Severance Pay And Income Tax

[wiso]

How severance payments paid by the employer under the Thai Labor Law taxed? Have read that severance pay is subject to "reduced rates" of taxation and that there is a 300,000 Baht no tax limit. Also that this severance pay income tax can be paid and calculated seperately from other regular income. But how is it calculated? What is the formula and tax rate? Thanks in advance.

[singa-traz]

Here is the form you are looking for:

http://download.rd.go.th/fileadmin/download/english_form/pnd9091_290851.pdf

If you are looking at a severance package over 500K THB, you might want to get some professional tax assistance, as you will end-up with much less than the normal tax rate.

The main points are:

- Total Severance Pay

- Special Deduction

- Expenses Deduction

- Net Taxable Severance Pay

Sorry can't be more specific.

Good Luck!

[wiso]

Thank you Singa-traz!

In summary:

- it probably makes sense to file severance pay seperately using the form (download);

- get professional advice: the form (although in English) looks confusing to me, specifically Expense deduction part: section B items 1 & 3. Anyone who can give more clarity on this? Maybe example of a calculation?

Thanks again and best regards.

[chivo]

I'd love to know about the tax rate for severance too! Anyone with more info? Example of how much for a big payout of several million baht for a long term employee???

[gregb]

I'd love to know about the tax rate for severance too! Anyone with more info? Example of how much for a big payout of several million baht for a long term employee???

There is no specific rate. It depends on how much you received and how many years you worked.

Suggest you download the form from the Revenue Department above and work it out for yourself. As I understand it, a good estimate is that your taxable income works out to be approximately 50% of everything you received over 500k, and you pay the normal tax rates on this taxable income. That is an estimate only. The form above will allow you to calculate exactly.

So if you got severance of 3 million baht, you can figure you will be paying taxes as if you earned 1.25 million.

[chivo]

Thanks gregb. Will investigate further and check out the form

[chivo]

Gregb I went thru the form bit didn't see where you got the info of tax on only 50% of the earnings. Was it on another sheet or form ? Thanks