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The Revenue Department exempts Personal Income Tax from severance pay when employees receive it due to termination
On 19 Jun 2024, the Revenue Department announced the resolution of the Cabinet dated 18 June 2024 in its press release no. PorChorSor. 20/2567 - that the Cabinet approved in principle adjustment of the exemption of Personal Income Tax on severance pay when employees receive such from their employers in the event of termination; details of which are listed as follows:
- 1. The severance pay that employees shall receive in accordance with the Labour Protection Act is exempted from Personal Income Tax but does not include any compensation for retirement or the termination of employment contract. Therefore, such exemption shall only be for the portion of the last 400 days' wages not exceeding Baht 600,000 (the previous exemption was on the portion of the last 300 days’ wages not exceeding Baht 300,000); and
- 2. Effective on income received as of 1 January 2023.
At present, the above exemption has not yet come into force. When it does, the Revenue Department will announce it as a Ministerial Regulation. Additionally, such exemption will affect the income received (severance pay) as of 1 January 2023. Consequently, the Revenue Department allows taxpayers to submit an additional Personal Income Tax return and request a tax refund within three years from the last due date of filing the tax return.
For further details on how SCL Nishimura & Asahi can assist you, please do not hesitate to contact us via the information provided at the end of this Newsletter.
Reference: Revenue Department, press release No. PorChorSor. 20/2567
This is intended merely to provide a regulatory overview and not to be comprehensive, nor to provide legal advice. Should you have any questions on this or on other areas of taxation law, please do not hesitate to contact our Tax Team of SCL Nishimura & Asahi Limited.
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Budhima provides advice on tax compliance and a wide variety of tax-related work. In particular, she has extensive experience with accounting transactions and tax planning. Further, she has handled tax counseling and tax controversies and has substantial experience representing and advising individuals and major corporations in tax disputes, including filing appeal letters for tax assessments, which were assessed by the Revenue Department, the Customs Department, the Excise Department, and local tax collection agencies such as those dealing with land and building tax. In addition, she has more than 10 years of experience as a public speaker and columnist for tax magazines, focusing on tax planning and tax compliance for individuals and companies seeking to maximize their tax privileges under Board of Investment (BOI) promotion and accounting adjustments to comply with Thai tax laws.
Budhima was a columnist for the Tax Documentation Journal, the No. 1 public journal related to accounting and taxation published by Dharmniti Press Co., Ltd., and she is also the author of “Differences and similarities between accounting profit and taxable profit,” a book that has been published twice.