Following the enactment of the Tax Administration Law (TAL), Myanmar’s Ministry of Planning and Finance has issued Notification No. 44/2024, which outlines directives and procedures for addressing violations of tax law provisions. These procedures, which came into force on June 13, 2024, primarily focus on three key areas: tax evasion, impeding tax administration, and failure to preserve secrecy.

The notification primarily aims to address tax evasion, impeding tax administration, and failure to preserve secrecy, classifying these offenses as either subject to arrest without warrant or not. Notably, tax evasion is classified as an offense subject to arrest without warrant, while impeding tax administration and failure to preserve secrecy are not. The notification also prescribed the forms for notifying taxpayers before taking any action.

Tax Evasion

Tax evasion refers to a taxpayer who willfully evades the assessment, payment, or collection of tax. Penalties for such offenses include fines of MMK 250,000 (approx. USD 120) or 100% of the evaded tax (whichever is greater), imprisonment for up to seven years, or both.

The enforcement process for tax evasion requires the chief officer of the township revenue department or an officer in charge (the tax authority) to assess the relevant documents and information provided by the taxpayer. If a taxpayer is found to be evading tax, the tax authority must send a notice in the prescribed form for verification within 15 days. Taxpayers may apply for a one-time extension of 15 days to submit requested documents and make disclosures. If the taxpayer cannot fulfill the requirements as instructed, the tax authority will seek approval from the director general of the Internal Revenue Department (IRD) for criminal proceedings as cognizable offences.

Impeding Tax Administration and Failure to Preserve Secrecy

Impeding tax administration refers to obstruction or attempted obstruction of taxation staff or officers from carrying out their duties. Such a person is guilty of an offense and is subject to a fine of MMK 250,000 (approx. USD 120), imprisonment for up to one year, or both.

The enforcement process for these offenses is similar to that for tax evasion. The tax authority will send a notice to the taxpayer regarding the impeding tax administration matters. If the taxpayer cannot fulfill the requirements within the specified time, the tax authority may extend the deadline once, provided certain criteria are met. If the taxpayer still cannot fulfill the requirements, the tax authority will seek approval from the director general of the IRD for criminal proceedings as noncognizable offenses.

Liable Parties in Civil and Criminal Proceedings

For civil lawsuits under the TAL, similar procedures by tax authorities are applicable. In these civil and criminal proceedings, taxpayers liable are:

• Corporate Taxpayers
  • The company itself
  • For nonliquidated companies that have ceased operations: chairperson, managing director, members of the board of directors, general manager, or operator managing the company on its behalf
  • For liquidated companies: The shareholders of the company before company liquidation or shareholders at the time the cause of action arose while the company liquidated
• Partnerships: Members of the partnership
• Trusts: Trustees
• Group Businesses (other than a company or partnership): Person responsible for the accounts on behalf of the group business
• Citizens or Foreigners Living Abroad: The manager or person liable for the business in Myanmar
• Representatives: All representatives if the taxpayer has two or more representatives
• Deceased Taxpayers or Indebted Companies (if the indebted company’s property is seized): The administrator, agent, or trustee of the taxpayer’s property, or the person who continues or closes the business subject to tax
• Mortgagees: In case of a business operation subject to tax for which mortgaged land or other assets are used

Key Takeaways

Businesses operating in Myanmar should take proactive steps to ensure compliance with the Tax Administration Law. Important actions include maintaining accurate and up-to-date financial records, implementing effective internal controls to prevent tax evasion, and ensuring all staff involved in tax matters are well informed about these new regulations. Companies should also be prepared to respond promptly to any notices from tax authorities and consider seeking professional legal and tax advice to navigate these complex requirements effectively. By staying informed and compliant, businesses can mitigate the risk of severe penalties and maintain good standing with Myanmar’s tax authorities.