Potential taxpayer fines under the Tax Administration Law

(8 November 2022)

In general, the Myanmar Internal Revenue Department (IRD) has been somewhat lax on tax enforcement in the past. However, there are indications that the IRD may be starting to enforce tax compliance matters more strictly. The Myanmar Tax Administration Law (TAL), which was introduced in 2020, restates and partially revises liabilities for late tax registrations, payments and filings. The IRD has relied on the provisions of the TAL to more frequently impose fines on taxpayers in recent years.

The following table summarises the defaults, and related potential fines, applicable to taxpayers under the TAL.

	Issue / failure	Fine	TAL Section
Registration, submission and information issues/failures
1.	Failure to: (a) register as a taxpayer; (b) inform IRD of changes in taxpayer information; (c) apply to cancel a taxpayer registration.	10% of the amount of tax payable	65
2.	(a) Using a wrong or false taxpayer identification number (b) Issuing a false invoice or sales receipt; (c) Issuing a false credit note or debit note. (d)Providing, or failing to provide, an invoice, credit note, debit note, or sales receipt.	Up to MMK 250,000	66
3.	Failing to file a tax return on or before the due date.	An amount equal to 5% of the amount of the tax owed, plus a further 1% of the amount of tax owed for each month or part month by which the filing is overdue – subject to minimum of MMK 100,000.	67
4.	Intentional or negligent statement or omission by the taxpayer that results in underpayment of tax.  Misrepresentation of the tax declaration (or) underpayment or less tax amount likely to be due to the omission and such statement or omission is intentional or omitted.	An amount equal to 75% of the underpaid amount of tax if the amount of underpaid taxis more than MMK 100,000,000 or is more than 50% of the relevant tax liability. Or: Otherwise (if the above does not apply) an amount equal to 25% of the underpaid amount of tax.	68
5.	Making a material false or misleading statement to taxation staff where this causes an amount of tax payable by the taxpayer to be less than the amount that should have been properly assessed, or causes an amount refundable to the taxpayer to be greater than the amount that should properly have been assessed. However, no penalty will be imposed ff the person did not know, and could not reasonably be expected to know, that the statement was false or misleading in a material respect.	MMK 150,000 plus the amount that is the greater out of the: difference between the actual amount of the properly assessed tax payable and the reduced amount that would have been assessed based on the false or misleading statement; And: difference between the actual amount of the properly assessed refund payable and the amount that would have been refunded based on the false or misleading statement.	69
6.	Failure to maintain proper documents as required by the TAL or any other tax law.	For each day or part day that the failure continues: MMK 5,000 per day if the person has a tax liability of not more than MMK 500,000.MMK 50,000 per day if the person has a tax liability of MMK 500,000 or greater, but not more than MMK 5,000,000. MMK 100,000 per day if the person has a tax liability of MMK 5,000,000 or more.	70
7.	Failure to comply with a notice from the IRD under section 60 of the TAL directing a third-party debtor to make debt repayments to the IRD where the creditor is in default on tax payments.	An amount equal to 25% of the difference between the amount payable by the third-party debtor to the IRD under the notice and the amount actually paid to the IRD by the due date in the notice.	71
8.	Failure to provide taxation staff with reasonable facilities and assistance to perform official duties as required under the TAL or any tax law	Up to MMK 500,000	72
9.	Failure to comply with a request from the IRD for provision of information under the TAL or any tax law within the time specified.	Up to MMK 500,000	73
Late payments
10.	Failure to pay the tax due for a tax period within 14 days after the assessment or reassessment or by any due date specified in the assessment. * (Note: taxpayers can apply for an extension of time for tax payments under section 44 of the TAL).	An amount equal to 10% of the tax due but not paid.	74(a)
11.	Failure to pay all or part of an instalment required under a tax law by the due date for the instalment.	An amount equal to 10% of the tax due but not paid.	74(b)
12.	Failure to make a withholding payment required under another tax law to which the TAL applies without sufficient justification.	The relevant person will be treated as being in default of the relevant tax law and is liable to make the withholding tax payment even if they failed to withhold the tax amount.	74(c)
13.	Failure to make a withholding payment required under another tax law to which the TAL applies within the specified period,	An amount equal to 10% of the tax for which there was a failure to pay.	74(d)

Where more than one of filings, payments and registrations are late in respect of the same tax issue, the associated fines (if all levied by the IRD) are likely to apply cumulatively. There is no reduction or allowance under the TAL for other fines having been levied in relation to the same tax issue. So, for example, where a taxpayer has failed to register for commercial tax before charging/receiving commercial tax from a customer, failed to remit the commercial tax to the IRD on time and failed to file the relevant commercial tax return on time – it may be liable to fines under all three of rows 1, 3 and 10 of the above table.

* Note re row 10: the Myanmar Commercial Tax Law (CTL) and Myanmar Income Tax Act (ITA) provide for fines of 10% of the amount by which any tax payment is not made in full on or before the date on which the payment is due (rather than 14 days after assessment). As a later in time law, the TAL should override the CTL and ITA. However, it is not clear that the IRD applies this view with respect to the timing when a commercial tax or corporate income tax amount will be considered to be late. It appears that the IRD will still consider tax to be late – and fines to be applicable – if payments are not made by due dates, in line with the older CTL and ITA provisions.