7-1-2024 (YANGON) Myanmar has recently introduced a new tax policy targeting its nationals working abroad, a move seemingly aimed at boosting foreign currency inflows. However, this has raised concerns among employers who fear indirectly supporting the military government through their compliance with the tax requirements.
Since mid-December, Myanmar’s embassies in key Asian countries have announced a series of tax rules for Myanmar nationals residing in their respective jurisdictions. The new policy imposes a 2% income tax on Myanmar nationals in Japan, with the tax amount varying based on income brackets. Similarly, nationals in South Korea, Singapore, Thailand, and Malaysia are subject to a 2% tax rate, but the final tax amounts owed depend on residency status and income levels.
Failure to pay the taxes is expected to have repercussions on the individuals’ ability to renew their passports. Myanmar implemented tax reforms for fiscal year 2023, mandating that its nationals living abroad pay income taxes in the foreign currencies they earn, effective from October 1. However, the government had not provided further details or guidance on necessary procedures until now. It is anticipated that authorities will collect back taxes retroactively from October using the new tax rules.
While the individual tax burden may not be significant, with someone in Japan potentially paying as little as 1,000 yen ($7) per month after tax credits, Myanmar stands to generate substantial tax revenue depending on how effectively the new tax scheme is enforced. According to estimates by independent news outlet Irrawaddy, at least 2 million documented Myanmar migrants work in Thailand, suggesting that the military government could collect 300 million baht ($8.6 million) monthly from this group alone.
However, the introduction of the overseas income tax has sparked concerns among businesses that hiring Myanmar talent may be perceived as supporting the military regime. Since the military assumed control of the government in February 2021, human rights experts and organizations have expressed worries that taxes paid by businesses and workers in Myanmar would indirectly fund the military, potentially contributing to a crackdown on pro-democracy forces and other human rights abuses.
Staffing agencies report that some companies already view hiring Myanmar workers as endorsing the military government. As more Myanmar nationals seek employment in Japan and South Korea, how investors and human rights activists perceive the new tax scheme has become a critical concern.
Nevertheless, according to a lawyer knowledgeable about human rights in business, companies need not shy away from hiring Myanmar talent. The lawyer stated that the belief that taxes directly contribute to Myanmar’s military government is not necessarily widely accepted.
There are also concerns about the financial implications of the new tax scheme for Myanmar workers abroad. Mitsuru Nishigaki, the head of a Japanese-affiliated staffing agency in Yangon, revealed that employers have already sought advice on the matter, with some opting to cover the tax burden themselves.
