Thailand Employee Termination Personal Income Tax
Update | March 2017
On 06 Mar 2017, the Director-General of Revenue issued Notification on Income Tax (No 287), amending the list of employee termination payments that are eligible for the separate (stand-alone) personal income tax computation benefit. This Tax Insight has been updated for the amendment.
Section 48 (5) of Thailand's personal income tax law prescribes:
"A taxpayer may choose to exclude from a computation of income tax under Section 48 (1) and (2), that income under Section 40 (1) and (2), which is paid by an employer in a single payment on termination of employment, according to the rules, procedures and conditions of the Director-General".
What this means is that a person who receives a single (lump-sum) payment on termination of employment has a right to choose to not add such payment to his or her other income, and instead, choose to pay personal income tax on the lump sum payment amount as a separate (stand-alone) amount of income ... according to the rules, procedures and conditions of the Director-General.
The Rules, Procedures and Conditions
The Director-General's rules, procedures and conditions are prescribed in his Notification on Income Tax (No 45), which prescribes therein:
1. A single payment received on termination of employment shall be received:
2. A taxpayer can choose to have a single payment received on termination of employment taxed separately under Section 48 (5) of the Revenue Code when:
(1) As prescribed in DGN Income Tax (No 287) issued on 6 March 2017 and applying from and including the 2016 tax year.
This Tax Insight is general information only. It should not be used to determine any particular matter without consulting with an experienced Thailand tax advisor.