(a)Taxation on Salary
- For the company staff, the employer has to deduct at source deduct the income tax from the monthly salaries of the staff who get the income above 4.8 million in a year. It can be calculated in the head “Salary” under the “Taxability” of “Individual”.
(How to forecast the tax due is available in the Tax Calculator Link.)
- The tax must be deducted at source by the employer at the time of payment. So as to withhold so, the advanced tax will have to be forecasted and deducted in installing from the income of the whole year in accordance with the sample calculation.
The form of monthly report is IRD (IT) – 15.
- The manager of the respective factory, workshop or enterprise, shall file the annual salary (employment’s income) return in the form (Patakha (wanga) -16) within three months after the end of Income Year.
- In accordance with Notification 47/2018, government department contracting for purchasing of good, performing operations and providing services (auction, tender), if the payment is over 1 million within a year, at the moment of payment, 2% of advance income tax shall be withheld. However, if the payment is done to non-resident foreigners, 2.5% shall be withheld.
(Notification 47/2018 can be seen at Laws & legislations link.)
(c)Tax applied on auction and tenders
- When contracting between a state-owned enterprise and tender-winning entrepreneur, the 1% of the amount of the contract (maximum 150000 kyat) and the stamp duty shall be paid by the tender winning entrepreneur.
- According to the contract value, the calculated commercial tax shall be paid with the name of the tender-winning entrepreneur. The tender-offering state-owned enterprise name and nature of work shall be mentioned in the payment receipt.
- When doing the payment according to the contract, the tender-offering state-owned enterprise does not need to pay the withholding tax (2%) with the name of the tender-winning entrepreneur. However, if it is a foreigner living in abroad, 2.5% shall be withhold and payment should be done.
Income Tax Calculation (Sample)
- State-owned enterprise paying to tender-winning enterprise = 5 000 000 kyats
- Commercial Tax: 5% (5000000 x 5/105) =238 095 kyats
- Withholding Tax (2%) (5000000 – 238095) x 2% =95 238 kyats
- Withholding Tax; Foreigner living abroad: (2.5%)(5000000-238095) x 2.5% = 119 048 kyats