On the use of tax stamps in Myanmar - The Fine Print, Legal & Tax Insight

Invented in 17th-century Europe, the duty stamp is alive and well in Myanmar. Though the tax has been abolished in many countries, Myanmar’s 1899 Stamp Act is still in force, and covers nearly all business dealings.Stamp duty arises if a business instrument is signed or received here, or relates to property or transactions located in the country.

Non-payment of stamp duty is a criminal offence punishable by a fine of up to K500,000. A document that does not bear a stamp to show that duty has been paid is not admissible as evidence in a contract dispute. The court will not even read an unstamped contract unless a party to the dispute pays the court the arrears, plus up to 10 times the amount of duty. The tax office may, at its discretion, later refund all or part of the penalty in excess of K500.

Stamp duty is either a fixed amount (K600, irrespective of the value of the contract), a capped ad valorem amount (duty for a joint-venture contract is 1 percent of the value, to a limit of K150,000) or an uncapped ad valorem amount (duty for a lease agreement in excess of three years is 5pc of the average annual rent).

The difference can be highly significant. While the fixed amounts apply to instruments irrespective of the currency used in them, the ad valorem amounts apply only to instruments in kyat. Stamp duty based on the value of a contract denominated in foreign currency is always 1pc of the total worth of the contract.

So for a joint-venture contract worth US$8 million, stamp duty is $80,000 (1pc of $8 million). But if the parties agree that the total contribution shall be “an amount in kyat equivalent to $8 million”, stamp duty is only K150,000.

Sebastian Pawlita and Thinzar Khine are consultants at Polastri Wint & Partners Legal & Tax Advisors.

source: The Myanmar Times

http://www.mmtimes.com/index.php/business/9103-on-the-use-of-tax-stamps-in-myanmar-the-fine-print-legal-tax-insight.html