May 10, 2011

Highlights of Myanmar Special Economic Zone (SEZ) law

Myanmar's special economic zone law was promulgated by the then ruling State Peace and Development Council at the end of January 2011.

The law, which comprises 12 chapters as a legal base, covers formation of central body, special privileges of investor, land use, bank and finance management and insurance business as well as quarantine inspection and confinement and matters related to labor.

In the chapter of special privileges of investor, it is stated that the investor is entitled to carry out such businesses as manufacturing finished products from raw materials, process production by machinery, carrying out warehousing, transport, service providing; transporting and importing raw materials, packaging materials, machinery and equipment, and fuel oils to be used in investment business from local or overseas to the special economic zone; commerce, import and export and selling at local market.

The law also states that the investor shall sell the goods produced in the special economic zone to the international market and use the imported materials for own production only and not sell them in local market.

The law grants income tax exemption on the proceeds of overseas sale for the first five years, 50 percent relief on the income tax rate for the second five years and 50 percent relief on the income tax rate for the third five years if the profit obtained from export sale is re-invested.

The law designates that if the capital asset is transferred by sale exchange or otherwise as the promotion for long-term investment, the investor shall pay to the state an amount of money not more than 50 percent of the profit gained based on the category of business, value of investment and sale proceeds;

The law prescribes that the investor shall collect and pay the income tax of the local and foreign staff and workers employed in the special economic zone on their salaries and income at the income tax rate prescribed.

The law also said the service enterprises may enjoy tax relief of commercial tax up to the prescribed period commencing from the year of operation.

The law allows investor to import raw materials, machinery, equipment from foreign country used for export-oriented processing enterprises established in export processing zone with exemption from customs duty and other revenues.

Source: Xinhua with contribution by Myanmar Business News