Income Tax

Income Tax

In accordance with Article 389 of the Constitution of the Union of Myanmar 2008, every citizen is obliged to pay the income tax.

Moreover, General Aung San, the national hero said: “Every citizen in any country is responsible for paying the income tax, the civic duties of a patriot.  Otherwise, independence will not be attained.”

Paying income tax being the duty of each & every citizen, every citizen should make a declaration and pay his/her income at the respective Township Income Tax office.

However, people fail to pay their income tax and thus, it has become the responsibility of the employers to ensure that all employees pay their income tax based on their salaries.  For this purpose, the employer has to deduct a certain amount (for the income tax) from the employee’s salary.  Hence, by and by problems occur between the employer and the employees.  

Every citizen is obliged to pay income tax to the government and it has been in practice for years.  With the enforcement of paying income tax by every citizen, it has become the vital responsibility of the employer to make every employee pay his/her income tax accordingly.  For this purpose, both parties [employer & employee] should have an understanding of this issue.

On behalf of the employer, it is the responsibility of an HR or an Admin staff to calculate the income tax for the employees and to submit to the Finance Department. In order to have a better understanding of why and how income tax deductions are made from each employee, the HR and/or the Admin staff should hold an in-depth discussion among the employees at the workplace.

Basic facts to be noted are as follows:

Those employees earning more than 48 lakhs per annum should pay the income tax

Exemptions are:

  • Basic allowance - 20% of annual income 

  • Parental allowance - 10 lakhs for each

  • Spouse allowance – 10 lakhs

  • Child allowance – 5 lakhs for each child

The illustrated Table shows the calculation method for an employee’s income tax (example).

Ma Phyu Phyu Zaw who is single is living with her parents.  She is an employee of a company and is earning six lakhs per month.

From her monthly salary (6 lakhs), the basic allowance, parental allowance and Social Security Board contributions are deducted accordingly and her estimated income tax to be paid is shown in the illustrated Table.