Before starting a business, check for any restrictions that may prohibit your proposed operation. Most businesses can operate unless specifically restricted.

1. RESTRICTIONS ON DOING BUSINESS

Before starting a business, check for any restrictions that may prohibit your proposed operation. Most businesses can operate unless specifically restricted.

Key business restrictions include:

• activities reserved for the government, sometimes with possible concessions to private entities
• sectors limited to Myanmar companies (up to 35% foreign investment may be allowed)
• joint ventures required with a Myanmar partner (usually up to 80% foreign investment permitted)
• investments needing prior approval from the relevant authority

The Myanmar Investment Commission (MIC) has issued a list of restricted investment activities under notification 15/2017, which details the businesses that are subject to specific restrictions.

2. CHECK ELIGIBILITY FOR INCENTIVES

Foreign and domestic enterprises investing in Myanmar may be eligible to receive incentives aimed at encouraging investment within the country. Available incentives include:

• import duty exemptions for equipment and material for the construction and implementation of the project
• import duty exemption for raw materials required in the manufacture of goods
• corporate income tax relief for reinvesting of profits
• accelerated depreciation of 1.5 times the normal depreciation rate
• approval for foreign investors to enter into long term lease agreements, otherwise these are normally limited to one year

The MIC has also issued a promoted sector list, businesses operating in these sectors may be eligible for a corporate income tax holiday for a period of 3-7 years depending on how developed the location is of where they are located.

3. CHOOSE A BUISNESS VEHICLE

Decide which business structure suits your needs. Most commonly, businesses form a private company limited by shares. Alternatively, you can register an overseas corporation in Myanmar (often referred to as a branch or representative office).

Unlike other jurisdictions, setting up and running a private company limited or a registered overseas corporation is largely the same. Both follow similar registration steps, tax duties, and can operate as revenue-generating businesses.

Other less common types of business vehicles are public limited companies, companies limited by guarantee, unlimited companies, business associations and partnerships.

4. REGISTER YOUR BUSINESS

Businesses must register with the Directorate of Investment and Company Administration (DICA), which serves as the official company registrar. For private companies limited by shares or overseas corporations, incorporation is typically finalised within 5-10 days. However, requests for additional information may occasionally extend the processing time.

If you choose a private company limited by shares, consider the following key points when incorporating:

• the company must have at least one director who is resident in Myanmar
• the company must have at least 1 and no more than 50 shareholders
• the capital of the company can be denominated in Myanmar Kyat or in USD. There is no minimum paid up capital requirement, however at least one share needs to be issued (in practice DICA will normally require a minimum share capital of MMK300,000)
• every company is governed by its constitution. When incorporating the company it will need to be decided whether to adopt the model form constitution, which in most cases will be sufficient or whether to prepare a specific constitution to govern the company
• the company must have a registered office address located within Myanmar

5. BUSINESS LICENCES

To start operating a business, it is necessary to determine if any further licences or approvals are needed. The specific requirements for approvals and licences typically depend on the nature of the business activities and its location.

Some common licences which a business may require include:

• Yangon City Development Committee (YCDC) business licence
• private Industrial Registration Certificate, which is a general requirement for operating any kind of manufacturing facility
• Food and Drug Administration Recommendation for Food Manufacturing for operating a food manufacturing facility
• Exporter/Importer Registration Certificate from the Ministry of Commerce is mandatory for engaging in export/import business
• Foreign Companies involved in retail or wholesale trading must obtain a Retail and Wholesale Registration Certificate from the Ministry of Commerce.

6. OPEN A BANK ACCOUNT

Opening a bank account is an essential aspect of operating any business. After registration, businesses are eligible to establish accounts with both domestic and international banks that have a presence locally. Most financial institutions offer options for Myanmar Kyat and foreign currency accounts. The prevalence of internet banking is increasing, although online transaction capabilities typically remain limited in scope.

When opening a bank account, additional factors should be considered, such as implementing restrictions on account operations and defining approval authorities for transactions. Businesses wishing to open accounts outside Myanmar must obtain prior authorisation from the Central Bank of Myanmar.

7. GET YOUR SPACE

A registered office address is required for all businesses in Myanmar, but we can provide this service before you secure your own space. Foreigners and foreign-owned companies generally cannot buy land or buildings, except some condominium units, so they must lease; Myanmar businesses may purchase property. Leases longer than one year for foreign businesses require approval unless the landlord has pre-approval. All leases must be stamped with stamp duty, and those over one year may also require registration with authorities.

