the type of goods or service sold in Myanmar. The table in the endnote lists the exempt goods and services from Commercial Tax[30].

(d) The Special Goods Tax (2016)

The Special Goods Tax[31] (“SGT”) is a subsection of the Commercial Tax Law aimed at taxing goods that are produced in the country for import/export on top of the commercial tax. The SGT lists tobacco, alcohol, teak and hardwood, precious stones, jewelry, luxury cars, fuel and natural gas.

(e) Other Taxes

(i) Stamp Duty

Stamp duty is levied under the Myanmar Stamp Act[32] on various types of fiscal and legal instruments. These include instruments chargeable with duty, mortgages, insurance, bonds.

(ii) Custom Duty

Custom duty is levied under the Tariff Law[33]. It governs the duties to be paid for goods imported and exported to and from Myanmar. Companies registered under the MFIL can apply for relief.

c) Fiscal Incentives

In order to attract domestic and foreign investments, Myanmar has resorted to two common fiscal incentives: the Special Economic Zones (2014) and the Foreign Investment Law (2012).

(1) The Myanmar Special Economic Zone Law (“SEZ”) (2014)

The Myanmar Special Economic Zone[34] (“SEZ”) Law was enforced in 2014 in order to promote the economy of the state, entice local and foreign investments, high technology industries and create employment opportunities. The government body handling foreign investment in SEC is called the Central Body for the Myanmar Special Economic Zone.

There are currently three SEZs:


Kyauk Phyu: the GOM’s Parliament approved the Kyauk Phyu SEZ in December 2015. The Chinese’s conglomerate CITIC holds 85% of the SEZ and plans to develop a deep sea port and factories.


Thilawa: the first SEZ in Myanmar formed by a Myanmar-Japan consortium comprising Mitsubishi, Sumitomo, Marubeni and the Japan International Cooperation Agency (49%) and a public-private partnership comprising of the GOM (10%) and local enterprises (41%). It was established in October 2013. An expansion, the Thilawa SEZ Zone A was opened in September 2015 and 100 companies are expected to come and conduct business over the next 5 years.


Dawei: formed by a consortium formed by the Italian-Thai Development and Rojana Industrial Park with the GOM. It opened in August 2015.

(a) SEZ Objectives

The SEZ Act outlines the following objectives:

· To support the development of the economy through job creation for citizens and promoting the export of goods and increase foreign exchange earnings,

· To encourage and promote the balanced development of industrial, economic and social sector,

· To encourage foreign investments by building the appropriate infrastructures for developers and investors.

(b) Fiscal Incentives

(i) Developer Incentives

As a developer of an SEZ, the Act refers to the following incentives:

· Income tax exemptions for the first eight years from the commencement of operations,

· 50% relief on the income tax rate for the following five years,

· 50% relief on the income tax rate for the subsequent five years, if the profits have been reinvested in the business within one year,

· Exemption from custom duty and other taxes on raw material, machinery and some imported goods.

· Carry forward of losses for five years from the year the loss is sustained.

(ii) Investor Incentives

As an investor in an SEZ, the Act refers to the following incentives:

· Income tax exemptions for the first seven years? from the commencement of the commercial operations of the businesses in the special zone,

· 50% relief on the income tax rate for the following five years,

· 50% relief on the income tax rate for the subsequent five years, if the profits have been reinvested in the business within one year,

· Exemptions from custom duty and other taxes on goods and machinery required for construction for the first five years commencing from the start date of commercial operation, followed by a 50% relief from all custom duty and other taxes for an additional five years,

· Carry forward of economic losses for five years from the year the loss is sustained.

(2) The Myanmar Foreign Investment Law (2012) (a) Objectives

The first Myanmar Foreign Investment Law (“MFIL”) was initially passed in 1988 as the Myanmar government turned toward attracting foreign investment and reform the country. THE MFIL allowed foreign companies to form a joint venture with an SEE to conduct business in Myanmar. The current MFIL is from 2012. Unlike the SEZ laws which encompass a large number of industries, the MFIL restricts investments to only a small number of industries. The objective of the FIL is to create jobs, develop basic infrastructure and for Myanmar to be brought in line with international standards.

(b) The Myanmar Investment Commission

As a result of passing the MFIL,the Myanmar Investment Commission (“MIC”) was created in order to facilitate the issuance of permits for companies created under the FIL. The MIC’s duty is to accept proposals that would be in line with the Union’s interests. In 2016, the GoM just released specific procedures for Environmental Impact Assessment and Social Impact Assessment in order for investors to comply to Myanmar’s evolving environmental laws[35].

© Restrictions

The MFIL restrictions refer to the preservation of the cultural heritage of ethnic nationalities, anything related to public health, natural resources, the environment, and the use of hazardous chemicals.

(d) Fiscal Incentives

· Five years of tax exemptions from the year of the start of production, and if beneficial for the state depending on the investment activities[36], additional tax exemptions may be given.

· Exemption or relief from income tax if the profits are reinvested within one year

· Foreigners working are taxed at the same rate as a Myanmar citizen

· Exemption from custom duties

While the fiscal incentives generally attract investments both foreign and domestic worldwide, there are also other factors that contribute to the FDI flows, mainly the ease of the business environment. As shown in this graph, while the incentives have contributed to an increase in the FDI, the real surge only happened once the GOM was willing to open and grow its economy.

