Myanmar

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Income Tax

7.The Income Tax Law was promulgated in 1974 and is supplemented by the Income Tax Rules, the Income Tax Regulations, the State Budget Law and Notifications issued from time to time; all constitute the complete machinery for assessment and collection of income tax. In general, the tax is payable by individuals, firms, companies or any other association of persons on the total income accruing in or derived from all sources in and outside Myanmar. A non-resident foreigner is contrarily liable to pay tax only for the income received in Myanmar. The income tax mainly comprises corporate income tax, individual income tax, capital gains tax and withholding tax.

8. The Income tax law applies to the following types of taxpayers and the classes of income:

1. State Economic Enterprises (SEEs),

2. Co-operative Societies,

3. Foreigners and foreign organizations engaged under special permission in the State sponsored enterprises,

4. Income from salaries,

5. Non-resident foreigner,

6. Income earned abroad by non-resident citizens,

7. Companies

8. Resident foreigners,

9. Partnerships or joint-ventures formed between or with (1), (2), (3), (5), (7) and (8) of above.

9.A person who has taxable income, not covered by the Income Tax Law is subject to tax under the Profit Tax Law. Such a person, if he desires to be assessed under the Income- tax Law, may apply to the State/Divisional Revenue Officer for passing an order to be so assessed.

(a) Income Tax (Corporate) Both foreign and local companies incorporated under the Myanmar Companies Act or Special Company Act 1950, or any existing law, are taxed on income accrued, or derived from, or received from any source in or outside Myanmar, in other words, on its total world income. Special tax exemptions and relief may be granted, under the Income-tax Law or any other special Law.The tax rate for corporation is same (30 %) for all kinds of corporation regardless of its size.

(b) Income Tax (Individual) Individual income tax under Income Tax Law is applied for individual salary income in practice. Individual foreigners engaged under special permission in a State sponsored project or any undertaking the income tax is 20 percent of the total income, before deduction or any relief is allowed. A foreign employee may be treated as a resident foreigner if he is engaged in an enterprise operating under the Union of Myanmar Foreign Investment Law.

For salary income of non-residents a flat rate of 35 percent and 5 percent to 40 percent whichever is greater shall apply. Other income includes property income, business income, and income from other sources, aggregated as one sum for assessment.

For resident citizens, salary income is taxed on the PAYE1 basis and includes salary, wages, annuity, pensions, gratuity, fees, commissions and bonuses.

There is a basic allowance of 20 percent up to a maximum of Kyat 12,000, and a family allowance for wife and children. There also is an allowance for insurance premiums paid on the taxpayer's own life or the life of his or her spouse. Also payment contributions towards saving funds as prescribed by the rules are deductible. The child allowance is applicable if the child is unmarried and under 18 years of age or if the child is over age 18 and is receiving full-time education.

Family allowance for wife and children is as follows:

Salary income also includes perquisites and any benefits; for instance, the rental value of free accommodations is usually calculated at 10 percent of the employee's gross salary or at 12.5 percent if the accommodation is furnished. If the employer pays the employee's tax, a tax on tax basis of assessment is adopted. Income tax is withheld monthly and paid within seven days to tax office.