Running Payroll in Myanmar: Employment Taxes & Setup

Payroll in Myanmar centers on four main obligations: personal income tax withholding, Social Security Board contributions, any applicable local levies, and periodic payroll reporting to the Internal Revenue Department and the Social Security Board. You need to track employee residency status, contract type, and salary level because tax brackets, reliefs, and contribution rules can change with income thresholds and employment category. Getting these details wrong can lead to penalties, back payments, and strained relationships with employees who rely on accurate and timely pay.

Non-compliance can trigger audits, fines, and interest charges, and in serious cases the authorities may suspend your tax clearances, which can affect visas, tenders, and banking. This guide walks you through how to calculate Myanmar payroll taxes, align with filing and payment deadlines, and structure your payroll setup whether you operate through your own entity or an Employer of Record. You will see how to handle monthly calculations, documentation, and submissions so your team can scale confidently in Myanmar in 2026.

Myanmar’s payroll tax landscape is built around personal income tax withholding, mandatory Social Security Board contributions, and commercial tax or withholding on certain payments, all overseen primarily by the Internal Revenue Department and the Social Security Board. Each obligation has its own base, rate structure, and payment cycle, and enforcement has tightened in recent years with more frequent reviews of employer filings.

Personal Income Tax (Salary Tax)

Personal income tax on employment income is withheld at source by the employer using progressive rates from 0% up to 25% based on annual taxable income in Myanmar kyat. You calculate tax on gross salary minus allowable reliefs, apply the correct bracket, and remit the withheld amount monthly to the Internal Revenue Department, typically by the 15th of the following month.

Employers are responsible for correct calculation, withholding, and timely payment, and underpayments can result in back taxes plus penalties and interest. Failure to withhold or late remittance can also expose responsible officers to administrative sanctions and can delay tax clearance certificates needed for corporate compliance.

Social Security Board (SSB) Contributions

Social security contributions fund benefits such as medical care, maternity, and work injury coverage and are administered by the Social Security Board under the Social Security Law. As of 2026, the standard rates for covered employees are 3% of insurable earnings for the employer and 2% for the employee, calculated up to the prevailing monthly wage ceiling set by the SSB.

Employers must register eligible employees, withhold the employee share, add the employer share, and pay the combined contribution monthly to the SSB. Late registration or payment can lead to surcharges and potential denial or delay of benefits for employees, which can quickly damage trust in your payroll processes.

Commercial Tax and Withholding on Certain Payments

While regular salaries are not subject to commercial tax, certain service fees and contractor payments processed alongside payroll may attract commercial tax at 5% or withholding tax at rates typically between 2% and 10%, depending on the nature of the payment and the residency status of the recipient. Employers that misclassify employees as contractors or fail to apply the correct withholding rate can face assessments from the Internal Revenue Department.

These taxes are usually reported and paid monthly or quarterly, aligned with the taxpayer’s registration status and turnover. Consistent reconciliation between your payroll, accounts payable, and tax filings is essential to avoid discrepancies that can trigger audits and additional penalties.

Most employers in Myanmar pay salaries via bank transfer in Myanmar kyat, although cash is still used in some sectors and regions where banking access is limited. You should align your payroll cycle with local practice, which is typically monthly, and ensure payment is made on or before the agreed payday stated in the employment contract.

If you do not have a local entity, you can use an Employer of Record to hire and pay staff compliantly, or you can partner with a local payroll provider while you complete company registration. Payslips should clearly show gross salary, itemised allowances, overtime, income tax withheld, social security contributions, other deductions, and net pay, and they should be provided in a durable format that employees can store for their own tax filings.

• Payment Method: Use bank transfers in Myanmar kyat wherever possible, reserving cash payments only for exceptional cases where banking access is limited.
• Pay Frequency: Set a consistent monthly pay date and include it in employment contracts and internal policies.
• Currency Rules: Pay employees in Myanmar kyat unless a specific regulatory exemption or approved foreign-currency arrangement applies.
• No-Entity Hiring: Engage an Employer of Record if you need to hire quickly without establishing a local company.
• Payslip Content: Include gross pay, allowances, overtime, income tax, social security, other deductions, and net pay on every payslip.
• Record Keeping: Retain payroll records, payslips, and tax calculations for the statutory period required by the Internal Revenue Department and Social Security Board.
• Bank Setup: Open a local corporate bank account early so you can fund payroll and statutory payments without delays.

Getting payroll set up correctly in Myanmar determines how smoothly you can hire, pay, and stay compliant with the Internal Revenue Department and Social Security Board. Running payroll through your own entity gives you direct control but requires full registration and ongoing compliance, while using an Employer of Record lets you operate quickly without building local infrastructure.