3. The State Owned Economic Enterprises

a) History

From 1962 to 1988, at the time when the country was formally known as Burma institutionalised the “Burmese Way to Socialism”, which consisted of a central economy combined with protectionism?. A wave of nationalization and creation of SEEs started as the military took power. Enterprises that were nationalized ranged from small-scale industries and by 1974, 94 percent of 409 industrial enterprises employing 100 or more workers were state-owned[37]. The performance of the SEE was disappointing and contributed to an economic decline. In order to reverse this, the SLORC’s economic objective was to abandon the Burmese Way to Socialism and build a market economy similar to its neighbours. The SLORC promulgated the MFIL shortly after taking power in 1988 and began to welcome foreign investment and foreign aid, and also undertook a series of austerity measure funds to healthcare and education.

In 1988, the military junta decided to transition to a market-oriented economy. They abandoned the Burmese Way to Socialism and moved towards the State Law and Order Restoration Council (“SLORC”). The SLORC issued the FIL and welcomed foreign aid. In March 1989, the government institutionalized a government monopoly on twelve different sectors[38].

State-Owned Economic Enterprises Law (SLORC Law №9/89), Section 3.

The SEE allowed the GOM to be the only one to carry activities as State-Owned Enterprises in the following activities:

a) Extraction and sale of teak,

b) Cultivation and conservation of forest plantation,

c) Exploration, extraction and sale of petroleum and natural gas products,

d) Exploration and extraction of pearl, jade and other precious stones,

e) Breeding and production of fish and prawn,

f) Postal and telecommunication services,

g) Air transport service and railway transport service,

h) Banking service and insurance service,

i) Broadcasting service and television service,

j) Exploration and extraction of metals and export of the same,

k) Electricity generating services,

l) Manufacture of products relating to the security and defense of the Union

The SEEs financial accounts were merged into the State Fund Account (“SFA”) and the SEEs were prohibited from borrowing from the state-owned banks. This meant that if the SEEs had a deficit, the SFA would automatically finance it, and be part of the central government deficits, which were financed by the central bank.The SEEs had to also surrender all profits to the SFA and hence the SEEs were an integral part of the Union’s budget, and were part of the Union’s budget constraints[39]. There was also a distortion in the exchange rate, and the overvalued official rate resulted in the true value of the income from SEEs not appearing in the government accounts. The inefficiencies of the SEEs were one of the reasons of the fiscal deficit, which resulted in macroeconomic instability.

In April 2012, the government replaced the exchange rate with a rate that reflected the informal market’s rate. This resulted in higher revenues from the SEEs. The GoM has been pushing for an independent management of SEE, including financial independence by stopping the practice of providing financial support to cover the SEE losses. Instead, the GoM acts as a lender and makes a loan to the non-profitable SEE, act that was prohibited during the SLORC era. The GoM has been pushing for privatization of the SEEs[40], however, separating the SEEs from the Union budget is only part of the solution. In February 2011, there was a quick sale of state assets, right before the change of government, leaving some concerns that there might be a number of transfers of assets to business men aligned with the military junta. The extractive industry SEEs have a large influence over public revenues and expenditures, and have contributed to about 20 percent of the Union budget for the 2015/16 fiscal year, and about 15 percent of the total government expenditures. Recent development since 2012 by the GoM are working toward a neoliberal approach of privatization of SEEs, stating goals of economic efficiency, transparency and accountability.

(1) The State-Owned Economic Enterprises Law (1989)

The State-Owned Economic Enterprises Law (SEEL)[41] was enacted in order to identify “economic enterprises to be carried out solely by the government”. The SEEL refers to a state enterprise as a “corporate body having perpetual succession” much like a corporate entity[42].SEEs have held a monopoly on above listed 12 sectors of the economy however most are public private partnerships, formed jointly with foreign investors.

(2) Fiscal Obligations of the SEEs

Prior to 2012/13, the SEEs were required to transfer 100% of their profits into the SFA as described above. Currently, the SEE obligations are 45 percent of net profit (25 percent income tax plus 20 percent of state contribution). Any profit remaining after the SEE pays its fiscal obligations is transferred to the SOE’s Other Accounts, for the company’s “own funds for the purpose of accumulation”. Revenue held in the Other Accounts does reach other government bodies. While this change in legislation has contributed to an increase in the fiscal transfers from SEEs, there is still little known about how much SEEs have accumulated in their Other Accounts. According to the Budget Department at the Ministry of Finance though, Other Accounts are meant to be used by the SEEs for the payment of commercial tax, corporate income tax, state contribution and raw material costs only[43].

Myanma Oil and Gas Exploration (“MOGE”) receives a large proportion of its revenues from natural resources in Myanmar as it has a monopoly and controls the license of oil and gas production. Below is a flowchart describing the fiscal flows related to an SEE in the oil and gas industry.

Example of an SEE Revenue Flow[44]

(a) Military Holding Companies

There are 2 military holding companies formed under the Special Companies Act[45], Union of Myanmar Economic Holdings Limited (UMEHL) and the Myanmar Economic Corporation (MEC). They are also governed by the SEEL. The two holding companies hold a wide range of companies under their name. UMEHL was established in 1990 and is a branch of the Myanmar military. It currently holds stakes in almost all sectors of Myanmar’s economy. It is owned by two military departments: the Directorate of Defense Procurement and the Defense Personnel. It is exempt from commercial and profit taxes. The Office of the Auditor General does not have the power to request audits.

MEC was set up in 1997 and is operated under the Ministry of Defense’s Directorate of Defense Procurement. It is owned by active-duty military personnel. The OAG can audit MEC’s accounts.

