Potential Discrepancy in Your Annual Personal Income Tax Return for FY2024–2025 Due to Exchange Rate

Taxpayers are required to file their annual Personal Income Tax (“PIT”) returns for the financial year 2024–2025 (“FY2024–2025”) with their respective tax offices by 30 June 2025.

Under the Union Tax Law 2024 and the related notification issued by the tax offices, all taxpayers—regardless of residency status—must pay PIT in the currency in which the income was earned. This regulation took effect on 1 April 2024 and applies FY2024-2025 onwards.

Following the end of FY2024–2025, taxpayers preparing their annual PIT returns should be aware of potential discrepancies arising from currency conversion practices and exchange rate fluctuations—particularly in cases where income was earned in foreign currencies but converted in Myanmar Kyat (MMK) using the Central Bank of Myanmar (“CBM”) reference rate (currently 1 USD = 2,100 MMK) for PIT calculation purpose.

In calculating monthly PIT returns, income earned in foreign currency is typically reported using the CBM reference rate and taxed according to the progressive PIT brackets. The resulting monthly PIT payable is then converted back to USD using the same rate and remitted in USD to the respective Myanmar Economic Bank (“MEB”) accounts of the tax offices.

However, in practice, the exchange rate applied when the PIT payment is received by the tax office may differ from the CBM reference rate. The difference may range from +/- 0.3% from CBM reference exchange rate. As a result, if the actual remitted amount—when converted using the applied bank rate—falls short of the expected amount, the PIT payment may be deemed incomplete or underpaid, potentially leading to compliance issues. 

To avoid potential challenges from the tax authorities and to ensure a smooth and accurate submission of their annual PIT returns, taxpayers are strongly encouraged to consult with their tax advisers. It has potential impact on claiming taxpayers’ source of income at the later stage. Thus, it is strongly recommended to check the annual PIT payment position and this discrepancy before submitting the annual PIT return of FY2024-2025.    

If you have any questions on the above or need assistance with this matter, please contact the undersigned or your usual VDB Loi adviser.