Abstract

• In order to promote a particular economy, the Myanmar Government aims at attracting Foreign Direct Investment (FDI) by offering tax incentives (Tax concessions) in the form of tax holidays, for FDI including domestic investments and other allowances. However, such generous fiscal incentives to attract FDI could hinder the government’s efforts in building fiscal policy space. Moreover, in making investment decisions, the investors often emphasize on the other considerations such as relatively low-cost labor, political situation, etc rather than the tax incentive system. Thus, such tax incentives may have only caused the waste of revenue costs because the incentives go to the investments. In this situation, tax reforms in the other revenue laws, other than the incentives regime, have been made by increasing the domestic income tax and the other commercial tax. Thus, this paper discusses the consequences of tax incentives that are offered to Foreign Direct Investment in Myanmar which can lead to adverse impacts to the local revenue system by causing revenue loss. This paper also analyzes the legal issues related to current Revenue Laws and Myanmar Investment Law, 2016. It is found out that the current Myanmar Investment Law, 2016 needs more specific provisions relating to the tax incentives with respect to the terms of relief which can lead to revenue cost.