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New Tax Laws

The Internal Revenue Department’s (IRD) latest income tax rules are out and they are geared toward persuading tax player to reveal their sources of income. After the Union Tax Law 2016 was approved by parliament on January 25, the IRD announced the new tax laws for the coming fiscal year through state owned newspapers on February 21.

Under the new law, sales of immovable property and vehicles will not be taxed if the source of income can be proved, nor will funds used for developing or starting a business. Even if an individual can only partially prove their source of income, they will not be taxed on that portion of the investment. Under the new law, those who cannot state their source of income will be taxed 15 percent on invested income if their total income is less than 30 million kyats, 20 percent if it is lower than 100 million kyats and 30 percent on any additional income. Although Ministry of Transportation has not yet issued an announcement about automobile tax, people understand that they have to pay tax when buying cars and that if they do not, they will have to pay when they renew their annual license.

For individuals, income under 4.8 million kyats in a year will now be tax-exempt, up from 2 million kyats in the current fiscal year. This is around four times higher than the average income, according to World Bank figures. Citizens living abroad are also exempt from paying income tax. Income between 4.8 million kyats and 5 million kyats will be taxed at 5 percent, income up to 10 million will be taxed at 10 percent, income up to 20 million kyats will be charged at 15 percent, income up to 30 million kyats will be taxed at 20 percent and 25 percent tax will be charged on any additional income above 30 million kyats.

Tax relief will be granted for those living with dependent parents, spouses and up to two children. Each dependent parent or spouse equates to personal tax relief one million kyats. 500,000 kyats relief will also be granted for each child.