28 April 2020
This article discusses the Myanmar government’s initiatives to assist businesses in mitigating the effects of Covid-19.
1. Financial relief
The Ministry of Planning, Finance and Industry of Myanmar issued Notification No.1/2020 on 18 March 2020 (“Notification”) providing that businesses in the cut-make-pack sector, hotels, tourism companies, and small and medium enterprises are categorised as priority sectors (“Priority Sectors”) and are entitled to the following reliefs:
- The government will establish a Covid-19 Fund having a total capital of 100,000,000,000MMK (approximately US$72,000,000) to provide loans to Myanmar citizen-owned enterprises in the Priority Sectors. The interest on such loans will be 1% with a term of one year. The Covid-19 Fund will be managed by the Myanmar Economic Bank.
- Enterprises from the Priority Sectors are permitted to:
- defer payment of income tax for the first and second quarter (i.e. ending 31 March 2020 and 30 June 2020 respectively) to 30 September 2020 for the fiscal year 2019-2020; and
- defer payment of monthly commercial tax to 30 September 2020 for the period 31 March 2020 to 31 August 2020.
In addition, the Notification also states that, for all export business, the 2% advance income tax will be exempted until the end of the fiscal year 2019-2020 (i.e. ending on 30 September 2020).
2. Reduction of interest rate
The Central Bank of Myanmar issued Directive No.4/2020 on 24 March 2020 (“Directive”), providing for the reduction of the lending interest rate by 1%. This brings the maximum interest rate for MMK-denominated commercial bank loans having collaterals to 11.5%. Interest, as defined in the Directive, includes commitment fees, management fees and other charges imposed by commercial banks.
3. Social security contributions
The Ministry of Labour, Immigration and Population issued Notification No.63/2020 on 20 March 2020, deferring the deadline for payment of social security contributions for employers and employees from 15 days after the end of each month to three months after the end of each month.