Prior to 2011, UMEHL and MEC enjoyed tax holidays, relieving them from paying corporate taxes and custom tariffs. As the military lost power and the government seeked an economic growth approach, UMEHL and MEC lost their tax exemption. Recently, UMEHL has privatized, while the military will still remain the principal shareholder, the holding company is showing signs of corporate governance, as it has recently join increased tax payments to the government.

4. State and Regional Taxation

While the state and local revenues account for less than 10% of the total Union’s GDP, the taxes collected by them are the ones people are exposed to the most, such as street lighting or garbage fees. Prior to 2011, the fiscal system was highly centralized, however, there have been changes at the state and local level. Taxation systems are complex and combined with the weak administration. This in turn impacted the lives of the people as the government had low levels of revenue for public service spending. There has been related instances corruption in some areas where citizens have been requested to pay high amounts of tax for limited services in return. Since then, the new government has gone through extensive reforms, in which more accountability and transparency has been the principal motto. One of the objectives has been to move from a centralized form of economy to a decentralized one, which in turn would give more autonomy to the state and local governments.

a) Structure of Local Revenues

The fiscal governance at the State and Region level needs to be reformed from a “license to operate fee” to a system that reflects the true cost of the service used. Currently direct taxes, such as land and building tax contributes to a small percentage of local revenues, licenses and permits fees are more significant.[46]. Fees are currently rarely proportional to the revenues collected from the license. Taxes, such as the property and land tax, are very low in Myanmar, creating shortcomings in the revenues collected.


Land and Property Tax

Land and property taxes are a sensitive political issue[47] and are kept at an extremely low rate compared to other countries. Many people are against increasing the land tax rate, as this would impact many of the farmers. Currently the rate of the land tax is so low, that it is in question as the cost associated to the revenue raising efforts are higher than the revenue.

The property tax in Myanmar refers to any taxes related to properties: building, garbage water supply, and street lighting tax. The property taxes represent a small portion of the State and Region revenue. Currently the property taxes are assessed in Yangon based on a percentage of the annual value of the gross annual rent and is broken down as follows:


Tax Rate

General Tax

20% of Annual Value

Lighting Tax

5% of Annual Value

Water Tax

12% of Annual Value

Conservancy Tax

15% of Annual Value

(2) Indirect Taxes — the Auction licenses

The auction license system is quite common across Myanmar and creates monopolies in certain industries. In some businesses, the license not only allows the licensee to operate, but to have control over a certain area. However, the cost of these licenses are only accessible to a certain minority, which in turn passes the cost to the consumer, creating an indirect tax. An example is the auction licensing of slaughterhouses: as the license holder passes the cost to its consumer.

(3) Arbitrary Tax

This refers to the hidden “taxes” that people in rural areas are forced to pay to the government or army, but there is no public benefit attached to it. These hidden taxes, mostly are aimed at the poor, and can be found in the form of taxes at checkpoints, fees, land confiscations, and even forced labor. This impacts people’s livelihood and their human rights and the government needs to reform the tax system to prevent this kind of abuse. The GOM needs to re-legitimize the fiscal system, especially at the local level.

II. Myanmar’s Fiscal Environment Challenges

Alphabet, now Google’s parent company has for motto “Do the right thing” and they certainly did in the past with their creative tax structure. “I am very proud of the structure we set up…It’s called Capitalism.[48]

Google used what was called the Double Irish Double Dutch Sandwich. Along with the Panama Papers, the Singapore Sling, the Bermuda Black Hole: these are not the latest blockbusters, but just some of the names of popular tax avoidance schemes perpetrated by multinational companies. Technology giants are funneling their profits to corporate tax friendly countries and amass massive bounties in the Caribbean, with no intention of repatriating its loot anytime soon[49]. In fact, there is no incentive for multinational companies to do that at this point, and some have described tax treaties Permanent Reinvestment Scheme as crack cocaine for earnings and profits[50], allowing executives to meet Wall Street’s investors’ expectations. Following the Great Recession, there was a public outcry to demand the corporate sector to be responsible and pay their fair share.

Efforts from governments and the international community are being undertaken in order to curb the abuse of tax avoidance, however, tax firms are actively looking for new way to optimize their clients’ tax liability. The public calls especially for more corporate transparency. Slowly through the public’s education, people are becoming aware of the impact of unfair taxation. The impact is even more important in developing countries which have even less fiscal real estate, and usually results in basic social services being cut, such as health and education.

In Myanmar, years of neglect have left its fiscal environment in a dire state and while some of the international scandals also affect Myanmar[51], the majority of the issues in Myanmar’s fiscal environment stem from its outdated policies, weak administration and low accountability. For decades, the GoM has given carte blanche to its SEEs, and created not only created a soft budget constraint, that exacerbated the already hard budget constraint, due to extremely low tax rate.

Since 2011, recognizing the inefficiency of the political, fiscal and social system, the GoM has gone through numerous reform measures in order to promote a stable, growing environment. The GoM published their intentions in the Framework for Economic and Social Reforms (“FESR”), outlining the intended objectives for the short term and a plan for the long term has also been drawn up[52]. The GoM intends to relinquish its isolationist past and create an inclusive political and economic environment to be a part of the global scene. It also intends to reemphasize the need to foster the growth of its human capital through health, education and social services.

The following section presents the issues surrounding Myanmar’s fiscal environment.

A. Economic and Social Indicators

1. Macroeconomic Indicators

a) Revenues

Following five decades of economic and political isolation, Myanmar is emerging as a promising player in the global economy and be potentially the next Asian Tiger[53]. Myanmar’s revenues were lagging compared to other countries in ASEAN until the GoM changed fiscal policy direction in FY 2011/12. The GoM adopted the FESR and the business sector started opening up. As economic sanctions were lifted, foreign investments started to flow in (Tun, 2015), however, decades of fiscal mismanagement still have an impact on the fiscal environment as shown when comparing macroeconomic indicators with other peer countries.

