E-Commerce System for Tax Payments and an Obstacle on Its Implementation

Myanmar Tax Reform Plan

Since 2012, with the assistance of international organizations1, Internal Revenue Department (IRD) of
Myanmar sets Tax Reform Plan with three phases to modernize the tax administration system in
Myanmar. The first phase has been completed in 2016/17 fiscal year2. Now, the second phase (2017/18 to
2021/22) has been implemented and the third phase will begin after 2021/22 fiscal year. During the first
phase, IRD successfully did many reforms and the most significant reforms are (i) enacting and
introducing Specific Goods Tax Law 2016 (SGTL), (ii) introducing the self-assessment system (SAS) to
replace officer-assessment system (OAS), (iii) restructuring the Company Circle Tax Office by
establishing Large Taxpayers Office (LTO) and Medium Taxpayers Offices (1), (2) and (3) to implement
better and effective administration mechanism3 and (iv) drafting the Tax Management Law (TML) to
submit to Parliament.

Second Phase of Tax Reform Plan and E-Commerce System

Under the second phase, the followings, such as modernizing tax laws, establishing functional
organizations and segmentation like LTO and MTOs, implementing streamline process and procedures,
and improving human resources and technology improvements, are included. As part of technology
improvements, IRD targeted to implement E-Commerce system during 2018-19 fiscal year as shown in
below table.

Reform Plan Target To Complete Remark

Formation of Data Center Within 2017-18 fiscal year
Upgrading Tax Revenue Within 2017-18 fiscal year
Management System
Tender and purchase Integrated Within 2017-18 fiscal year
Tax Administration System
(ITAS)
ITAS configured Within 2018-19 fiscal year
ITAS implemented Will commence in 2019-20 fiscal year
E-pay or E-Commerce System Within 2018-19 fiscal year
E-filing Within 2018-19 fiscal year It appears that this
plan has not been
achieved
Telephone infrastructure Within 2017-18 fiscal year
Reference from: www.irdmyanmar.gov.mm

1
International Monetary Fund (IMF), US Treasury, Office of Technical Assistance (US OTA), World Bank (WB), Japan
International Cooperation Agency (JICA), Asian Development Bank (ADB), Norwegian Agency For Development
Cooperation (NORAD) and Department for International Development (DFID)
2
In Myanmar, a fiscal year begins on April 1 and ends on March 31 of the next calendar year.
3
According to IRD, LTO administers the companies which have tax amount payable more than MMK 10 billion per
year: MTO (1) administers the companies which have tax amount payable more than MMK 7 billion per year, but
no more than MMK 10 billion per year: MTO (2) administers the foreign companies which have tax amount
payable less than tax revenue MMK 7 billion per year: and MTO (3) administers the Myanmar companies which
have tax amount payable less than MMK 7 billion.
E-Commerce System Implemented by IRD

On February 21, 2018, IRD issued a pamphlet in respect of using E-Commerce System for the payment of
tax through online. According to an officer of IRD, as the first step of the implementation of the E-
Commerce System, IRD successfully implemented the E-Commerce System for the companies located in
the Thilawa Special Economic Zone for the payment of salary income tax of their employees. On
February 23, 2019, as the second step of the implementation of the E-Commerce, IRD announced that all
the tax payers of LTO and MTO(s) can use E-Commerce System for online tax payment. On March 2,
2019, IRD invited the tax payers to explain how to use E-Commerce System.

Step-by-Step Procedures

Using E-Commerce System is not mandatory. However, a tax payer who would like to use E-Commerce
System must have a Myanmar Payment Union Card (MPU Card), whether an individual debit card or a
corporate debit card, to make online tax payment. Such MPU Card may be used for tax payment only, but
not for any other type of payment. For an individual debit card, each transaction is allowed for the
payment of up to MMK 5 million while MMK 500 million is allowed in each transaction for a corporate
debit card. The procedures of using E-Commerce System are summarized in below table.

Step Action Remark

1 Apply MPU Card (Individual or Corporate) at the  Almost all the local banks can issue
banks, which can issue MPU Card MPU Card

2 Visit to www.irdmyanmar.gov.mm and click “Start

Your Tax Online Payment”

3 Fill (a) tax payer identification number (TIN), (b) tax
amount to pay, (c) contact email address, (d) contact
phone number, (e) tax type (commercial tax, income
tax, capital gin tax or specific goods tax), (f) payment
type (whether payment is advance or withholding tax or
balance due after tax return), (g) tax period (whether
the payment is for 1st quarter, 2nd quarter, 3rd quarter or
4th quarter of the fiscal year) and (h) other information
mentioned therein
4 Click “Pay with MPU Card” and “I agree to pay
transaction fees for tax payment” and click “Confirm”
button.
5 Click “Pay with MPU Card” again and fill card
information
6 Click “Continue”
7 The page stating “Your payment is successful” will be
appeared, if the payment is successful. Payment details
will also appear on this page
8 Upon receipt of payment, IRD web portal will send
automatically generated email to tax payer
 In case of a corporate tax payer,
TIN is the same number with its
company registration number
 In case the payment of salary
income tax withheld from the
payment to employees, tax payer
information of such employee must
be attached with an excel file
Transaction fee MMK 200 for each
transaction will be charged by bank
This email will be an evidence of tax
payment.
If there is any mistake on tax type, payment type, tax period and income year, request for correction must
be made at a tax office within the month when payment is made. If the request is not made within the time
period, tax office, if and when the tax office becomes aware of such mistake, will, in its sole discretion, (i)
refund the tax payment to the tax payer or (ii) offset as an advance payment under the tax type in
accordance with tax law.

Obstacle

There is one main obstacle for the implementation of E-Commerce System. Although IRD announced
that companies can apply MPU corporate card which allows tax payment transaction for up to MMK 500
million, no local bank has issued an MPU corporate card to any company to date. Therefore, companies
which are willing to use E-Commerce System for tax payment must authorize an individual (maybe the
managing director of the company) to apply MPU individual card and must arrange to pay tax payment
with this MPU individual card. As MPU individual card has its limit on each transaction amount (up to
MMK 5 million as set out above), the use of MPU individual card would not really work for the
companies which has huge amount of tax payment transaction. Therefore, IRD should discuss with the
banks to solve this issue as to whether companies may open corporate MPU corporate card for effectively
using E-Commerce System.

Conclusion

One of the purposes on the implementation of E-Commerce System is to prevent the bribery and
corruptions when tax payment is made as taxpayer has limited contact with tax officer. However, the
implementation of E-Commerce System alone would not be enough to meet this purpose unless E-filing
(such as filing quarterly tax return, annual tax return and other required documents to tax office through
online) can be implemented at the same time. At present, tax payers are still required to visit tax officer
for filing the tax documents although the payment can be made through online. It is true that the reforms
of tax administration in Myanmar have made some progress and, hopefully E-Commerce System and E-
filing will be completed in upcoming years as announced by IRD.