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Myanmar

Comprehensive Payroll Management Solutions in Myanmar

Myanmar is a south-east Asian country encompassing well-known shipping lanes and trading routes on the coastline of the Bay of Bengal. The country is surrounded by the borders of India, Bangladesh, China, Laos, and Thailand, catering to a global economy and foreign investments. The country has a diversified economy, and since 2011, the government policies on foreign investments have created an economic expansion in the Asia Pacific. 

Along with the potential of the youth population willing to work, the government of Myanmar has established foreign ownership policies and caters to a lucrative market and business ventures. The country aims to capture worldwide markets in the long run and is an attractive choice for many overseas businesses for its large workforce and abundant natural resources. This is why starting and expanding a business in a developing country like Myanmar will help you flourish soon. 

One of the essential aspects while setting up a business entity in Myanmar is establishing payroll. Companies must comply with local rules and regulations, such as the Employment Act, to prepare a legal payroll policy. 

Myanmar’s payroll process provides business strategies and ventures into opening a successful business firm. 

How Is Payroll Calculated in Myanmar? 

Myanmar’s payroll policies and procedures entail basic pay, gross pay, overtime, incentives, and other allowances. While calculating payroll in Myanmar, employers consider factors such as working hours, overtime compensation, allowances granted, timesheets, and unpaid leaves. 

Companies can calculate the payroll in Myanmar in the following way: 

Payroll in Myanmar (Net Salary) = Gross Salary – Gross Deductions

Important Elements of Salary Structure in Myanmar 

The different components of employees payroll in Myanmar include: 

  1. Basic salary: According to payroll policies and procedures in Myanmar, the basic salary refers to an employee’s monthly salary and depends upon the employee’s designation and job profile. It is the fixed component and does not include overtime and other incentives and allowances. 
  2. Net pay: The net payment is an employee’s total salary after the payroll deductions. This is usually credited directly to the employee’s bank account. 
  3. Incentives pay: The payroll rules and regulations in Myanmar include several performance-based incentives like bonuses, commissions, and gratuities. These are added to the net pay and credited to the bank account. 
  4. Overtime allowances: Employees are entitled to overtime compensation if asked to work overtime. According to the Shops and Establishments Act of 1951 (the “Relevant Labor Legislation”), the overtime allowance is calculated at the double the ordinary rate of wages. 
  5. Social Security Deductions: The payroll in Myanmar includes compulsory social security payroll deductions, including disability, old age, and insurance. These are deducted from gross salary before calculating the final net salary. 

How to Set Up a Payroll in Myanmar 

To set up payroll in Myanmar, the employer must remember the following pointers: 

  1. Register the company name in Myanmar Companies Online (MyCO) to trademark the name.
  2. Submit the required application documents for the company’s license and registration.
  3. Open a bank account for payroll processes and taxation.
  4. Register on the Directorate of Investment and Company Administration (DICA) and collect the employees’ details and other necessary information. 
  5. The employees’ details provide better connectivity leading to business productivity and social security. 
  6. Provide payments to legally signed employees and recruits. 

A Step-by-step Process of Payroll Processing in Myanmar 

The following steps provide a complete Myanmar payroll guide for payroll processing in the country. 

  • Collect employee details and define payroll policies: Companies need to collect employee details and define payroll policies, including basic pay, attendance policy, and employee benefits policy. 
  • Validate the inputs: The company must validate and approve the active employees’ details and other company policies. No former employee should be taken into account for salary and compliance payments. 
  • Calculate payrolls: The approved inputs are provided to the payroll processing system. The payroll calculates the basic net amount after social security deductions and tax dues. The calculations are done on spreadsheets, and to avoid errors, automated payroll software is also available. 
  • Disburse employee salaries: The company provides funds and advice to the concerned bank to disburse salaries to the employees. 
  • Payment of statutory dues: Along with the net pay, the employer must pay all statutory dues to the employees, which include severance pay, sick leave, rent allowances, and overtime incentives.
  • Distribute payslips and tax computation sheets: It is the fundamental and mandatory rule for every business to provide payslips and tax computation sheets. 

