Myanmar to Commercially Tax All Transactions on Yangon Stock Exchange

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According to the Securities and Exchange Commission of Myanmar (SECM), all transactions on the soon to be opened Yangon Stock Exchange (YSX) will be commercially taxed.

The new bourse, the first of its kind in Myanmar, is scheduled to be opened in December of this year. The YSX is being developed in partnership with two Japanese firms, the Daiwa Institute of Research Ltd, which holds a 30.25 percent stake, and the Japan Exchange Group, with an 18.75 percent stake. As a result of the opening of the new exchange, all existing over-the-counter (OTC) markets will be made illegal.

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The SECM was established in August 2014 in order to oversee the new stock exchange. Its powers are vested in it by the July 2013 SECM Law. The SECM will issue licenses for brokers, consultants, dealers, and underwriters.

Despite the enthusiasm for the new bourse, analysts have warned that Myanmar’s Revenue Department has no prior experience in taxing such an operation. Therefore, investors can most likely expect some growing pains in the short term as the tax authorities settle into their new responsibilities.

In the future, there is the possibility that the tax on transactions could be removed and a range of financial incentives offered to encourage investment. Dr Maung Maung Thein, chair of the SECM and deputy finance minister, explained the situation: “The Union Tax Law was enacted before the stock exchange opened, so it doesn’t mention anything about YSX tax…This means investors will initially have to pay tax. But in the future we plan to amend the law to grant tax exemptions and we are considering other incentives.”

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According to the country’s Finance Ministry, transactions on the YSX will not involve any direct cash transactions; instead all transactions will be processed through banks, via the Kanbawza Bank – the expected settlement bank for the exchange. Additionally, transactions higher than 100 million Kyat (~US$77,827) will require the banks involved to inform the financial crime unit and the Central Bank of Myanmar’s anti-money laundering program.


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