MyanmarTax Obligations Detailed

In Myanmar, employers face several tax obligations, including income tax withholding, social security contributions, and annual salary statement filing.

Income Tax

• Withholding: Employers must withhold income tax from employee salaries at the time of payment. The tax is calculated based on progressive rates depending on the employee's residency status (resident or non-resident) and income level. Payment of the withheld tax is due within 15 days of the deduction. All income tax obligations are fulfilled in the currency in which the income was earned.
• Annual Salary Statement: Employers must file an annual salary statement (Form PaTa Kha (Wa Nga) – 03-07 (A)) for each employee within three months of the end of the income year (March 31st).
• Currency: Income tax is paid in the currency the income was earned.

Social Security Contributions

• Rates: Employers contribute 3% of an employee's total salary and wages, up to a maximum of MMK 9,000 per month. Employees contribute 2% of their total salary and wages, capped at MMK 6,000 per month.
• Payment: Contributions must be made in Myanmar Kyat, regardless of the currency of salary payment, within 15 days of the following month. The exchange rate used is the one prescribed by the Myanmar Foreign Trade Bank (MFTB) on the first day of the relevant month.
• Threshold: Social security contributions apply to companies with five or more employees.

Corporate Income Tax

• Rate: The general corporate income tax rate is 25%. Specific rates apply to other sectors, such as oil and gas exploration and production (40%-50%) or publicly listed companies (17%).
• Filing: Annual corporate income tax returns must be filed by July 1st of the following year. Companies registered with the Large Taxpayers Office (LTO) or Medium Taxpayers Office (MTO) must file electronically. Others can file physically or by mail/email.
• Payment: Advance quarterly income tax payments are required based on estimated income. Final tax liability is due within 21 days of the notice issued by the Internal Revenue Department (IRD).

Other Taxes

• Commercial Tax: Businesses with annual turnover exceeding MMK 50,000,000 are subject to commercial tax, generally at a rate of 5%. Some sectors, such as infrastructure, have a reduced rate of 3%.
• Capital Gains Tax: A 10% tax applies to capital gains, with specific rates for the oil and gas sector. Payment is due within 30 days of asset disposal.

This information is current as of February 5, 2025, and may be subject to change. Consulting a tax professional is recommended for specific situations.

Employee tax deductions in Myanmar are determined by progressive rates, meaning higher earners pay a larger percentage of their income in taxes. Various deductions and allowances can reduce the taxable income.

Personal Income Tax (PIT)

• Tax Year: The tax year runs from April 1st to March 31st.
• Tax Rates: Progressive rates range from 0% to 25% for non-resident foreigners and 3% to 30% for resident citizens and resident foreigners. These rates apply to worldwide income for residents and Myanmar-sourced income for non-residents. Non-resident Myanmar citizens are taxed on salary income received in foreign countries.
• Income Threshold: Annual salary income up to MMK 4.8 million is exempt from PIT.

Deductions and Allowances

• Basic Allowance: 20% of total income, capped at MMK 10 million annually.
• Spouse Allowance: MMK 1,000,000 for a non-working spouse with no assessable income.
• Child Allowance: MMK 500,000 per child meeting specific criteria (unmarried, no assessable income, under 18 or in full-time education if older).
• Dependent Parent Allowance: MMK 1,000,000 per dependent parent living with the taxpayer.
• Life Insurance Premiums: Premiums paid for the taxpayer and spouse are deductible.
• Social Security Contributions: Employee contributions are deductible.
• Charitable Donations: Donations to approved organizations are deductible, up to 25% of income.

Social Security Contributions

• Employee Contribution: 2% of total salary, capped at MMK 6,000 monthly.
• Employer Contribution: 3% of basic salary, capped at MMK 9,000 monthly.

Capital Gains Tax (CGT)

• Rate: 10% on gains from the sale, exchange, or transfer of capital assets.
• Threshold: CGT does not apply if the total sale value of the asset is below MMK 10 million.

Other Taxes

• No inheritance, estate, gift, or net wealth taxes are currently levied in Myanmar.
• Stamp duty applies to various instruments.

Employer Obligations

• Withholding Tax: Employers must deduct PIT from employee salaries and remit it to the tax authorities within 15 days of deduction.
• Annual Salary Statement: Employers must provide an annual salary statement to employees within three months of the tax year's end.
• Social Security Contributions: Employers must register for and contribute to the social security scheme if they have five or more employees. They also withhold employee contributions.

Filing and Payment

• Individuals file separate tax returns; joint filing for married couples is not permitted.
• For income other than salary, individuals must file their tax returns.
• The information provided is based on available resources up to today's date, 05 February 2025, and is subject to change due to potential future updates in tax regulations.

Myanmar's primary indirect tax is Commercial Tax (CT), not Value Added Tax (VAT). CT functions similarly to VAT in many other countries.

