19 December 2019
On 26 November 2019, the Myanmar Parliament passed the Law Amending the Myanmar Stamp Act (“Amending Law”). The Amending Law lowers the penalty prescribed for late or insufficient payment of stamp duty to three times the due and outstanding tax amount. This is a reduction from a previously stipulated rate of 10 times the amount owing.
The Stamp Act 1899 (“Stamp Act”) provides that all instruments chargeable with duty and executed in Myanmar must be stamped before or at the time of execution. It also provides that if the instrument has been executed outside of Myanmar, it may be stamped within three months from receipt in Myanmar.
The reduced penalty applies to agreements or instruments set out in Schedule 1 of the Stamp Act, such as service agreements, bonds and financing instruments, conveyance and transfer instruments, and leases.
Failure to pay sufficient stamp duty does not affect the validity of the relevant legal documents, but will render such legal documents inadmissible as evidence in a Myanmar court. Parties therefore generally pay penalties on the relevant legal documents only when there is a dispute on the same in a Myanmar court. The reduction in penalty rate is aimed at encouraging the relevant parties to pay sufficient stamp duty on subsisting legal documents and, accordingly, assist the government in recovering tax owing.