Union of Myanmar Tax Law 2015 lowers rates applicable to expats and foreign companies

The 2015 Union of Myanmar Tax Law (2015 Law) came into effect on 2 April 2015, lowering the tax rates applicable to foreign residents and foreign companies with operations in Myanmar. The non-resident income tax rate has been lowered from 35% to 25%, which will affect branch offices operating in Myanmar, foreigners working in Myanmar, as well as companies deriving income from Myanmar. From now on foreign companies will be taxed at the same rate as local companies.  Income derived from Myanmar will be taxed at 25%.  Under the 2015 Union of Myanmar Tax Law the salaries of non-residents – those who spend fewer than 183 days per year in the country – will be taxed progressively, from 0% to 25%. Capital gains tax has been lowered from 40% to 10%, except for companies operating in the oil and gas sector. (Source: http://www.mmbiztoday.com/articles/union-tax-law-2015-lowers-rates-expats-foreign-industry, 9 April 2015)

Index Creative Village halts Myanmar projects

Index Creative Village Plc (Index), Thailand’s largest event company, has temporarily suspended its Myanmar operations due to stricter licensing requirements imposed by the Myanmar Government in a bid to halt public protests in the run up to the elections which are scheduled to be held before the end of 2015. In 2010, Index became the first Thai media and event-organising company to enter into the Myanmar market. Index operates as part of a Myanmar joint-venture with Myanmar Index Creative Village Ltd. Mr. Kriengkrai Karnchanapokin, Index’s co-founder and co-chief executive, said Index has decided to suspend its planned events there until the political situation in Myanmar stabilised. (Source: http://www.bangkokpost.com/business/news/532191/index-halts-myanmar-projects, 18 April 2015)

Capital Diamond Star Group and Mitsubishi form new Myanmar joint-venture company Lluvia Ltd

Myanmar conglomerate Capital Diamond Star Group (CDSG) and Japan’s Mitsubishi Corporation have established a new Myanmar joint-venture company Lluvia Ltd (Lluvia) to manufacture and distribute food in Southeast Asia. The joint-venture partners plan to invest approximately US$200 million in the new joint-venture over the next three years. Lluvia will develop new products and also produce and distribute CDSG’s existing brands, including Premier Milk Powder and Tea Master Tea Mix. Lluvia has announced that it intends to work closely with farmers in Myanmar to allow better access to capital and improve farming techniques through knowledge transfer. It has also committed to contributing to better food safety and aims to become a leading player in the Asian market. CDSG has numerous business interests in Myanmar with operations in the retail and construction sectors among others. (Source: http://www.thuraswiss.com/update/myanmar-news-database, 2 April 2015)

Reliance Industries executes PSCs in relation to Myanmar offshore blocks

India’s Reliance Industries Ltd (RIL) has entered into two production sharing contracts (PSCs) with the Myanmar Oil & Gas Enterprise in relation to Myanmar offshore blocks M17 and M18. RIL has a 96% participating interest in the blocks. Local company United National Resources Development Services Company Ltd, will hold the remaining interest. The blocks are located offshore in the Tanintharyi basin of Myanmar in water depths up to 3000 ft. and together encompass a total area of 27,600 square kilometres. The blocks were made available as part of a competitive bidding process which commenced in 2013. (Source: http://www.myanmar-business.org/2015/04/ril-signs-contracts-for-myanmar-blocks.html, 2 April 2015)

Myanmar Central Bank raises exchange rate to meet the market price

The Central Bank of Myanmar (CBM) has increased its U.S dollar-kyat conversion rate closing the gap on the unofficial market rate. The CBM had maintained the official rate at K1027 per US$ since February 2015 even though the unofficial market rate had climbed to a high of approximately K1090. The spread between the official rate and the market rate had created the potential for arbitrage, and was causing difficulty for banks and consumers alike. The CBM has now increased the reference rate to K1065, within 1.5% of the current unofficial market rate of approximately K1080. (Source: http://www.mmtimes.com/index.php/business/14039-central-bank-raises-exchange-rate-to-meet-the-market-price.html, 10 April 2015)

Myanmar Central Bank approves OCBC branch office

The Central Bank of Myanmar (CBM) has approved Singapore’s Overseas-Chinese Banking Corporation Ltd.’s (OCBC) application to establish a branch office in Myanmar. OCBC was issued with a business licence on 2 April 2015 and will commence operations on 23 April 2015. It has a registered capital of approximately US$75 million. OCBC intends to offer cash management services, project financing, working capital financing and trade finance, together with treasury and capital markets advisory services to foreign companies and joint ventures, as well as domestic banks in Myanmar. OCBC has also announced that it will make its business internet banking platform ‘Velocity@ocbc’ available to its customers in Myanmar.  (Source: http://www.mmbiztoday.com/articles/ocbc-receives-yangon-branch-approval, 7 April 2015)

Eni and PetroVietnam enter into Myanmar offshore PSCs

Italian oil and gas producer Eni Company (Eni) and the PetroVietnam Exploration Production Corporation Ltd (PetroVietnam) have entered into production sharing contracts (PSCs) in relation to the exploration and development of Myanmar offshore blocks MD-02 and MD-04. Eni will maintain an 80% participating interest in the blocks via its local subsidiary Eni Myanmar BV, with PetroVietnam taking the remaining 20% share. Block MD-02 is located in the southern part of the Bay of Bengal, in the Rakhine Basin, approximately 135 kilometres offshore. Block MD-02 covers an area of 10,330 square kilometres with water depths ranging from 500 to 2,400 metres. Block MD-04 is located in the Moattama-South Andaman Basin, approximately 230 kilometres offshore. Block MD-04 covers an area of 5,900 square kilometres with water depths ranging from 1,500 to 2,200 metres. The PSCs provide for an initial study and evaluation period of two years to be followed by an exploration period of six years. Eni first entered Myanmar in July 2014, entering into PSCs in relation to the exploration of onshore blocks RSF-5 and PSC-K, located in the Salin Basin and the unexplored Pegu Yoma-Sittaung Basin, respectively. (Source: http://www.mmbiztoday.com/articles/eni-signs-myanmar-offshore-deals, 7 April 2015)

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