New law offers tax incentives for Special Economic Zones

The Myanmar government has recently enacted a Special Economic Zone Law that includes several tax incentives for investors. 

The state-owned media reported on January 25 that President Thein Sein signed it into the law on January 23. It allows for income tax exemptions for up to 7 years for local and foreign investors and up to 8 years for constructors in the “exemption areas”.

The law consists of 96 sections organised in 18 chapters which include forming the central authority of Special Economic Zones (SEZ) and the management committee, and establishing new zones.

Myanmar currently has three SEZ, namely Kyauk Phyu SEZ, Dawei SEZ and Thilawa SEZ. New zones will be established based on eight criteria such as: being accessible to the international borders or local markets, being a part of the regional development programme area, and having water resources, electricity and enough land.

For investors operating in exemption zones, income tax exemption are allowed for up to 7 years from the date of launch. For constructors in exemption zones, income tax exemption is up to 8 years.

Businesses that operate in promotion zones are also allowed tax exemptions to varying degrees. They are exempted from customs duties on imported machinery and materials to be used for building infrastructure within a 5 year period.

The law also stipulates that disputes in SEZs are to be settled in a friendly manner referring to original contracts and existing laws.

The management committee will be responsible for setting wage levels and monitoring the ratio of local and foreign labour. Local skilled labour should compose minimum 25 percent in the first year, 50 percent in the second year and 75 percent in the third year, according to the law.

By enacting this law, Dawei Special Economic Zone Law and Myanmar Special Economic Zone Law (2011) are revoked. However, notices, instructions and procedures relating to Myanmar Special Economic Zone Law (2011) will be maintained if they do not oppose the newly passed law.

Source:elevenmyanmar News,28 Jan,2014.