Step-by-step calculation
This walk-through covers how to tax the bundle of payments made when an employment ends in Myanmar. Default: Myanmar tax resident, single, no dependant allowances, no donations. Brackets are from the Union Tax Law 2025-2026 (Section 5). Tax year: 1 April – 31 March. Terminal benefits are usually paid in the final pay run; PAYE must be withheld before release.
Step 1 — Apply the 20% basic personal relief on aggregated annual income
Combine all income earned in the leaver year — months of salary worked, leave encashment, gratuity, severance, ex-gratia, final bonus — into a single annual gross figure. Apply the 20% basic personal relief (capped MMK 10,000,000) on the aggregate.
| Salary earned in leaver year | (figure) |
| Plus: leave encashment | (figure) |
| Plus: gratuity / retirement payment | (figure) |
| Plus: severance pay | (figure) |
| Plus: ex-gratia / final bonus | (figure) |
| = Annual gross (leaver year) | (sum) |
| Less: 20% basic personal relief | − up to MMK 10,000,000 |
| Annual taxable income | = residual |
Step 2 — Apply the Union Tax Law 2025-2026 brackets
| Annual taxable income | Marginal rate |
|---|---|
| 1L – 20L (MMK 0 – 2,000,000) | 0% |
| 20L – 100L (MMK 2,000,000 – 10,000,000) | 5% |
| 100L – 300L (MMK 10,000,000 – 30,000,000) | 10% |
| 300L – 500L (MMK 30,000,000 – 50,000,000) | 15% |
| 500L – 700L (MMK 50,000,000 – 70,000,000) | 20% |
| 700L & above (MMK 70,000,000+) | 25% |
Worked illustration — 8 months of salary at MMK 1,000,000/month (MMK 8,000,000) + leave encashment MMK 1,500,000 + gratuity MMK 4,500,000 + severance MMK 2,000,000 = MMK 16,000,000 annual gross (taxable = MMK 12,800,000 after 20% relief):
| Band | Amount in band (MMK) | Rate | Tax (MMK) |
|---|---|---|---|
| First 2,000,000 | 2,000,000 | 0% | 0 |
| 2,000,001 – 10,000,000 | 8,000,000 | 5% | 400,000 |
| 10,000,001 – 12,800,000 | 2,800,000 | 10% | 280,000 |
| Annual PIT (terminal year) | MMK 680,000 | ||
Step 3 — Convert to final-pay withholding
- Cumulative PAYE already withheld through the months worked: subtract from total annual PIT.
- Final-pay PAYE = annual PIT − cumulative PAYE.
- Withhold this in the final payslip before releasing the leaver's net.
- Issue PAYE certificate showing the year's gross and PIT for the leaver's annual return.
What about SSB and the true net salary?
SSB on regular wages stops at the leaving date. One-off terminal payments (gratuity, severance) are typically outside the SSB wage base, but final-month wages still attract SSB up to the MMK 300,000 cap. Confirm with the Social Security Board for borderline classifications.
Employer takeaway
Aggregate every leaver-year payment, apply the 20% relief once, run the bands, then deduct PAYE already withheld to land on the final-pay PIT. Withhold before releasing cash. Remit to IRD by the 15th of the following month, issue the PAYE certificate so the leaver can file the annual return by 30 June, and retain the calculation, contract, and evidence for at least 7 years.
Common variations to watch for
- Statutory severance under labour law — see severance pay tax.
- Long-service retirement gratuity — possible concessional treatment; check IRD circular. See gratuity tax.
- Leave encashment — see leave encashment tax.
- Garden-leave salary — assessable in the year paid like ordinary salary.
- Settlement payment from a dispute — substance test; usually salary in nature.
Common PIT mistakes to avoid
- Releasing the gross terminal payment — chase PAYE later is uncollectible.
- Treating retirement gratuity as exempt without circular support — default to fully taxable.
- Forgetting cumulative PAYE — annual PIT minus monthly PAYE withheld = final-pay top-up; not a fresh full-year calculation.
- Missing PAYE certificate issuance — leaves leaver unable to file. See filing forms.
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