03.07.2017
Notification No. 51/2017 on Withholding Tax
On 10 January 2017, the Ministry of Planning and Finance issued Notification No. 2/2017 with updated rates and regulations in respect of withholding tax on interest payments, royalties for the use of licenses, trademarks and patent rights, and payments for the purchase of goods, for services performed and the leasing/hiring of property. The applicable withholding tax should be withheld, filed and paid by the person making a payment as stipulated in the notification – regardless of whether the payment recipient has agreed to the deduction or not.
On 10 January 2017, the Ministry of Planning and Finance issued Notification No. 2/2017 with updated rates and regulations in respect of withholding tax on interest payments, royalties for the use of licenses, trademarks and patent rights, and payments for the purchase of goods, for services performed and the leasing/hiring of property. The applicable withholding tax should be withheld, filed and paid by the person making a payment as stipulated in the notification – regardless of whether the payment recipient has agreed to the deduction or not.
Notification No. 2/2017, which clarified previous ambiguities on the application of withholding tax to payments for offshore services and lease agreements, came into effect on 1 April 2017, superseding Notification No. 41/2010 dated 10 March 2010 and Notification No. 167/2011 dated 26 August 2011.
On 4 April 2017, the Ministry of Planning and Finance followed up with Notification No. 37/2017, introducing new thresholds for the imposition of withholding tax for tax payers under the new self-assessment tax system.
Less than two months later, on 22 May 2017, the Ministry of Planning and Finance issued Notification No. 51/2017, which replaced both Notification No. 2/2017 dated 10 January 2017 and Notification No. 37/2017 dated 4 April 2017 and came into effect retrospectively from 1 April 2017.
The most important change from Notification No. 2/2017 is the introduction of new thresholds for the imposition of withholding tax. (For all other matters related to the new withholding tax regulations, please refer to our Mach 2017 – News Alert).
Pursuant to Notification No. 51/2017, the imposition of withholding tax shall not be required for payments to resident tax payers, if the following thresholds are not met:
| (i) If the person making the payment is a large or medium tax payer subject to the new self-assessment tax system: | MMK 1,500,000 |
| (ii) For any other person making the payment: | MMK 500,000 |
For the avoidance of doubt, the thresholds do not apply for payments to non-resident foreigners.
A further change from the previous Notification No. 2/2017 is that the new thresholds will apply with respect to each payment. The previous requirement to impose withholding tax if a sum of cumulative payments exceeds the threshold has been deleted. Such payments not exceeding the threshold shall, however, still be notified to the relevant tax office.
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