The Ministry of Planning and Finance has announced that those companies listed on the Yangon Stock Exchange (YSX) are entitled to a 5% reduction in corporate income tax. This means they will only need to pay 20% income tax.
The move comes in a bid to encourage more companies to jump on board to help grow and develop the YSX.
Union Tax Law
The corporate income tax is set by the Union Tax Law at 25%, so this move to offer a discount is calculated to encourage more companies to get involved. Further benefits to being listed on YSX include exemption from penalties and fines in paying the remaining tax.
U Htay Chun is a member of Securities Exchange Commission of Myanmar (SECM) and said: “The main purpose is to attract more listed companies by providing a tax incentive. The tax rate here is a bit high when compared to other countries in the region. But taking into account the situation and conditions in our country, the ministry might have decided an appropriate rate.”
In some of the other countries within the region, tax rates of as low as 5% are levied on listed companies.
Encouraging more companies to become listed on the YSX is crucial to its growth and development. With a greater number of listed companies, there will be increased opportunities for investment. The government will also receive more in tax revenues as listed firms have to disclose their income.
At the moment, there are only four companies listed on the YSX. These are First Myanmar Investment (FMI), Myanmar Citizens Bank (MCB), First Private Bank (FPB) and Myanmar Thilawa SEZ Holdings (MTSH).
It’s hoped that this move will attract more companies to the stock exchange and continue to help boost the country’s economy going forward. It remains to be seen as to whether any will consider the tax cut enough of an incentive to join.