Burma

Burma’s Income Tax Code Clarified

By Tin Htet Paing 22 February 2016

RANGOON — Burma’s Internal Revenue Department released a notice on Friday regarding changes to the individual income taxation system for the 2016-17 fiscal year, including specific measures regarding monetary relief and exemptions.

The IRD released an official notice in the state-owned newspaper The Mirror that any citizens with an annual income of less than 4.8 millions kyats (US$4,000) will be exempt from paying income tax. It stated that the effective start date will be April 1.

However, basic monetary relief and other personal relief for spouses, children and dependent parents will be deducted from the annual taxable income. Income tax will then only be imposed on individuals with an annual net salary over two million kyats (US$1,625) after the deduction, the notice stated.

According to the notice, the basic monetary relief for individuals will be 20 percent of their annual income and not more than 10 million kyats (US$8,120).  Personal tax relief of one million kyats (US$812) for each dependent parent or spouse and 500,000 kyats (US$406) for each child will also be granted annually.

Life insurance premium fees and social security funds will also be deducted.

According to a calculation system in the notice, a rate of five percent tax will be imposed on people who earn between two and five million kyats, 10 percent for those who earn five to 10 million kyats, 15 percent for those earning between 10 and 20 million, 20 percent for those earning 20-30 million, and 25 percent for citizens who earn above 30 million kyats annually.

An official from the Rangoon office of the Service Department for Tax told The Irrawaddy, under the condition of anonymity, that the government’s tax revenue will not fully reflect the incomes of its taxpayers. The official said that employers are responsible for employees’ monthly income tax deduction; the government then generates tax based on “declared” salaries, which may differ from actual income.

Burma collected about 4.3 trillion kyats from tax revenue in 2014-15 while about 3.8 trillion kyats were collected in 2013-14.

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