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 listing of employee termination payments that are eligible for separate (stand-alone) personal income tax. This Insight Article has been updated for the change.
Tax Insight | July 2015
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, provided ... in accordance with 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 for the purposes of paying personal income tax, but instead, to pay personal income tax on the lump sum payment amount as a separate (stand-alone) amount of assessable income ... in accordance with the Director-General's rules, procedures and conditions.
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:
(Note 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 Article is general information only. It should not be used to determine any matter without consulting with an experienced Thailand tax advisor.