Commercial Tax (CT) in Myanmar

CT is a turnover tax levied on goods and services traded, produced, or rendered within Myanmar, as well as on imported goods.

• General Rate: 5%
• Reduced Rates: 1% (e.g., gold, jewelry), 3% (e.g., construction services, hotel and tourism services).
• Higher Rate: 8% (export of electricity).
• Zero Rate: 0% (all exports except electricity and crude oil which are taxed at 8% and 5% respectively).
• Exemptions: A wide range of goods and services are exempt, including basic food, agricultural products, healthcare, education, religious and cultural activities, some financial services, and public transportation.
• Registration Threshold: Businesses with annual turnover exceeding MMK 50 million (approximately USD 23,800 as of February 5, 2025, based on the reference rate of 2,100 MMK/USD, though the market trading rate is significantly higher) are required to register for CT. Those with turnover between MMK 50 million and MMK 10 million can register voluntarily. Import/export businesses must register regardless of turnover.
• Filing and Payment: CT returns are filed and payments made quarterly, within one month of the quarter-end. An annual return is also required within three months of the fiscal year-end (March 31). There is a 10% penalty for late filing.

Recent Developments

The government has recently reinstated the use of the Central Bank of Myanmar's (CBM) reference exchange rate of 2,100 MMK/USD to calculate import/export duties and CT on traded goods, reversing a short-lived policy that used the market trading rate. There are also ongoing discussions about implementing a Goods and Services Tax (GST) system in the near future, potentially by 2027, but no concrete implementation date has been set yet. As of February 5, 2025, CT remains the applicable indirect tax system.

Other Taxes

In addition to CT, businesses in Myanmar may also be subject to other taxes such as Specific Goods Tax (SGT), customs duties, excise duties, income tax, withholding tax, and various other levies.

Doing Business in Myanmar

It is important to note that the tax laws and regulations in Myanmar can be complex and are subject to change. Businesses operating in or considering entering the Myanmar market should seek professional tax advice to ensure compliance with all applicable regulations.

Myanmar offers various tax incentives, primarily aimed at promoting investment and specific sectors. These incentives often include tax exemptions, reduced rates, and allowances applicable to both corporate and individual taxpayers. Eligibility and specific benefits can vary based on factors such as business activity, location, and investment size.

Corporate Tax Incentives

• General Incentives: Companies listed on the Yangon Stock Exchange enjoy a reduced corporate income tax rate of 17%. Those involved in exporting manufactured goods may be eligible for income tax relief of up to 50% of profits derived from such exports. Furthermore, research and development (R&D) costs can be deducted from taxable income. Tax losses can be carried forward for up to three consecutive years, provided they are incurred within two years from the end of a tax exemption period.

• Myanmar Investment Law (MIL) Incentives: The MIL offers various incentives, including corporate income tax exemptions for periods of three, five, or seven years, depending on the development level of the region where the investment is located. These exemptions are targeted towards specific promoted sectors. Additional benefits may include exemptions from customs duties and other internal taxes on imported machinery, equipment, and raw materials.

• Special Economic Zone (SEZ) Incentives: SEZs offer significant tax advantages for investors and developers. Investors in a free zone can benefit from a seven-year tax exemption, while those in a promoted zone receive a five-year exemption. Both categories are eligible for a 50% tax relief for the subsequent five years, extendable for another five if profits are reinvested within one year. Developers enjoy an eight-year exemption followed by 50% tax relief for five years, also extendable for a further five years with reinvestment. Import duty exemptions on certain goods are also available within SEZs.

Individual Tax Incentives

• Personal Allowances: Resident individuals are entitled to a basic allowance of 20% of their total taxable income, capped at MMK 10 million. Further allowances are available for spouses (MMK 1 million, provided the spouse has no assessable income), children under 18 (MMK 500,000 each), and parents living with the individual (MMK 1 million each). Life insurance premiums and social security contributions are also deductible.

Other Tax Provisions and Updates

• Capital Gains Tax: A 10% tax applies to gains from the sale or transfer of capital assets, including land, buildings, and shares. The capital gains tax on immovable property for individuals is postponed until the end of 2025.

• Commercial Tax: A 5% commercial tax is levied on most goods and services, though some items are exempt or taxed at different rates.

• CMP Customs Duty Exemptions: As of December 1, 2024, exemptions are available for customs duties and taxes on imported raw and packaging materials used in Cut-Make-Pack (CMP) operations, provided the finished goods are re-exported.

• Unused Land Tax: Beginning in 2025, a new unused land tax policy will exempt land parcels up to 5 hectares. Larger properties can qualify for exemption if used for agriculture, registered economic activities, leased, government-owned, or located in SEZs, among other conditions.

It is important to consult official sources and seek professional advice for the latest information and to determine eligibility for specific incentives. Tax laws and regulations are subject to change. This information is current as of February 5, 2025.