However, tax revenues in Myanmar, while on the rise, are still lagging behind ASEAN peer countries. The tax revenues rose from a low of 3.3% for FY 2010/11 to an estimated 8.2% for FY 2014/15. his reflects the efforts of the GOM as outlined in the FESR guidelines to raise revenue efforts and potential. In the FESR, the Ministry of Finance and Revenue set a target of achieving a 10% tax to GDP ratio, as well as shifting away from the reliance of resource revenues. The GOM is also recognizing the need to broaden the tax base. It also shows the SEE fiscal reforms, both privatization and income tax requirement. In FY 2015/15, the tax revenues are largely driven by income tax.

Figure 2 — Tax Revenues Comparison in ASEAN (% of GDP)
 Source: Various IMF Article IV reports

Tax revenues include income tax, commercial tax and other local taxes. The tax consensus promulgated by the IMF, the World Bank, and other international organizations prescribes an increase in tax revenue raising efforts in order to satisfy Myanmar’s budget needs. The tax revenues are estimated to keep rising as the administration is modernizing and compliance is on the rise through infrastructure like the Large Taxpayer Office and the introduction of the Taxpayer Individual Number in 2014.

Other revenues refer to licenses, fees, custom duties, grants and other one-time revenues derived from the issuance of large contract, such as the telecommunication licenses, or oil and gas exploration and production licenses bonuses. The graph shows how the Myanmar is largely dependent on other revenues, rather than tax revenues to keep its budget relatively moderate. Compared to its peers in ASEAN, Myanmar derives most of its revenues from the issuance of licenses in its extractive industry.

Figure 3 — Other Revenues in ASEAN (% of GDP)
Source: Various IMF Article IV Reports

While its tax revenues are low, the overall total revenue of the GOM is in line with its peer countries, and its budget deficit is relatively moderate compared to ASEAN and international standards. For FY 2014/15, Myanmar’s budget deficit stands at 6% of GDP.

Figure 4 — Budget Deficit in ASEAN (% of GDP)
Source: 2015 Myanmar IMF Article IV Report

However, while keeping a budget deficit moderately low is a great thing in other circumstances, in Myanmar, it just means that because of the low level of revenue mobilization, the expenses are also low.

b) Expenses

Because of the low revenue raising capabilities, the GOM’s expenditure levels are also among the lowest of ASEAN, especially in the health, education and infrastructure sector. However, in order to maintain the third largest military in ASEAN after South Korea and Vietnam (Institute for Strategic Studies, 2014), the GOM spends has the largest percentage of military spending to GDP in ASEAN.

Figure 5 — Government Expenditures (% of GDP)
Source — Various IMF Article IV Reports

The FESR outlines the GOM’s plan for health and education spending and account for an increase proportion in the government spending, as the military spending will decline. While the expenditures have increased on both education and health, they also have increased in defense, while the agriculture stayed constant.

Figure 6 — Comparison of Selected 2011 Expenditures in ASEAN (% of GDP)
Source: Various IMF Article IV Reports

2. Union Economic and Social Indicators

As noted in the discussion in the previous section, Myanmar’s revenue has seen an increase in its revenue due to the efforts of the GOM to collect income taxes. As shown, the tax revenues are being led by income tax. This is due to the privatization of the SEEs, as well as changes in the fiscal administration, such as the introduction of the Large Taxpayer Office and the Taxpayer Individual Number, both contributing to additional compliance through self-assessment. International organizations such as the IMF and the World Bank are currently giving technical assistance in order to overhaul the tax administration and are suggesting other reform to boost income tax revenues, such as the introduction of a Value Added Tax (“VAT”) and other consumption related taxes.

Figure 7 — Tax Revenue Composition
 Source : 2015 Myanmar IMF Article IV Consultation

Figure 8 — Customs Revenue
 Source: 2015 Myanmar IMF Article IV Report

Figure 9 — Revenue Composition Trend (% of GDP)
 Source: Myanmar Economic Report, World Bank, May 2016

According to the World Bank, Myanmar’s fiscal environment is not resource dependent, however, the revenues derived from the extractive industry are significant enough to have an impact on the economy. The World Bank estimates Myanmar’s revenues from the oil and gas industry to be around 1.1% of GDP. Due to the oil and gas price and exchange rate volatility, there could be significant impact on the budget. 
 As the country is opening up its economy, it also received one-time payments, such as telecommunication licenses or oil and gas licenses.

Following the FESR guidelines, the GOM is increasing its social budget, and is investing in health and education. It is worth noting that the defense expenses are still more than the health and education budget combined. For FY 2015/16, the planned budget for defense went up by 14.7 percent, health by 11.2 percent, and education by 5.1 percent. According to the World Bank, this was allowed by cutbacks from public services, recreations, culture and religion and social protection. The reallocation of this budget has allowed for better spending on school stipends and healthcare package.

Figure 10 — Health, Education and Defense Spending as % of GDP
 Source: 2015 Myanmar IMF Article IV Report

a) Healthcare

As shown above in the graph, health expenditure in Myanmar was between 2% and 2.4% of its GDP between 2001 and 2011, the lowest in ASEAN according to the WHO. Inadequate expenditure by the government resulted in financing for health care in out of pocket payments and it became the major source of health care financing. Until the mid 1990s, the health care system was primarily financed by government taxation; however, a reform during the mid 90s resulted in increased responsibility of household for their own healthcare through out of pocket payments. Since 2009, the OOP share of total expenditures is still significantly high at over 75%.

