Is gratuity taxable in Myanmar?
Yes. Statutory severance and contractual gratuity are fully taxable as PIT assessable income in the month paid. Employers must gross up PAYE at the marginal rate, withhold, and remit to IRD by the 15th of the following month. The 20% basic personal relief still applies on the year's total assessable income; no separate gratuity exemption exists in current Union Tax Law.
What Myanmar law says
The Union Tax Law 2025-2026 defines assessable salary income broadly to include all wages, salary, allowances, bonuses, commissions, gratuities, and end-of-service benefits received from an employer. There is no separate gratuity exemption in current law. The 20% basic personal relief still applies to total assessable income for the year (capped at MMK 10,000,000), but it operates on the aggregate, not on the gratuity in isolation.
Practically, the gratuity is added to the year's assessable income in the month paid; the employer must gross up PAYE at the marginal rate rather than apply a flat percentage. PAYE is remitted to IRD by the 15th of the following month.
Worked example — 5-year exit at MMK 800,000/month basic
| Step | Math | Amount (MMK) |
|---|---|---|
| Severance per Notification 84/2015 (5 mo) | 5 × 800,000 | 4,000,000 |
| Last drawn monthly basic | — | 800,000 |
| YTD assessable income (10 months @ 800,000) | 10 × 800,000 | 8,000,000 |
| Total assessable on exit | 8,000,000 + 4,000,000 | 12,000,000 |
| 20% basic personal relief | 20% × 12,000,000 | 2,400,000 |
| Taxable income | 12,000,000 − 2,400,000 | 9,600,000 |
| PIT (5% on band 2M–10M) | 5% × (9,600,000 − 2,000,000) | 380,000 |
| YTD PAYE already withheld (10 mo) | — | (approx 95,833) |
| PAYE due in exit month | 380,000 − YTD withheld | ~284,167 |
Documentation requirements
- Final settlement statement showing gross gratuity, PIT withheld, SSB if applicable, net.
- Last drawn payslip and YTD PAYE summary.
- PIT remitted to IRD by the 15th of the following month.
- Annual PIT reconciliation by 30 June following the 31 March FY-end.
- Record retention: at least 7 years.
Edge cases
- Death-in-service gratuity — paid to nominee; still taxable as the deceased employee's income up to the date of death.
- Long-service gratuity (10+ years) — large lump sums can push into higher brackets; gross up correctly.
- Non-resident employee — flat 25% on Myanmar-source gratuity; no reliefs.
- SSB on gratuity — gratuity is generally not within the SSB monthly wage base for the exit month if base is already capped at MMK 300,000.
- Foreign currency gratuity — convert to MMK at the Central Bank reference rate on the payment date.
- Donations — donations to a registered organisation can offset assessable income up to 25%.
Employer takeaway
Gratuity and severance are fully taxable PIT in the month paid. Add to YTD assessable income, apply the 20% basic relief on the aggregate, run brackets, deduct YTD PAYE, and withhold the remainder. Remit to IRD by the 15th of the following month. Itemise on the final settlement statement and retain records 7 years. No separate gratuity exemption exists in current law.
Common payroll mistakes
- Treating gratuity as tax-free — there is no exemption in current Union Tax Law.
- Applying a flat 5% or 10% to the lump sum instead of grossing up at the marginal rate.
- Forgetting to deduct YTD PAYE already withheld and over-collecting in the exit month.
- Missing the IRD remittance deadline (15th of the following month).
- Not reflecting the gratuity on the annual PIT return reconciliation by 30 June (see gratuity calculation).
- Union Tax Law 2025-2026 — assessable salary income definition
- ESDL 2013 — severance
- Notification 84/2015 — severance schedule
Related questions
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