SEATCA TOBACCO TAX PROGRAM
myanmar
The overall progress of tobacco tax policy implementation:
Relationship between tobacco
taxes, price and public health
The Government has introduced the Commercial Tax Law since 1990, which is to be considered for moving towards back to the Goods and Services Tax System that was installed in 1976. In 2016, the Special Commodity Tax Law was enforced and shifted the tobacco tax system from a purely ad valorem to a specific system with 4 tiers for cigarettes. The main objective is to raise taxes on all tobacco products, with a view to have impact on tobacco use.
Structure of tobacco taxes
The current tobacco tax structure is specific system with 4 tiers for cigarettes[1] (Table 1) under the Special Commodity Tax Law. The SGT is also levied on cheroots, pipe tobacco, cigars/cigarillos, smoking tobacco, and betel chewing preparation[2]. The Internal Revenue Department (IRD) determines the prices of tobacco products (based on information provided by the manufacturers and their own market survey). These prices are subject to the review by IRD and determine the tax rates.[3]
Tax Rate on Cigarettes and other tobacco products under the Union Tax Laws, 2016 to 2022*
| No. | Description of Specific Goods | Market Price Level* | Specific Tax Rate (2018) | Specific Tax Rate (2020) | Specific Tax Rate (2021) | Specific Tax Rate (2022) |
|---|---|---|---|---|---|---|
| 1 | (a) Cigarettes of all sorts | Sale price of packet containing 20 sticks not exceeding 400 MMK (2016 & 2017) or 500 (2018), 600 (2020), or 700 (2021) (2022) | 4 MMK per stick | 9 MMK per stick | 10 MMK per stick | 10 MMK per stick |
| (b) Cigarettes of all sorts | Sale price of packet containing 20 sticks from 401 to 600 MMK (2016, 2017 & 2018), 601 to 800 MMK (2020), or 701 to 900 (2021-2022) | 9 MMK per stick | 18 MMK per stick | 19 MMK per stick | 19 MMK per stick | |
| (c) Cigarettes of all sorts | Sale price of packet containing 20 sticks from 601 to 800 MMK (2016, 2017 & 2018), 801 to 1000 MMK (2020), or 901 to 1100 MMK (2021-22) | 13 MMK per stick | 23 MMK per stick | 24 MMK per stick | 24 MMK per stick | |
| (d) Cigarettes of all sorts | Sale price of packet containing 20 sticks from 801–900 MMK and above (2016, 2017 & 2018), 1001 MMK and above (2019), or 1101 MMK and above (2021) (2022) | 16 MMK per stick | 26 MMK per stick | 27 MMK per stick | 27 MMK per stick | |
| 2 | Cheroots | Cheroots 2018, 2020, 2021 & 2022 | 25 pya per stick | 0.80 MMK per stick | ONE MMK per stick | ONE MMK per stick |
| 3 | Tobacco Raw | 2018, 2020, 2021 & 2022 | 60% | 60% | 60% | 60% |
| 4 | Virginia Tobacco | 2018, 2020, 2021 & 2022 | 60% | 60% | 60% | 60% |
| 5 | Cigars | 2018, 2020, 2021 & 2022 | 80% | 80% | 80% | 80% |
| 6 | Piped tobacco | 2018, 2020, 2021 & 2022 | 80% | 80% | 80% | 80% |
| 7 | Tobacco products for betel quid | 2018, 2020, 2021 & 2022 | 80% | 80% | 80% | 80% |
Note: *Union Tax Law 2022, State Administrative Council Law 6/2022, 30 March 2022
Level of tax rates to apply
Tobacco tax as a percentage of retail prices in Myanmar is 50-60%. Since 2015, the Internal Revenue Department (IRD) has started to implemented a long-term policy on tobacco taxation. Tobacco tax rates on all tobacco products increase annually. Nonetheless, the tobacco tax rates apply to cigarettes are in tiers based on tobacco prices while tobacco tax rates for cheroots are much lower than cigarettes.
Comprehensiveness/similar tax burden for different tobacco products
The government does not tax all tobacco products in a comparable way. Since hand-rolled tobacco products like cheroots or cigars or smokeless tobacco products are taxed less than cigarettes, there is a potential to for consumers to shift to those cheaper products if there is a tax increase. As per the Myanmar Constitution 2008, the Union Parliament has to pass the annual Budget and Union Tax Law, and thus every year, the Parliaments (both upper and lower houses) have to review and also can make revisions of tax systems and tax rates as required.
Authorization/licensing
Myanmar has a license system for manufacture of tobacco products and manufacturing equipment, import or export of tobacco products and manufacturing equipment. There is no license required for retailing tobacco products, transporting commercial quantities of tobacco products or manufacturing equipment, and wholesaling, brokering, warehousing or distribution of tobacco and tobacco products or manufacturing equipment.
Warehouse system/movement of excisable goods and tax payments
Myanmar formally ban any importation of cigarettes, but allow importation of raw tobacco, and other materials to be used for cigarette production. Myanmar also allows import of duty-free cigarettes to be sold to tourists and to passengers passing through international terminals. Myanmar has not implemented yet of establishing bonded stores/warehouse system for storing and control of movement of excisable goods, including checking for taxation.
Anti-forestalling measures
Myanmar does not have anti-forestalling measures.
Fiscal markings
The government applies tax stamp on tobacco products. However, it is not part of any tracking and tracing system.
enforcement
There is an enforcement action under the Special Commodity Tax Law and the Union Tax Law, as well as Income Tax Law.
Use of revenues – financing of tobacco control
There is currently no policy for specific use of tobacco tax revenues to finance tobacco control.
Tax-free /Duty-free sales
Duty-free imports for cigarettes are allowed for hotels and international airport terminals, under licensed from the Hotel and Tourist Ministry. In addition, international travelers to Myanmar can carry duty-free cigarettes up to 400 sticks, 100 cigars, or 250 grams of pipe tobacco.
Protection of tax policies from vested interests
The government has not implemented the WHO FCTC Article 5.3 to protect tax policies from vested interests of the tobacco industry yet.
[1] Myanmar Cigarettes, GlobalData, October 2020.
[2] Myanmar. Overview of Tobacco Use, Tobacco Control Legislation and Taxation. World Bank, 2019.
[3] Myanmar. Overview of Tobacco Use, Tobacco Control Legislation and Taxation. World Bank, 2019.
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