By SPECIAL TO THE NATION
Understanding the recent changes adopted by tax officers and stipulated in the individual income tax regulations will help you prepare efficiently and effectively.
Many of the changes come from the Amended Income Tax Law that was passed by parliament on August 31 and became effective on April 1 of last year.
Read on to find out more about the changes and how they may affect you or your employees working in Myanmar.
Allowances, but only if you live together
The Amended Tax Law specifies that a taxpayer qualifies for the allowances for parent(s), spouse and children only if those dependents are actually living with him.
Now it appears that the Myanmar tax authorities are being more stringent with the claims for parent, spouse and children allowance.
If you are audited, you will be asked for documents to check that no one is claiming allowances he is not entitled to. They will typically request household registration, marriage certificate, birth certificate and passport for foreigners as proof that the parent(s), spouse and children are living with the taxpayer.
Another new addition is that if a taxpayer wants to claim a deduction for overseas life insurance premiums for themselves and their spouse, they must have proof of the payments.
What’s in a salary?
The new law has removed gratuities and perquisites from the definition of salary, wages, annuities, bonuses, awards and any fees “received in lieu or in addition”, but questions arise as the law doesn’t define awards or perks. The compensation packages offered to expatriate employees in Myanmar usually have several components.
They often include free accommodation, which is tax-exempt, but often also other benefits.
The Internal Revenue Department hasn’t yet clarified how the change in the definition of “earned income” will affect the benefits provided to international employees.
Components that may be affected include school fees, overseas health insurance and employer’s contribution to an overseas pension fund. It is also not yet clear if and when employee stock awards are taxable in Myanmar.
Don’t miss the deadline
Make sure you are ready for June 30! If you miss the deadline, you risk a 10-per-cent penalty on the tax shortfall.
Employers are responsible for reporting the annual salary for each of their employees by June 30. Short-term business travellers need to file their own tax returns and organise the payment of taxes by the same deadline.
As the tax law and practices in Myanmar are frequently changing, you or your employees would need support from a Myanmar tax specialist to make sure that you or your employees are fully complying with the Myanmar tax law and regulations.
NAPAPORN SARALAKSANA, the author, is associate director of PwC Thailand