The Legal Steps for Foreigners to Start a Business in Myanmar

Myanmar, once a closed economy, is now opening up to foreign investment. If youre an entrepreneur or business owner looking to tap into the growing market of Myanmar, youll need to understand the countrys legal framework for business setup. Whether youre planning to set up a small venture or a large enterprise, navigating the legal steps is essential to ensure compliance and smooth operations.

This guide walks you through the key legal steps for foreigners to start a business in Myanmar. Well explain everything you need to knowfrom the types of companies you can form, to registration, licensing, and employment regulations. Lets dive in!

1. Choose the Right Type of Business Entity

When setting up a business in Myanmar, choosing the right legal structure is essential. The Myanmar Investment Law (MIL) allows foreign investors to establish various types of businesses. Here are the most common options for foreign entrepreneurs:

a. Wholly Foreign-Owned Company (WFOC)

• A Wholly Foreign-Owned Company (WFOC) is 100% owned by foreign investors. This type of company is commonly used by foreign nationals looking to have full control over their operations in Myanmar.

• To establish a WFOC, you must comply with Myanmars investment laws and get approval from the Myanmar Investment Commission (MIC).

b. Joint Venture (JV)

• A Joint Venture is a partnership between foreign investors and local Myanmar nationals or companies. This structure allows foreign businesses to enter the local market with local expertise and market knowledge.

• The foreign ownership percentage in a JV can vary, but it typically cannot exceed 80% in most sectors unless otherwise specified by the MIC.

c. Representative Office

• A Representative Office is a non-commercial entity that is set up to represent the interests of a foreign company in Myanmar. It cannot engage in direct sales or business operations but can help with market research and promoting the business.

2. Register Your Business with the Directorate of Investment and Company Administration (DICA)

Once youve chosen the right business structure, the next step is to register your business with the Directorate of Investment and Company Administration (DICA). DICA is the government body responsible for overseeing the registration and operation of businesses in Myanmar.

Key Documents for Registration:

• A business name (must be unique and comply with DICAs regulations)

• Proof of identity for all directors and shareholders

• Address proof (for the registered office in Myanmar)

• Articles of Incorporation (for companies)

• Investment license (if applicable)

• Bank statement showing the companys paid-up capital (minimum capital requirements vary by business type)

The registration process with DICA takes about 1 to 2 weeks, depending on the type of company and the completeness of your application.

3. Obtain an Investment License (for Wholly Foreign-Owned Companies and Joint Ventures)

If youre setting up a Wholly Foreign-Owned Company or a Joint Venture, you will need to apply for an investment license from the Myanmar Investment Commission (MIC). The MIC is responsible for granting investment approval and ensuring that your business complies with Myanmars foreign investment laws.

Requirements for an Investment License:

• Business plan: Detailing your investment, projected revenues, and operations.

• Foreign exchange approval: If your business requires transferring foreign funds into Myanmar.

• Compliance with sector-specific laws: Certain sectors (e.g., finance, energy) may have restrictions or specific requirements for foreign investments.

Approval from the MIC can take several weeks, so make sure to plan ahead and submit all necessary documentation promptly.

4. Register for Taxes

All businesses operating in Myanmar must register with the Internal Revenue Department (IRD) for tax purposes. Myanmars tax system includes corporate tax, income tax, VAT, and other taxes depending on your business type.

• Corporate Tax: The standard corporate tax rate in Myanmar is 25%. However, for small and medium-sized businesses, the tax rate may be lower.

• VAT: If your businesss annual turnover exceeds a certain threshold, you may be required to register for VAT.

• Employee Taxes: If you have employees, you will need to comply with withholding tax regulations and ensure proper deductions from employee salaries.

Its highly advisable to hire a local accountant or tax consultant to navigate Myanmars complex tax system and ensure compliance.

5. Set Up a Bank Account

To carry out business transactions, you will need to open a business bank account in Myanmar. This is an essential step for managing your companys finances and fulfilling any regulatory requirements.

To open a bank account, you will need:

• A valid company registration certificate from DICA

• Investment license (for foreign investors)

• Proof of business address

• A valid passport for foreign directors or shareholders

Foreign-owned companies can open a foreign currency account, but keep in mind that Myanmars banking system can be relatively slow and may involve additional paperwork.

6. Obtain Necessary Permits and Licenses

Depending on the type of business youre operating, you may need to obtain various permits or licenses before starting your operations. For example, if youre opening a restaurant or retail store, you may need health, safety, and environmental licenses.

Certain businesses in specific sectors may require sector-specific licenses, such as those in the telecommunications, energy, banking, or construction industries.

7. Hire Employees and Comply with Labor Laws

Once your business is legally established, you can start hiring employees. Myanmar has a Labor Law that sets out the rights and duties of employers and employees.

Key considerations include:

• Employment contracts: Must be written and comply with local labor laws.

• Minimum wage: Myanmar sets a national minimum wage which employers must comply with.

• Employee benefits: Employers are required to provide benefits such as paid leave, public holidays, and health insurance.

Foreign businesses can also hire foreign employees, but they must comply with work visa regulations and ensure that employees have the necessary permits.

8. Comply with Ongoing Regulatory Requirements

After your business is established, there are ongoing legal requirements to maintain good standing:

• Annual tax filings with the Internal Revenue Department (IRD)

• Annual renewal of your business registration with DICA

• Auditing: Depending on the size of your business, you may need to submit audited financial statements.

It's important to stay on top of these administrative requirements to avoid penalties or closure of your business.

Conclusion

Starting a business in Myanmar as a foreigner can be a rewarding endeavor, but it involves understanding the countrys legal and regulatory landscape. By following these key stepschoosing the right business structure, registering with the relevant authorities, and ensuring compliance with tax and labor lawsyou can establish a successful business in Myanmar.

To navigate these legal steps smoothly, its advisable to work with a local business consultant, legal advisor, or accountant. This will help you avoid delays and ensure that your business complies with Myanmars rules and regulations.

FAQs

1. Can foreigners fully own a company in Myanmar?
Yes, foreign investors can fully own a company in Myanmar, but they must obtain approval from the Myanmar Investment Commission (MIC) for certain types of businesses.

2. How long does it take to start a business in Myanmar?
The business registration process typically takes 24 weeks, but obtaining an investment license can take several additional weeks, depending on the nature of your business.

3. Do I need to hire local employees in Myanmar?
While its not mandatory to hire local employees, many foreign companies in Myanmar do so to comply with local labor laws and benefit from local expertise.