Figure 11 — Health Spending by Financing Agent (% of Total Health Expenditure)
 Source: The Republic of the Union of Myanmar Health System Review, Asia Pacific Observatory on Health Systems and Policies, 2014

b) Education

During colonial times, Burma developed its educational standards and had one of the highest literacy rates in Asia in the late 1940s and 1950s (Fink, 2001). Due to its high amount of natural resources, it was expected to be one of the fastest developing country in the region. However, due to the change in regime, the current state of the education system is in abysmal condition.

As shown on the above graph, the government spending on education is very low and in turn is creating an additional cost to families to send their children to school. Although this creates a barrier to education, the amount spent by families compared to peer countries is comparable as a share of total expenditures by households[54].

After decades of a fiscal system failing to raise enough revenues to fund basic social needs, what was once a well-functioning system is now in need of a reform. The capacity to provide adequate education, special needs and vocational training is weak. The drop-out rate is very high. The quality of teaching and infrastructure and resources is lagging behind its peers. It is estimated that just over half of Myanmar’s children complete primary school. Rural, poor, ethnic minorities, girls and children with special needs are the most affected. Even though education is supposed to be free, the additional costs associated with school, such as uniforms and books, make it impossible for many families to send their children.

B. Current Fiscal Issues in Myanmar

Myanmar is considered one of the most resource rich countries in Asia. Once known as the “rice bowl” of Asia, one of the country’s major revenue source comes from its exports from the extractive industry. According to the first EITI report, the mineral sector contributed to 7 percent of the GOM’s fiscal revenues and the oil and gas industry amounted to more than 40 percent of the fiscal revenue in 2013/14, excluding the payments of SEEs.

While Myanmar is blessed with a large range of natural resources, it has been cursed with the same paradox that curses resource rich developing countries. Instead of having their economy boosted by the large amount of exports, they are left with more corruption, and profiting to only a select few widening gap between the rich and the poor. The lack of revenue sharing between extraction sites and the governing bodies leave local population to have to bear the cost of extraction, including environmental damage, pollution. Another curse of resource rich countries is the Dutch Disease, as the foreign investment and currency flows in, this increases the value of the local currency, which in turn is detrimental to its export sector as it is decreasing the country’s competitiveness. 
 While the GOM has some plans to maintain fiscal responsibility and increase the accountability and transparency of the extractive industry, it currently has no roadmap for sharing revenues and reducing inequalities in the regions where the resources are being extracted.

The following section presents the issues associated with the extractive industry and other issues related to the fiscal environment.

1. At the Union Level

a) The Extractive Industry

(1) Oil & Gas (a) The Industry

Myanmar’s oil and gas industry started during colonial times in 1853. Natural gas export represents 35% of total exports revenues and 5% of GDP in 2014[55]. It is dominated by the SEEs, primarily MOGE, which has the exclusive right to issue production sharing contracts (“PSC”) and collects tax and non-tax revenues. Under a PSC, the government still owns the oil or gas block and allows companies to pursue production activities.

The government’s revenue structure from an oil and gas PSC are as follows:


Estimated Amount


10% of Available gas/petroleum

Government Share of Profit from Gas/Petroleum

Between 40% and 90% depending on factors, such as rate of production, depth of offshore discovery, and price calculations

Government Participation

Between 15% and 25% stake in the consortium

Signature Bonus

Negotiable, between 2 million and 15 million USD

Production Bonus

Starting at 1 million USD and incrementally increase to 10 million USD based on daily rate of production


30% on Profit Gas/Petroleum after the tax holiday period


50,000 USD per year for training and technology during exploration; 100,000 USD per year for training during development/production; Research and Development Fund in the amount of 0.5% of the Consortium’s share of Profit Gas/Petroleum.

Source: Arakan Oil Watch, Burma’s Resource Curse, 2012

According to the Arakan Oil Watch organization, the estimated profit, which all go to the government, for just the Shwe Gas Project and the M9 block add up to more than $24 billion USD for the life of the project.

Myanmar has been ranked having one of the lowest natural resource governance among fifty-eight natural resource rich countries. The central government has kept secret how it earns and what it does with the revenues from its extractive industry. The first EITI revealed that there is a discrepancy of USD$412 million between the value of the gas exports reported by the Customs Department and the Central Statistical Organization (Arakan Oil Watch, 2016).

The majority of resources such as jade, timber, oil and gas are in ethnic states of Burma and are directly exported to other countries. Not only are the revenues not reflective of the actual production, they are also not shared back with the owner state. The state does not receive any compensation for environmental destruction and human rights abuses that accompany the extraction of resources[56].

Because of the central government collection of revenues, the distribution of revenues to the State and Regions is not reflective of the state needs. While the extractive industry revenue mostly originates from ethnic states, the transfers to the sub-national governments are favoring conflict states, such as Kachin, Kayah and Tanintharyi[57].

