Ministry of Planning and Finance merged Profit Tax Department, Commercial Tax Department, Excise Department, State Lottery Department, Stamp Duty Department, the Revenue Section of the General Administration Department, and the Office of the Financial Commissioner which existed separately and formed the Internal Revenue Department on 1-10-1972 in order to administer all tax assessments.It was an anticipation towards the new administration system which will become active after the approval of 1974 Constitution. Internal Revenue Department, at formation,administered 10 kinds of taxes and duties, namely income tax, profit tax, commercial tax, excise tax, State lottery tax, stamp duty, land tax, water tax and embankment tax, fisheries tax and mineral tax (crops tax in Shan State).

   Socialist Economic System was adopted before 1988 and Market Economy System was adopted after 1988 during Military Government Era. In order to ensure more effective tax collection system, five kinds of taxes and duties administered by the IRD were transferred to other relevant departments. Land tax, water tax and embankment tax, excise tax and mineral tax were transferred to the General Administration Department and fisheries tax was transferred to Fisheries Department on 1-4-1989.

   The Internal Revenue Department has experienced different governments, eras, economic systems and has adapted the tax systems to be in accordance with the administration system of the time. Before the forming of the Internal Revenue Department, under the Myanmar monarchy system, Colonial era, Japanese era, after war era (before the independence), after independence ear, Revolutionary Council era, Socialism era, State Law and Order Restoration Council era, and State Peace and Development Council era,tax laws were enacted and collected taxes accordingly to the administrative systems.

   Now, according to the 2008 Constitution, under the democratic government that the public has elected, the Union Government is focusing on the political and economic reforms for the development of democracy. While the Union Government is making much effort in reform activities, the Internal Revenue Department is also undertaking reforms by setting policies, objectives, strategies and regulations.