Myanmar is one of the Asian countries that many investors consider due to the abundance of natural resources and comparatively cheap labor force. This country demonstrates a steady tendency for growth and is interested in foreign direct investments. Even though there are some regulatory issues, company registration in Naypyidaw or Yangon may open the next benefits of the region.
Why to Register a Company in Myanmar
New company registration in Myanmar may easily enable access to the next advantages attributed to this option:
- strategic location in the Asian Region;
- high interest in foreign capital;
- vailability of special economic zones;
- double-tax treaties signed with many countries.
Legal and Organizational Forms in Myanmar
Setting up a company in Myanmar or establishing your legal presence in an alternative form is possible through:
- Private company limited by shares – the most popular type of company in Myanmar that offers maximal flexibility in doing business. There are no statutory requirements for the amount of the starting share capital but it has to be sufficient for the types of goals that an entity is going to realize. Specific minimal capital thresholds may be foreseen in certain areas (for instance, $50,000 – for the service sector and $150,000 – for manufacturing). At least 1 founder and 1 local director are needed to form this entity. This company can have a maximum of 50 members. Specific limitations are applied to the transfer of shares of the considered business type.
- Public company limited by shares – this is a more complicated business structure that supposes share offerings to the general public. All the financial and legal obligations of its shareholders are restricted solely to the values of the shares they possess. Such shares may freely circulate in the market. The law does impose any restrictions on the amount of share capital but its minimal amount should be appropriate to the goals a public company intends to realize. The maximum number of shareholders is unlimited for this type of entity. At least, 3 directors are needed for this business type, 1 of which has to be a resident.
- Branch – a simplified business registration solution that will suit a foreign company that intends to enter the local market easier compared with the option of entity incorporation. 100% financial and legal liability over the performance outcomes of a branch shall bear its mother company.
- Representative office – another simplified solution that allows one to carry out marketing and research efforts without the right to conduct a business. The entire liability over the results of performance that a subsidiary demonstrates always bears its mother company.
How to Set up a Company in Myanmar
The entire process of company incorporation in Myanmar covers the subsequent must-have stages:
- Defining the scope of business activities that a future enterprise intends to carry out. Getting approval from the Myanmar Investment Commission.
- Elaborating on and reserving the unique commercial name.
- Requesting and formalizing the particulars about the entity’s founders, including its mother company (if any), final beneficiaries, and officials.
- Depositing the amount of starting share capital for a new entity in Myanmar.
- Searching for and formalizing an official legal address for a future entity.
- Composing and executing all must-have statutory documents and applications for a business in Myanmar.
- Sending the set of registration documents, including a bank statement on the payment of the registration fee, for consideration to the Myanmar Investment Commission. Making the respective record about a newly-formed company in the Companies Register.
- Registering a new corporate entity for tax and social security payment purposes.
- Developing a corporate seal for a new company.
- Opening corporate bank accounts.
- Applying for and getting specialized permits or licenses (usually needed for specific regulated types of activities).
Legal and Business Framework
Myanmar is interested in getting foreign direct investments through the establishment of specialized authorities and providing incentives to abroad investors. At the same time, the approach to foreign investment regulation is not 100% in favor of a non-resident investor. It is allowed to own 35% of a local company only by a foreigner to preserve the status of a local company. The rest of the capital should own the locals. Otherwise, an entity will be considered to be a foreign company in Myanmar. Still, formally, Myanmar allows 100% foreign ownership in most sectors unless we speak about certain fields where governmental restrictions are applied. Foreigners should also get approval from the Myanmar Investment Commission.
The entire business framework is a bit non-stable because of some occasional governmental actions that decrease the level of trust and transparency. For instance, the local Register of Companies (Myanmar Companies Online) was closed for a long period of time. Contact Prifinance attorneys if you wish to have equally profitable but more safe jurisdictions for the company registration in the Asian Region.
Taxation in Myanmar
If you seriously consider the option of establishing a company in Myanmar, please draw specific attention to the next highlights about the local tax regime as well:
- Profit tax (for companies) – 22%
- Income tax (for individuals) – 25%
- Commercial tax (instead of VAT) – 5%
- Withholding tax – (1) dividends – 0% (2) interests –15%* (3) royalties – 15%
- Capital gains tax – (1) for companies – (i) from the oil and gas sector – 40-50% (ii) from other sectors – 10% (2) for individuals – 10%.
* if we speak about the registered branch of a foreign company, the rate may be 0%.
How Prifinance Attorneys Can Assist You
If you are interested in more precise considerations and planning on the matter of company registration in Myanmar, send your request to Prifinance experts. Lawyers already have 11 000 successful projects in their portfolio and are ready to foster your business growth as well.