Your approach should reflect your hiring scale, risk appetite, and long-term plans in Myanmar, as well as sector-specific rules that may apply to your business. The checklist below highlights the core steps your team should complete before running the first payroll cycle.

• Incorporation: Register a legal entity with the Directorate of Investment and Company Administration if you plan to run in-country payroll directly.
• Tax Registration: Obtain a Taxpayer Identification Number from the Internal Revenue Department for corporate and payroll tax purposes.
• Social Security Registration: Register the company and eligible employees with the Social Security Board and understand current contribution ceilings.
• Bank Account: Open a local corporate bank account in Myanmar kyat to pay salaries and remit taxes and contributions.
• Employment Contracts: Draft compliant employment contracts that define salary, allowances, benefits, working hours, and pay frequency.
• Payroll Policies: Establish written policies for overtime, bonuses, leave, and expense reimbursements that align with Myanmar labour law.
• Payroll System: Implement payroll software or a provider that can handle Myanmar tax brackets, social security, and reporting formats.
• No-Entity Option: If you lack a local entity, appoint an Employer of Record to become the legal employer and manage payroll and filings.
• Data Protection: Put controls in place to secure employee personal and payroll data in line with local privacy expectations.
• Internal Controls: Separate duties for payroll preparation, approval, and payment to reduce errors and fraud risk.

Example Of Salary Tax Calculation

Imagine a resident employee in Yangon with a monthly gross salary of MMK 1,500,000 who is covered by social security. You would first calculate the employee’s 2% social security contribution on the applicable wage ceiling, subtract allowable reliefs, and then apply the progressive income tax rates to the resulting taxable income.

The employer would also calculate its 3% social security contribution on the same base and add this to the statutory payment schedule, while withholding the income tax from the employee’s salary. The steps below show how this flows through a typical monthly payroll run.

• Step 1 – Determine Gross Pay: Confirm the employee’s monthly gross salary, including fixed allowances and regular bonuses.
• Step 2 – Calculate Social Security: Apply 2% employee and 3% employer social security rates to the insurable earnings up to the SSB ceiling.
• Step 3 – Compute Taxable Income: Subtract the employee’s social security contribution and applicable reliefs from gross pay to arrive at taxable income.
• Step 4 – Apply Tax Brackets: Use the current progressive income tax table to calculate monthly tax based on annualised taxable income.
• Step 5 – Derive Net Pay: Deduct income tax and employee social security from gross salary to get net pay and reflect all items on the payslip.
• Step 6 – Remit Statutory Amounts: Pay withheld tax to the Internal Revenue Department and social security contributions to the Social Security Board by their due dates.

Submitting Employee Tax In Myanmar

Employee income tax and social security contributions in Myanmar are typically submitted monthly using forms and payment channels specified by the Internal Revenue Department and the Social Security Board. You will need your company Taxpayer Identification Number, SSB registration number, payroll period details, employee lists, and supporting calculations to complete filings accurately.

• IRD Portal or Office: File monthly salary tax returns through the Internal Revenue Department’s electronic system where available or submit forms at the relevant tax office.
• Bank Payment: Pay assessed income tax and social security via designated banks using the correct reference numbers and tax period codes.
• SSB Office or Online: Submit social security declarations and payments through the Social Security Board’s office or online channels where enabled.
• Payroll Software Integration: Use payroll software that can generate Myanmar-compliant reports and, where possible, upload data directly to government systems.
• Third-Party Provider: Consider outsourcing filings and payments to a local payroll provider or Employer of Record that already interfaces with the authorities.
• Reconciliation: Reconcile payment receipts with filed returns each month to ensure all liabilities are fully settled and recorded.

Payroll Tax Due Dates In Myanmar

Understanding the tax obligations for both employers and employees is crucial when operating in Myanmar's business landscape. This section explains how taxes and statutory fees affect payroll and individual earnings in Myanmar.

Employer Tax Contributions

Employer payroll contributions are generally estimated at an additional 3% - 5% on top of the employee salary in Myanmar. The exact percentage depends on whether employees are covered by social security and whether any sector-specific levies or insurance schemes apply.

Employee Payroll Tax Contributions

In Myanmar, the typical estimation for employee payroll contributions cost is around 5%.

Individual Income Tax Contributions

Individual income tax in Myanmar is calculated on annual taxable income after deducting allowable reliefs and social security contributions. Residents are taxed on worldwide income, while non-residents are generally taxed only on Myanmar-sourced income at different rates.

Pension in Myanmar

Myanmar does not yet operate a universal, earnings-related pension scheme for private sector employees comparable to those in many other countries, and retirement income is often based on personal savings, employer-specific arrangements, or sectoral rules. Some larger employers and multinational companies offer voluntary provident funds or retirement plans, so you should clarify whether any such scheme applies to your workforce and reflect contributions clearly in payroll.