Payroll Contributions 

Employers and employees have to mandatorily contribute to various schemes and payroll tax in Myanmar, which are as follows: 

Employer contribution 

Particulars 

Employer Payroll Contribution 

Social security

3% 

Employee contribution

Particulars 

Employee Payroll Contribution 

Social security

2% 

Employee income tax

Taxable income (Myanmar Kyat) 

Tax rate 

1 to 2,000,000

0%

2,000,001 to 5,000,000

5%

5,000,001 to 10,000,000

10%

10,000,001 to 20,000,000

15%

20,000,001 to 30,000,000

20%

30,000,001 and above

25%

Payroll Cycle 

According to Myanmar labor laws and payroll processes, employers must disburse employee salaries via cash or cheque between 5 to 10 days before the month. 

The payroll process follows a monthly cycle in Myanmar, and the calculation is done monthly or yearly, depending on the job agreement. The payroll in Myanmar does not include a 13th-month pay at the end of the year. However, it is customary for employers to pay additional incentives and bonuses to the employees. 

Myanmar Payroll Options for Companies 

International businesses get the choice of choosing the workforce and managing payroll in Myanmar. There are several payroll options in Myanmar, depending on the requirements and sizes listed below. 

  • Remotely: Remote payrolls work with a unique goal of collaborating with companies, providing services like salaries to international and national employees, and aiding business taxes and benefits.
  • Internally: Overseas businesses sometimes conduct internal payrolls and increase staff and human resources. The company’s labor laws and payroll tax in Myanmar are managed by in-house employees. The internal payroll system requires time and flow of economic capital but ensures complete authority in the employer’s hands.
  • With a Myanmar payroll processing company: In many cases, the overseas business hires an outsourcing company for payroll processes, tax deductions, compensation, and benefits. The employers become more dependent and are responsible for inaccuracy caused by the outsourcing company. 
  • With global PEO/EOR services: A modern way of hiring a PEO or an EOR can resolve payroll problems. You can choose Multiplier for managing the payroll processes in Myanmar. Multiplier will take care of the local government laws and handle local insurance policies, taxes, and payroll processes. 

Entitlement and Termination Terms 

According to the payroll rules and regulations in Myanmar, an employee’s contracts and agreements can be terminated immediately for misconduct and other reasons. Employers can terminate the employee by giving one month’s notice period and severance pay. They have to pay for employees’ work done on their last day, despite their dismissal from the organization. 

In accidents and injuries, the employees on sick leave cannot be dismissed. However, if this leave continues for longer, for instance, more than two years, the employee is dismissed. In every case of dismissal, the employer can withhold social security payments and other benefits, but providing basic pay to the employees is mandatory. 

There are several reasons for the termination of employees from the companies, which are: 

  • Termination for the cause of misconduct and misbehavior: The company can terminate the employee if misbehavior or misconduct is witnessed. According to the laws of Myanmar, employees accused of misconduct shall be warned. Still, if they are witnessed misbehaving, the company shall sign an undertaking, and failing to the agreement, they shall be dismissed without any prior notice and severance payments. 
  • Termination for violating the employment rules: The company can dismiss the employees if a violation of the employment rules is witnessed within 12 months of the undertaking. The employer can terminate the employee without prior notice and severance payment. 

There are several key entitlements elements: 

  • Severance pay: Employees terminated by prior notices are sometimes entitled to severance payments. In the case of employment for six months, the employees do not receive any payment, but if they have worked for six months to one year, they will receive a half month’s salary. If the term of service is 2 to 3 years, the employees will receive a one and half a month’s salary; if the employees work for more than 25 years, they will receive thirteen months’ salary.

Myanmar Payroll Processing Company

To have a timely, precise, and compliant payroll in Myanmar, companies should understand the timesheets, local tax, and compensation requirements. They must comply with the payroll, benefits, compensation, and taxation. To do so, you can contact a global EOR platform like Multiplier to ease up the payroll processing procedure. 

How Multiplier Can Help with Global Payroll

Multiplier is the ultimate solution for all your company’s struggles while processing payrolls and taxation. Our trained and experienced digital team can help businesses grow and develop while collaborating with local government and labor laws. We provide global payroll solutions in 150+ countries and can tackle administrative needs without disrupting the expansion of the companies. 

Frequently Asked Questions

According to the Myanmar payroll process, all employers must provide a printed or a digital payslip to employees enlisting the total payments, including incentives and allowances.

There are different kinds of options for payroll in Myanmar, and employers are free to choose any method, which includes remote, internal, local payroll administration, and Global payroll outsourcing.

According to the Government labor laws, payroll policies, and procedures in Myanmar, an employee earning above 2,000,001 is liable to pay taxes. However, failing to pay will lead to a huge fine and imprisonment.

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