27 February 2020
The Myanmar Internal Revenue Department (“IRD”) issued Public Ruling No 1 of 2020 on 27 January 2020 (“Public Ruling”), clarifying two issues regarding the application of the Tax Administration Law (“TAL”) which came into effect on 1 October 2019.
A public ruling issued by the IRD is legally binding, pursuant to section 11(b) of the TAL.
Section 29 of the TAL provides that the limitation period is now six years from the end of the year of assessment, and the tax authority is empowered to make new assessments or re-assessments on any taxpayers within that time frame. In contrast, the limitation period prescribed under the Income Tax Law, Commercial Tax Law and Specific Goods Tax Law (“Tax Laws”) is three years.
The Public Ruling clarifies that the three-year limitation period specified under the Tax Laws is no longer applicable, and the limitation period under the TAL applies instead.
The Public Ruling also provides for interim measures for businesses to adapt to the change in limitation period. For income tax and commercial tax accrued within the fiscal year 2019 to 2020, the limitation period shall remain three years. For specific goods tax, the limitation period will gradually increase from three years to six years as of the fiscal year 2019 to 2020, as follows:
- Fiscal year 2020 to 2021: Limitation period of four years
- Fiscal year 2021 to 2022 Limitation period of five years
- Fiscal year 2022 to 2023: Limitation period of six years
Application of monetary penalties and criminal proceedings
With respect to discrepancies between both monetary and criminal penalties prescribed under the relevant Tax Laws and the TAL, the Public Ruling clarifies that the main criteria is the timing of the default which led to the penalty.
Where a default occurred before 1 October 2019, the penalties and proceedings prescribed under the Tax Laws are applicable. If a default occurred on or after
1 October 2019, the penalties and proceedings under the TAL shall apply, regardless of when such default becomes known to the tax authority.