Manufacturing companies will be able to deduct taxes for material imports and manufacturing operations from their export tariffs if a bill to update the Tariff Law for 2015-16 fiscal year passes.
The tax credit for exports is aimed at promoting value-added processes and the export production capacity, U Zay Ya Si Thu, deputy director of the Internal Revenue Department (IRD), told a seminar at the headquarters of the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI).
“No tax credit was allowed for exports in the past. We added this relaxation as well as tariff cuts in the bill,” said U Zay Ya Si Thu.
To be eligible for the tax credit, exporters will need to register their businesses and comply with all the regulations while meeting all the tax obligations in a timely manner since the start of their operations.
The exporters will also have to collect and keep all the notification letters from relevant government departments, receipts and invoices for all duty payments to the government regarding their industry and present them at the time of exporting to receive tax credits.
However if the exporters have not fulfilled the tax obligations and instead paid what they owe to the government in one payment just before the end of taxation period, they will not be eligible to enjoy tax credits for exports, the deputy director said.
The bill sets tariffs on exports for the next fiscal year at 5 percent for crude oil, 8 percent for natural gas, 50 percent on raw and lightly-processed timber, 15 percent on raw gems and 5 percent for finished jewellery, while zero percent tariffs are set for other goods and products. Tax credits will be subtracted at the time of export.
If the amount of tax credit allowed is higher than the value of the tariff due, the exporters can request a refund equivalent to the excess amount of the tax credit from the IRD, said U Zay Ya Si Thu.
Tax credits will not cover exports of the items in IRD’s list of “special items,” which are subject to high tax rates including cigarettes, tobacco and tobacco products, cheroots, cigars, betel nut, alcohol, beer and wine.
Source: Myanmar Business Today