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Government: Microfinance Institutions Must Form As Companies
AUTHOR: ZIN THU TUN
The Ministry of Planning and Finance have ordered non-government organizations (NGOs) and international non-government organizations (INGOs) providing microfinance services in Myanmar to form as companies.
According to the order, issued in early June, if an NGO or INGO is going to provide microfinance services, they must have a license to perform those services in accord with the Myanmar Company Act.
The Financial Regulatory Department asked the Ministry of Home Affairs and the Union Attorney General’s Office for their remarks on the matter. One of their replies was that financial institutions such as NGOs and INGOs do not need to register under the Registration of Organization Law; however, they will need to apply for microfinance licenses in accord with the Myanmar Company Act of 2017.
U Myo Min, Director General of the Directorate of Investment Company Administration, said: “It’s not like an NGO becomes a company. But if they want to operate as a business, they can register as a company limited by guarantee as a company for development.”
The Union Attorney General’s Office, in their response, said that in this case, INGO refers to an organization founded in another company operating social works in the country by registering under the Union Registration Committee.
“It is hard to define in terms of their names,”U Myo Min said. “However, they will become a company-like organization. Perhaps their backing can be a corporate identity.”
INGOs that are involved in microfinancing services must operate in the manner of a company, opening a bank account and paying taxes.
The Director General added: “When the Internal Revenue Department levies the income tax, they look at the source of income for those institutions to see if they have a clear source of income. If that source is foreign, there will be no income tax at first, but after a year, a corporate income tax will be levied.”
Currently, the Financial Regulatory Department has issued microfinancing licenses for three INGOs, 16 NGOs, 47 foreign companies, 110 local companies, and five joint-ventures.
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