Business entities in Myanmar
Myanmar company setup still represents a time consuming and complex engagement, in spite of recent efforts of the local authorities to simplify rules over investment by foreigners. Entrepreneurs should hence be prepared for inconsistent regulations, bureaucratic challenges and licensing delays. In many industries still restricted to investment by foreigners, our Clients may additionally be required to setup a joint venture company with a Myanmar shareholder.
The Myanmar limited liability company (wholly foreign-owned company)
- A limited liability company can be setup in Myanmar with i) two shareholders and ii) two directors. While all companies setup in Myanmar with foreign investment must receive approval from the Myanmar Investment Commission (MIC), the shareholders can be corporate or individuals and do not need to be resident in Myanmar. The minimum paid up capital for companies with foreign shareholders is i) US$50,000 in service industries and ii) US$150,000 in manufacturing;
- Our Clients setting up a business in Myanmar can also request the MIC to grant them a foreign investment permit under the Foreign Investment Law, with benefits including i) increased guarantees to remit earnings abroad ii) easier access to foreign currencies iii) tax holidays during up to seven years and iv) exemption from custom duties on equipment and some raw materials. However, such applications are subject to a lengthy review process, requiring foreigners to submit a business plan including i) the amount of paid-up capital of the company ii) a detailed account of its operations iii) the number of jobs created in Myanmar and iv) expected technology transfers (if any);
- Post incorporation, all Myanmar LLCs must i) provide the authorities with an annual return ii) make quarterly provisional payments for corporate tax and iii) submit annual financial statements. Most foreign-owned companies are subject to audit requirements.
The Myanmar joint venture company
- A Myanmar joint venture company is commonly a standard Myanmar limited liability company incorporated by i) one foreigner (our Client) and ii) one local shareholder. Such legal structure usually corresponds to a Government requirement for foreigners to do business in many industries: click on this link to learn the list of industries where investment by foreigners is prohibited or subject to formation of a joint venture. In such case, foreign ownership will be subject to a maximum level, which cannot be higher than 80%;
- Joint venture company setup may also be requested by some of our Clients, willing to benefit from the specialist local knowledge of their local partner.
The Myanmar public limited company (Myanmar PLC)
- A Myanmar public limited company can be setup with i) seven shareholders and ii) two directors. They are subject to the same requirements as a limited liability company, but their financial statements are always subject to audit rules;
- Public limited companies are not required to list in Myanmar. There is actually not much opportunity to list in this country as only two companies are listed on the Myanmar Securities Exchange.
The Myanmar branch office
The Myanmar Companies Law allows foreign companies to open branch offices in Myanmar. Because the branch will be subject to a corporate tax rate of 35%, higher than the corporate tax rate of 25% applicable to companies incorporated in Myanmar, Healy Consultants recommends our Clients to setup a subsidiary in Myanmar instead of a branch.
The Myanmar representative office
Local regulations stipulate that foreign companies can open representative offices in Myanmar. While the representative office can be 100% foreign owned, it is not allowed to pursue production-related or commercial activities in Myanmar.
Table of comparison between Myanmar entities
(Partly foreign owned)
|Public limited company||Branch||Rep office|
|Also known as:||Foreign company||Joint venture||Joint Stock Company||Branch||Rep. office|
|How long to set the company up?||12 weeks||14 weeks||14 weeks||12 weeks||12 weeks|
|How long to open company bank account?||4 weeks||4 weeks||4 weeks||4 weeks||4 weeks|
|Will the company be able to conduct business in sectors restricted to foreign investment?||No||Yes||No||No||No|
|Does the company needs to obtain a business license?||Yes||Yes||Yes||Yes||Yes|
|Approval needed from MIC?||Yes||Yes||Yes||Yes||Yes|
|Wholly foreign owned?||Yes||No||Yes||Yes||Yes|
|Minimum share capital for foreigners?||US$50,000||US$50,000||US$50,000||N/A||N/A|
|Minimum paid up capital?||50%||50%||50%||N/A||N/A|
|File annual tax return?||Yes||Yes||Yes||Yes||Yes|
|Corporate bank account options?||First Private Bank||Yoma Bank||AGD Bank||First Private Bank||Yoma Bank|
|Does our Client need to travel?||No||No||No||No||No|
|Resident director required?||No||No||No||No||No|
|Minimum directors allowed?||2||2||2||N/A||N/A|
|Corporate shareholders allowed?||Yes||Yes||Yes||Yes||Yes|
|Individual shareholders allowed?||Yes||Yes||Yes||No||No|
|Standard corporate tax rate?||25%||25%||25%||35%||35%|
|Annual financial statements required?||Yes||Yes||Yes||Yes||Yes|
|Statutory audit required?||No||No||Yes||Yes||Yes|
|Allowed to issue sales invoices in Myanmar?||Yes||Yes||Yes||Yes||Yes|
|Allowed to sign contracts with residents?||Yes||Yes||Yes||Yes||Yes|
|Allowed to import and export goods?||Yes||Yes||Yes||Yes||Yes|
|Can rent an office in Myanmar?||Yes||Yes||Yes||Yes||Yes|
|Can buy Myanmar land?||No||Yes||No||No||No|
|Can own equity in other Myanmar companies?||Yes||Yes||Yes||Yes||Yes|
|Total Myanmar business setup costs in Yr. 1||US$20,725||US$17,325||US$18,325||US$21,400||US$21,400|
|Subsequent annual costs (excl. accounting and tax fee)||US$1,100||US$1,100||US$1,100||US$1,100||US$1,100|