(b) The SEEs and the Other Accounts

The SEEs play a large role in Myanmar’s economic environment. In fact, in FY 2012/13, the SEEs revenues accounted for 28.5 percent of the overall revenue and 15 percent of the overall expenses. However, as noted in the legislature section, the current fiscal obligation of the SEEs to the Union is only 45 percent of its revenues. SEEs are allowed to retain 55 percent of their net profit and transfer it to its own account for its own use, called “Other Accounts”. The exact functions of the Other Accounts are unclear, and while these accounts are meant to be for capital expenditures and other expenses needed for the functioning of the SEE, there is little known of how much is actually accumulated in these accounts and how the money is being used. According to a study by Adam Smith International, the Ministry of Energy and SEEs have accounts in the Myanmar Economic Bank, which are not in the fiscal report, and other accounts in Singapore. It is not clear what these accounts are used for, and to what extent oil and gas revenues flow through these accounts. For FY 2011/12, it is estimated that the Other Accounts amounted to 54 trillion kyat (Adam Smith International, 2015).

Source: EITI

Myanma Oil and Gas Enterprise (“MOGE”) is one of the biggest SEEs. For FY 2012/13, it accounted for 16 percent of the overall revenues and 10 percent of the overall expenditures. In the first EITI, it was reported that MOGE transferred $1.6 billion to its Other Accounts for FY 2012/13. For comparison purposes, in FY 2012/13, the GOM spent $750 million on health and $1.1 billion on education.

In Myanmar, there appears to be no clarity as to what the SEEs’ role is. The SEEs do not seem to have a participating activity in the commercial activity and appear to have more of licensing function. For example, MOGE operates with foreign partners through production sharing contracts (“PSC”). It usually has an equity share of 15 to 25 percent of the venture, and receives profits of 60 to 90 percent, once costs have been recouped. MOGE is a non-operating partner, and is looking to have an operational role in the near future.

International experience shows that endowing SEE with any other activity other than commercial creates a conflict of interest and should be avoided. Hence, there needs to be clear regulations and legislation, defining the role of the SEEs. In the case of MOGE, it holds the exclusive right to award the concessions to whoever it chooses to, monitors the performance of the contract, and enforces the law. There are no commercial incentives for MOGE at this time, as it is guaranteed a share in every oil project.

Since there is no commercial role of a SEE in Myanmar, there should not be much revenue retention. Revenue retention is essential for the independent operation of an SEE, however, the current state of operation in Myanmar needs to be changed first. Beginning in 2012, the GOM reformed the SEEs’ operations, however, policies need more guidance on how the SEEs are using their Other Accounts funds. At the moment, the law seems to allow a profitable SEE to accumulate revenues in the Other Account, without having to invest back into its operations. The GOM needs to promulgate laws that would dictate how the SEEs need to invest in themselves in order to stand on their own feet[58].

The SEEs have undergone a round of privatization and most recently, MEHL has applied to become a public company. Last year, MEHL was one of the top five commercial and income tax contributors.

(2) The Mining Industry

The mining sector in Myanmar is riddled with issues at the fiscal level, but also at the social level. Similar to the oil and gas industry, the mining industry is dominated by the SEEs, with whom investors, foreign or domestic, must partner with in order to make business. There are a few alternatives to take advantage of the system:

· Tax evasion — taxed at the mine site: low value stones are switched for high value stone at official valuation.

· Tax evasion — at the official site: cutting a window into a lower quality part of a stone to hide the true value of his stone.

· Smuggling: businessmen estimate that 50% to 80% of jade goes directly to China

· Money Laundering: in some cases, the vendors will buy back their own stone for a much higher price

While the EITI has pushed companies to disclose their data, many are still not disclosing their information. A report by Global Witness estimates the total jade export to China at $31 billion, which would equal to 48% of Myanmar’s GDP. The estimated tax losses in 2014 amount to $6.165 billion[59].

There are clear defined rules for the mining of jade, however, while some is reportedly correctly reported, most of the revenue that is lost is through tax evasion. The jade mining is comprised of bribe, corruption.

b) The Tax Code & Administration

(1) Narrow Base, Low Compliance, Low Collection

A country’s tax base represents the potential tax revenues a Country Could get. The broader it is the more revenue it potentially could get. However, Myanmar’s current tax code is still based on the outdated Burma Code, which is not relevant to the needs of a global economy and the current fiscal needs of the government.

Myanmar’s tax base is quite narrow. While the government is expanding its commercial tax each year, making it resemble more of a VAT tax, the commercial tax does not cover all items across the board, and there are many exemptions from commercial tax. The property and land tax are almost inexistent as discussed in the previous section.

The tax revenues are furthered hindered by the number of tax incentives that are currently in place. Corporations make up for the majority of revenue, however, the corporate sector is currently enjoying a large amount of tax incentives, narrowing the tax base.

Another factor affecting the current fiscal revenues is the lack of administrative power. While the current tax code has provisions for audits, there are very few audits taking place at the moment as the taxpayers are working with the IRD in order to ensure compliance. The IRD’s current role as an auditor is hence completely nulled and this creates a high risk of conflict of interest.

The current Commercial Tax was recently amended in order to add more exemptions from it — however, taxes more harmful products. There are talks moving towards the implementation of a VAT tax by 2020/21, however, while this would broaden the tax base, this would also render the fiscal system more regressive.

On top of this, because of a lack of transparency, there is a low tax culture. As people are not seeing the benefits of their tax payments, and sometimes as they are forced to pay bribes that are called taxes, they tend to be more averse to paying taxes.

(2) The SEZ, the FIL eroding the base

In order to attract investments, foreign and domestic, the GOM issued many fiscal incentives that are eroding the tax base even more. The current SEZ and FIL provides tax holidays that are easily manipulated and taken advantage of for new companies, for example in the hotel and tourism industry, where the company would simply reconstitute in order to renew their eligibility for the tax holiday (House of Commons, International Development Committee, 2012).