8. REGISTER FOR TAX

• Every business operating in Myanmar is required to register for a Taxpayer Identification Number (TIN) as well as registering for commercial tax (which is a consumption tax similar to VAT or GST). The Internal Revenue Department (IRD) now requires all taxpayer registrations, including for commercial tax, to be completed online through the official IRD portal.Key taxes which businesses in Myanmar are liable for:Corporate income tax. Companies operating in Myanmar are subject to corporate income tax on their profits. The standard corporate income tax rate is 22%. However, companies listed on the Yangon Stock Exchange are eligible for a reduced rate of 17%.
• Commercial tax. Commercial tax in Myanmar is applied at rates ranging from 0% to 15%, depending on the type of goods or services. In general, most services are taxed at the standard rate of 5%. However, there are notable exceptions. The income from Internet services is taxed at a rate of 15%, and the sale of new mobile phone SIM cards is subject to a one-time commercial tax of 20,000 MMK upon activation. Construction, repair, and sale of infrastructure related to long-term leases on state-owned or private land are subject to commercial tax at a rate of 3%, as are receipts from hotel and tourism services. Meanwhile, the sale of gold or jewellery, or the import of such items, is subject to a commercial tax of 1%. Certain specific goods and services are exempted from commercial tax as prescribed by law.
• Personal income tax. An Employee is liable for the payment of his or her own taxes and the employer is responsible for deducting income tax at the time of payment to employees. After that employers shall pay those personal income tax to Internal Revenue Department.
• Specific Goods Tax. Companies engaging business of an import or export, or manufacturing of specific goods are subject to paying Specific Goods Tax and must register with the relevant tax office. Specific Goods Tax included various kinds of cigarettes, tobacco, cheroots, and betel-chewing preparations, various kinds of liquor, beers, wine, and alcoholic beverages; wood logs and wood cuttings; vans, saloons, sedans and estate wagons, and kerosene, petrol, diesel, and aviation jet fuel, natural gas etc.
• Customs Duty. Most imported goods are subject to import duties at rates ranging from 0% to 50%..
• Withholding Tax. Withholding tax (WHT) in Myanmar is imposed on certain payments to residents and non-residents. Interest paid to non-residents is subject to 15% WHT, while no WHT applies to residents. Royalties are taxed at 10% for residents and 15% for non-residents. Payments by government entities for goods and services are subject to 2% WHT for residents and 2.5% for non-residents, while other payers apply a 0% rate for residents and 2.5% for non-residents. Payers must deduct WHT at the time of payment. A 2% WHT also applies to fees for private healthcare professionals, except for permanent staff salaries.
• Capital Gain Tax. Capital Gains Tax (CGT) is applicable to taxpayers deriving a profit from sale, exchange or transfer of capital assets in Myanmar. Capital assets means any land, building, vehicle and any capital asset connected with an enterprise includes share, bonds and similar instruments. If the total sale value of the capital assets, which was sold, exchanged or transferred, does not exceed MMK 10 million, CGT will not be applicable. In most cases the CGT rate is 10 %, except for the oil and gas industry where the CGT rate ranges from 40% to 50%.

9. HIRE EMPLOYEES

Employees can be hired through direct job postings or through the use of a recruiter or agency.

When hiring employees, it is required to enter into an employment agreement and this will need to be registered with the relevant Township Labour Office. Currently only the model form employment contract published by the Ministry of Labour is accepted for registration. Additional terms will need to be included separately and may also need to be registered.

As an employer you will be required to withhold personal income tax payable by the employee. You are also required to make social security contributions which are payable by both the employer and the employee. The contributions are 3% by the employer and 2% by the employee to the Social Security Scheme. The maximum wages to calculate such percentage is MMK 300,000.

10. GO LIVE ONLINE

Business registered in Myanmar are eligible to have a domain name ending with .mm. Lock-in your favourite web-address by registering your domain name.

11. REGISTER YOUR TRADEMARK

Having a registered trademark is one of the best ways to protect your brands locally.

The Myanmar trademarks law uses the first to file principle, meaning that the first person to file the trademark will be recognised as its owner. A new online trademark registration process is being implemented.

Talk to your intellectual property experts on the best way to protect your trademarks in Myanmar.