UNION OF MYANMAR FOREIGN
INVESTMENT LAW
Introduction
The Union of Myanmar Foreign
Investment Law was promulgated on 30th November
1988, as The State Law and Order Restoration
Council Law No. 10 / 88, in order to promote all
round development of national economy.
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Basic Principles
• Promotion and Expansion of
Exports;
• Exploitation of Natural
Resources Which Require Heavy Investment;
• Acquisition of High
Technology;
• Supporting and Assisting
Production and Services Involving Large Capital;
• Opening of More Employment
Opportunities;
• Development of Works Which
Would Save Energy Consumption;
• Regional Development.
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Applicable Economic
Activities
This Law applies to economic
activities prescribed by the Union of Myanmar
Foreign Investment Commission from time to time
with the prior approval of the Government.
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Form of Organization
Form of investment may be
made in any of the followings :-
(a) investment made by a
foreigner to the extent of one hundred percent
of foreign capital;
(b) joint-venture made
between a foreigner and a Myanmar citizen.
In order to make an
investment, it could be :-
(i) a sole proprietorship, a
partnership and a limited company may be formed;
(ii) if a joint-venture is
formed, the foreign capital shall be at least 35
percent of the total capital.
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Acceptance of Proposal
(i) The Commission may accept
any proposal which in its opinion will promote
the interests of the State and which is without
prejudice to any existing law;
(ii) The Commission shall in
scrutinizing a proposal take into consideration
facts such as financial credibility, economic
justification of the business enterprise and
appropriateness of technology;
(iii) The Commission shall
issue a permit to a promoter, on a proposal
being accepted;
(iv) In case an extension,
relaxation or amendment of the terms of the
permit or the agreement is submitted by those
concerned, the Commission may allow thereof as
it may deem appropriate;
(v) The Commission shall take
necessary and prompt action in respect of
complaints made by investors on failure to
receive, benefits entitled to under this Law;
(vi) The Commission may, at
any time require a promoter or an investor to
furnish such evidence or facts as the Commission
may deem necessary;
(vii) The Commission may, for
the purpose of carrying out the provisions of
this Law form such committees and bodies as may
be necessary;
(viii) The Commission may
prescribe the bank which shall transact
financial matters under this Law;
(ix) The Commission shall,
from time to time report its performance to the
Government. It shall also recommend to the
Government measures necessary to facilitate and
promote foreign investments.
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Insurance
An economic organization
formed under a permit shall in effect place
insurance with the Myanma Insurance in respect
of the prescribed types of insurance.
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Exemption and Reliefs
(a) in respect of any
enterprise for the production of goods or
services, exemption from income tax for a period
extending to 3 consecutive years, inclusive of
the year of commencement of production of goods
or services; in case where it is beneficial for
the State, exemption or relief from income tax
for a further reasonable period depending upon
the success of the enterprise in which
investment is made;
(b) exemption or relief from
income tax on profits of the business if they
are maintained in a reserve fund and re-invested
therein within 1 year after the reserve is made;
(c) right to accelerate
depreciation in respect of machinery, equipment,
building or other capital assets used in the
business, at the rate fixed by the Commission to
the extent of the original value for the purpose
of income tax assessment;
(d) if the goods produced by
any enterprise are exported, relief from income
tax up to 50 percent on the profits accrued from
the said export;
(e) right of an investor to
pay income tax payable to the State on behalf of
foreigner who have come from abroad and are
employed in the enterprise and the right to
deduct such payment from the assessable income;
(f) right to pay income tax
on the income of the above mentioned foreigner
at the rates applicable to the citizens residing
within the country;
(g) right to deduct from the
assessment income, such expenses incurred in
respect of research and development relating to
the enterprise which are actually required and
are carried out within the State;
(h) right to carry forward
and set-off up to 3 consecutive years from the
year the loss is sustained in respect of such
loss sustained within 2 years immediately
following the enjoyment of exemption or relief
from income tax as contained in sub-section (a),
for each individual enterprise;
(i) exemption or relief from
custom duty or other internal taxes or both on
machinery, equipment, instruments, machinery
components, spare parts and materials used in
the business, which are imported as they are
actually required for use during the period of
construction;
(j) exemption or relief from
customs duty or other internal taxes or both on
such raw materials imported for the first 3
years' commercial production following the
completion of construction.
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Guarantees
The Government guarantees
that an economic enterprise formed under a
permit shall not be nationalized during the term
of the contract or during an extended terms, if
so extended.
On the expiry of the term of
the contract, the Government guarantees an
investor of foreign capital, the rights he is
entitled to, in the foreign currency in which
such investment was made.
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Foreign Capital
The Commission shall evaluate
the foreign capital in terms of kyat in the
manner prescribed, and register it in the name
of the investor. In so registering, the types of
the foreign capital and the type of the foreign
currency evaluated shall be stated.
In the event of termination
of business, the person who has brought in
foreign capital may withdraw foreign capital
which he is entitled to withdraw as prescribed
by the Commission within the time stipulated.
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Transfer of Foreign
Currency
The following shall be
transferable abroad in the relevant foreign
currency through the bank prescribed by the
Commission, at the prevailing official rate of
exchange:-
(a) foreign currency entitled
to by the person who has brought in foreign
capital;
(b) foreign currency
permitted for withdrawal by the Commission to
the person who has brought in foreign capital;
(c) net profits after
deducting from the annual profits received by
the person who has brought in foreign capital,
all taxes and the prescribed funds;
(d) legitimate balance, after
causing payment to be made in respect of taxes
and after deducting in the manner prescribed,
living expenses incurred for himself and his
family, out of the salary and lawful income
obtained by the foreign personnel during
performance of service in the State.
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Opening of Bank Accounts
An economic organization
formed under a permit shall open in the bank
prescribed by the Commission, a foreign currency
account in the type of foreign currency accepted
by the bank, and a kyat account and carry out
all financial transactions relating to the
business enterprise.
Foreigners serving in any
such economic organization shall open a foreign
currency account and a kyat account in any bank
prescribed by the Commission.
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