In December 2024, the Ministry of Planning and Finance (“MOPF“) and the Internal Revenue Department (“IRD”) introduced two significant updates concerning foreign currency tax payments. These updates pertain to the calculation of import and export taxes, and the tax payment currency for individuals receiving salaries in Myanmar Kyats (“MMK”) under foreign currency contracts.

We provide below the important features of these issuances:

1. Use of Market Trading Rate for Import/Export Customs Duties and Tax Payments starting 1 January 2025

On 27 December 2024, the MOPF and the Customs Department issued Notification 90/2024. This notification states that effective 1 January 2025, the Customs Department will no longer use the Central Bank of Myanmar (“CBM”) Reference Rate to calculate import/export customs duties and taxes. Instead, a “Weekly Exchange Rate” based on the Market Trading Rate, as published by the Customs Department, will be used.

This will apply to customs duties, commercial tax, specific goods, and advance income tax, which are payable by the importer/exporter upon import or export of goods.

Previously, these taxes were calculated using the CBM Reference Rate, fixed at 2,100 MMK/USD since 5 August 2022. However, under the new system, the Market Trading Rate will fluctuate with market conditions, leading to a more dynamic and potentially volatile exchange rate. For the week of 5^th to 11^th of January 2025, the Market Trading Rate is at 3,587.5 MMK/USD, according to the Customs Department’s website. Due to the significant difference between the Reference Rate and the Market Trading Rate, this change in tax valuation procedures is expected to increase the cost of imported/exported goods.

2. Clarification on Personal Income Tax (PIT) currency for salaries received in MMK

On 24 December 2024, the Medium Taxpayers Office-2 (“MTO-2”) announced that taxpayers may settle their PIT obligations in MMK if employees receive salaries in MMK, even if their employment contracts specify a foreign currency.

This announcement aligns with Section 30 of the 2024 Union Taxation Law, which became effective on 1 April 2024, requiring that income taxes must be paid in the type of currency earned or received.

A key consideration under this announcement is the use of the word “may”, indicating that employees earning in MMK under foreign currency contracts now have the option to pay PIT in either MMK or in foreign currency. This provides relief, especially in situations where obtaining foreign currency is difficult.

While this announcement is specifically for taxpayers under the MTO-2, we understand that the same approach is being applied to other tax offices. However, as implementation may vary across different tax offices, particularly those at the township level, it is important to verify this with the relevant tax office to ensure consistent application of the tax.

The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.

Jack Sheehan, Partner, Head of Regional Tax, Thailand

Diberjohn Balinas, Tax Partner, Cambodia, Myanmar