Additional tax exemption on employee termination income

In summary, Ministerial Regulation No. 394 raises the amount of severance pay which involuntarily terminated employees receive that is exempted from personal income tax. The new tax regulation was published with the new maximum rate of severance pay in mind, in order to reduce the financial burden on involuntarily terminated employees.

Previously, employees who were terminated involuntarily were exempt from personal income tax on their statutory severance pay up to an amount equal to their last 300 days’ wages or THB 300,000, whichever is less. According to Ministerial Regulation No. 394, taxpayers who receive a lump sum payment due to involuntary termination of employment under Thai labour law or the state workers law are eligible for an exemption from personal income tax for that portion of a lump sum received that does not exceed the total of the last 400 days’ wages or THB 600,000, whichever is less. Any severance payments for retirement, lump sums paid at the end of a fixedterm employment agreement, and other types of payments for employee resignations are not eligible for this tax exemption.

Note

The additional personal income tax exemption under Ministerial Regulation No. 394 applies to assessable income received from 1 January 2023 onwards. The Revenue Department should allow taxpayers to request a tax refund on any excess personal income tax for 2023 that was already remitted in early 2024. However, taxpayers should be prepared for tax audits by the Revenue Department when requesting a tax refund.

Reference (in Thai):

• Ministerial Regulation No. 394 (B.E. 2567).

Retrieved from Revenue Department, Kingdom of Thailand.