Top 10 commonly asked questions by potential homebuyers
Updated: Jun 23, 2020
Legal & tax issues
1. What kind of title guarantee can be provided?
Within Pun Hlaing Estate, a land grant for each individual plot will be issued by the Department of Urban and Housing Development (DUHD) in the name of the property owner once certain conditions are satisfied e.g. full payment of the property price to the developer and substantial completion of the building on said plot. This will not be the case for apartment units as there is no existing strata title system in Myanmar. The recently-enacted Condominium Law provides a mechanism for collective ownership of applicable projects but the developer will need to make the necessary application to the relevant authority and meet the stipulated conditions set out under the Law for its project to be designated as a ‘condominium’.
2. Is there any restriction on foreign ownership? Is it legal for expatriates to own property? Can they buy under a company name?
The Transfer of Immoveable Property Restriction Act 1987 (“TIPRA”) generally prohibits foreigners from owning land in Myanmar. Notwithstanding that, the Condominium Law allows foreigners to purchase units up to 40% of a condominium designated under the Law. Additionally, the Myanmar Companies Law 2017 (“MCL”), which came into effect on 1 August 2018, defines a ‘local company’ as having no more than 35% of foreign shareholding. This appears to carve-out an exception for foreigners to own up to 35% shares of a local company holding land or landed properties in its name.
3. Can they get a mortgage from a local bank or international banks in Myanmar?
Due to the prohibition stipulated by TIPRA on foreign ownership and the fact that no buildings have been designated as a ‘condominium’ under the Condominium Law, it is unlikely for foreigners to obtain any mortgage financing from banks in Myanmar. The circumstances may be different for future condominium projects.
4. Are nominee agreements legally binding in Myanmar?
To the more specific query of whether local citizens or local companies are able to hold shares on behalf of foreigners, we are of the view that the MCL would capture these arrangements and regard the foreigners as the beneficial shareholders of the company in determining whether the said company is a ‘local company’ under the MCL. Separately, it bears highlighting that nominee arrangements are not explicitly disallowed under Myanmar laws but such arrangements may arguably be disregarded by the courts in event of a dispute, particularly if they were made with the sole intention of circumventing prohibitions under Myanmar laws.
5. Are there any covenants, caveats or any regulatory impositions on the property?
This depends on the type of land upon which the property is being built on - the conditions imposed on each plot of land may be different. The standard conditions are typically set out in the grant to be issued to the property owner.
6. How is the capital gains tax (CGT) calculated on the property? Is there a difference between calculation for local versus foreigner or company?
CGT is applicable to both resident and non-resident taxpayers deriving a profit from the sale, exchange, or transfer of capital assets in Myanmar. Where the value of the property transferred does not exceed MMK 10 million, CGT is not applicable. The CGT rate for all taxpayers is a flat rate of 10%.
7. What are the tax considerations - foreign income tax, property tax, stamp duty, foreign buyer tax, income from rental and vacancy tax?
We make no further comment on this in view of our response to item 2 above. For a standard case, stamp duty, commercial tax and rental income tax are payable.
8. What are the names/contact of some local lawyers if I need them in the purchase process?
Please contact our Sales Team and we will provide contact details of some local law firms for your further action.
9. What legal obligations are there on landlords in Myanmar?
The general obligations on landlords are to pay the relevant taxes such as commercial tax, stamp duty, CGT and property tax. All land leases must be registered with the Office of Registration of Deed together with payment of the relevant registration fee.
10. Is it possible to obtain landlord insurance there?