By Pitipong Santadram, Payroll Manager

 

Bangkok, Thailand -2024 – In a significant update to labor and tax regulations, the Thai government has announced new tax exemptions for severance pay. This change is aimed at providing greater financial relief to employees affected by termination, especially those with longer years of service.

Key Changes in Tax Exemption for Severance Pay:

     1.    Increased Tax Exemption Limit:

            Old Rule: Severance pay up to 300,000 baht was exempt from personal income tax.
            New Rule: The exemption has been doubled to 600,000 baht. Now, severance pay up to 600,000 baht will be completely exempt from personal income tax, offering more substantial relief to employees.

     2.    Retroactive Application: this new exemption is retroactive to January 1, 2023, meaning employees who received severance pay in 2023 will benefit from the updated tax rules.

     3.    Taxation on Excess Amounts: if severance pay exceeds 600,000 baht, the excess will be subject to regular personal income tax rates.

Important Deadline for Tax Refunds

If you have already resubmitted your annual personal income tax return and are eligible for a refund due to overpaid taxes, make sure to complete the refund process by March 31, 2027. Any claims for tax refunds must be submitted before this date to be processed.

Need Assistance?

Navigating tax amendments or filing for a refund can be complex. If you need help with your tax filings or refund claims, we recommend consulting with the Revenue Department or seeking guidance from a tax professional. At RSM, we are ready to assist you in ensuring a smooth and efficient tax filing process, helping you make the most of the new tax exemption rules. 

For more information with respect to Thailand tax issues or accounting Thailand issues please do not hesitate to contact the author of this article Khun Pitipong Santadram RSM Thailand’s Payroll manager on [email protected].

Reference: กฏกระทรวง ฉบับที่ 126 (พ.ศ. 2509); Clause 2(51) of the Ministerial Regulations No. 126.  
                          กรมสรรพากร - The Revenue Department (rd.go.th)
                          กฎกระทรวง ฉบับที่ 394 (พ.ศ. 2567); Ministerial Regulation No. 394. 
                           https://www.rd.go.th/fileadmin/user_upload/kormor/newlaw/mr394A.pdf