The SEZ and the FIL also provides provisions for accelerated depreciation and loss carryforwards, furthering the losses in potential tax revenues.

c) Illegal flows

Isolationist policies of the military junta promoted illicit inflows of capital. A popular way of outward transfer was the under invoicing of goods subject to export sanction by western countries[60]. Illicit flows, from the sale or financing of illegal activities, are small compared to the capital flight. Over the period of 1960 to 2013, the total illicit inflow totaled $77.7 billion USD, the inward capital flow amounted to $82.8 billion USD, while the illicit outflows totaled $18.7 billion USD, and the outward capital flight was $35.9 billion USD.

The unrecorded capital flow averaged 15 percent per year of GDP, mainly done through under-invoicing. 
 It is estimated that Myanmar lost between $2.9 billion and $3.6 billions of potential tax revenues through import under reporting and export over reporting. These had a direct impact on understating the net profit, and hence resulting in an underpayment of corporate tax. This tax loss ranged from 122–172 percent of total health expenditures and from 48–72 percent of total education expenditures incurred during 1960 to 2013.

d) Abuse of Tax Treaties

Tax treaties serve a legitimate purpose: granting a range of tax advantages that prevents double taxation and eliminate the barrier that double taxation would create by cross-border trade, investment and movements of person. Tax treaties usually grant exemption in one or the other country, or reduced withholding taxes on dividends, interests or royalties and a foreign tax credit that would eliminate the double taxation.

The Commentary on Article 1 of the UN Model Convention identifies six common ways of improperly using tax treaties:

· Treaty Shopping and the Use of Conduit Companies

o Refers to a taxpayer resident of Country A doing business in Country B and seeking to derive his income from Country C, which has a preferential tax treaty with both Country A and Country B. This tax scheme relies on the possibility to repatriate income without any taxes paid in Country C.

· Income Shifting

o Refers to the use of a base company, usually in a low tax jurisdiction, which holds the property that the company accrues the income from.

· The International Hiring-Out of Labor

o An employee who is resident of Country A and goes to work for Country B for less than 183 days will only be taxable in Country B if he is a resident of Country B.

· Circumventing Treaty Threshold Requirements

o Refers to creating artificial arrangements, such as a higher ownership rate, to take advantage of a treaty’s requirement

· Changing the Character of Income

o Refers to changing the classification of income or expenses. For example, if the withholding tax is higher on dividends than interests, the tax planner would structure the arrangement between the parent and subsidiary company to be a payment of interest, instead of a distribution of profit.

· Tax Sparing Abuses

2. At the State and Region level

a) Economic Impact

The 2008 Constitution states that some fiscal responsibilities should be delegated to the State and Region governments, potentially increasing the efficiency of the governments. The DAO, the GAD, the IRD and the relevant ministries share the economic governance of the State and Regions. The State and Region administration is mostly self-funded and is caught in an unending cycle, needing reform.

The DAO and GAD are an essential part in the decentralization of the GOM. However, the agencies face operational and policy challenges. In fact, because of the low tax culture in general in Myanmar, the public is not yet fully cooperative with the agencies’ efforts. And since the DAO and GAD are the agencies who are in charge of most of the municipal services, these tend to lack in substance as the agency lacks funding.

The local tax policy and administration is poorly developed and the states and regions have little incentive to enhance the revenue base. Similar to the SEE’s situation prior to 2012, the state and regions receive budget deficit funding for supplementary budget to cover their shortfall in revenue collections.

b) Human Rights Impact

While the previous government signed the Universal Declaration of Human Rights, the SPDC’s fiscal policy deprived people of their minimum level of income and worsen people’s access to human rights. This was done through corruption, arbitrarily depriving people of their property, and forced labor[61].

Burma’s government officials repeatedly abused their power, forcing people to pay a higher tax, or bribes to access basic services. There were also reports of a taxation system through land confiscation without compensation, in the name of the Tatmadaw. Land was also confiscated for development projects, such as the Shwe gas project, hydro power damn projects and highways. Forced labor on plantations or big infrastructures projects for the Army were common as well. Child soldiers were also a practice.

The Burmese standard of living were not only affected by the arbitrary collection of taxes, but also the minimal access to the poor health and education services that were provided by the SPDC. The impact of the corrupt taxation system contributed to an overall lowering of economic growth, decrease of standard of living and violated the people’s right to basic services.

Since then, standards have been put in place in order to lower corruption and raise the standards of living of Burmese. However, as described by reports of the Karen Human Rights Group, reports of arbitrary taxation by the armies are still happening.

[1] Ministry of Finance, Internal Revenue Department website, The Objectives of Taxation, http://www.mof.gov.mm/en/content/internal-revenue-department

[2] International Monetary Fund, Revenue Mobilization in Developing Countries, 2011.

[3] International Monetary Fund, 2015 Article IV, Staff Report, September 2015.

[4] The Burma Code (1953) — contains the Burma Income-Tax Act(1953), which is based on the India Act XI, 1922. The Burma Income Tax Act outlines the definitions and the administrative procedures of collecting and appeals for tax debts. It also outlines how taxable income is computed, and the procedures for income tax returns.

[5] Vicary, Alison et al., Network for Human Rights Documentation — Burma, 2010, The Hidden Impact of Burma’s Arbitrary & Corrupt Taxation.

[6] Id. 5

[7] International Monetary Fund, 2015 Article IV Consultation Staff Report, 2015.

[8] Id. 8.

[9] Dickeson-Jones, Giles et al., State and Region Public Finances in Myanmar, September 2015.

[10] The Union of Myanmar, 2008 Constitution, Section 74

[11] Constitution of the Republic of the Union of Myanmar, 2008, Section 254(a)&Section 254(b)

[12] Bissinger, Jared, Local Economic Governance in Myanmar, 2016.

[13] Dickenson-Jones, Giles et al., State and Region Public Finances in Myanmar, September 2015.

[14] A new version of the Companies Act is being written at this time.

[15] The Burma Code, 1953, The Burma Income Tax — Chapter I, Section 4 (I). “The total income of any previous year of any person includes all income, profits and gains from whatever source derived”

[16] The Burma Code, 1953, The Burma Income Tax — Section 15.

[17] The Burma Code, 1953, The Burma Income-Tax, Chapter 1, Section 4A(a)

[18] PriceWaterHouse Cooper, Doing Business in Myanmar, May 2016 — Foreigners working for a company set up under the MFIL are treated as resident foreigner regardless of the amount of time they spend in Myanmar.

[19] The 2014 Union Tax Law, 2014, Chapter I, Section 3

[20] The 2016 Union Tax Law, 2016, Chapter 7, Section 19(a)

[21] Refer to Table 3 for rate tier

[22] The Income Tax Law, 1974, Section 31.

[23] 2016 Union Tax Law

[24]Myanmar Tax Law as of April 1, 2016 states the depreciation rates of fixed assets as follows:

· Buildings: 1.25%-10%

· Furniture and fittings: 5–10%

· Machinery and plants: 5–10%

· Vehicles: 5–20%

· Other fixed assets: 5%

[25] The Union Tax Law (2016), Chapter 6, Section 27(b).

[26] The Burma Code, 1953, the Burma Income Tax, Chapter 4, Section 28.

[27] Visate, Anthony, Insight Into Tax Audit Activities in Myanmar, 2015

[28] The Union Tax Law (2016), Chapter 5 Section 11(a).

[29] The Union Tax Law (2016), Chapter 5, Section 11(b).

[30] See Annex 1.

[31] Id.

[32] The Burma Stamp Act, 1891.

[33] The Tariff Law, SLORC 2/92, 1992

[34] Myanmar Special Economic Zone Law, 2014.

[35] Environmental Regulation, Directorate of Investments and Companies Administration’s website, http://www.dica.gov.mm/en/environmental-regulation, accessed July 21, 2016.

[36] The Foreign Investment Law, Chapter XII, Section 27(a), 2012.

[37] Rieffel, Lex, Policy Options for Improving the Performance of the State Economic Enterprise Sector in Myanmar, 2015.

[39] Cook, Paul, Privatization and Private Sector Development in a Transitional Economy: The Case of Myanmar, 1995.

[40] See Annex 2 for a list of State Owned Enterprises.

[41] State-Owned Economic Enterprises Law (SLORC Law №9/89)

[42] State-Owned Economic Enterprises Law (SLORC Law №9/89), Section 8

[43] Myanmar Extractive Industries Transparency Initiative, EITI Report for the Period April 2013-March 2014 oil, gas and mining sector, December 2015.

[44] Id.

[45] Special Companies Act, 1990

[46] Taxes and fees, while synonymous, do not refer to the same. Taxes are involuntary and directly linked to a service in order to raise revenue for the government. Fees are voluntary, proportionate to the costs of the services and is used to defray the cost of a regulatory activity.

[47] Bissinger, Jared, Local Economic Governance in Myanmar, The Asia Foundation, February 2016.

[48] Drucker, J. (2012, December 9). Google Revenues Sheltered in No-Tax Bermuda Soar to $10 Billion. Bloomberg.

[49] Google, Inc. (2012). 2012 10-K. Google, Inc.

[50] Fisher, D. (2012, October 25). Foreign Tax Reserves are “Crack Cocaine” For Earnings Manipulation, Study Says. Forbes.

[51] Barron, L. (2016, May 17). Panama Papers List Myanmar Names. Retrieved June 25, 2016, from Myanmar Times: http://www.mmtimes.com/index.php/national-news/20325-panama-papers-list-myanmar-names.html Russell, Martin, European Parliament Think Tank, Myanmar/Burma, the Next Tiger, 22 October 2015 Aung Hla Tun, “Myanmar 2014/15 FDI swells to $8 billion — govt agency,” Reuters, March 25, 2015 at http://www.reuters.com/article/myanmar-investment-idUSL3N0WR25Q20150325 International Institute

[52] The FESR was developed to set policy priorities in 2012–15 for achieving the long term goals of the 20 year National Comprehensive Development Plan (“NCDP”) 2011–31, which consists of four 5 year plans.

[53] Russell, M. (2015, October 22). Myanmar/Burma, the Next Tiger. Retrieved July 11, 2016, from European Parliament Think Tank: http://www.europarl.europa.eu/thinktank/en/document.html?reference=EPRS_ATA(2015)569041

[54] World Bank and AusAid. (2013). Rapid Assessment of the Financing of the Education Sector in Myanmar.

[55] Arakan Oil Watch. (2012). Burma’s Resource Curse.

[56] Id.

[57] Id.

[58] Bauer, A. e. (2016). Sharing the Wealth: A Roadmap for Distributing Myanmar’s Natural Resource Revenues. Natural Governance Institute.

[59] Global Witness. (2015). Jade: Myanmar’s Big State Secret.

[60] Kar Dev and Spaniers, J. (2015). Flight Capital and Illicit Financial Flows to and from Myanmar: 1960–2013. Global Financial Integrity.

[61] Vicary, A. e. (2010). Burma, The Hidden Impact of Burma’s Arbitrary & Corrupt Taxation.