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Tax Benefit

          Money flows into and out of the provident fund can be divided into three streams: contributions, returns on investment and benefit payout.

       Countries employ different tax policies pertaining to these streams. Some apply the Taxation-Exemption-Exemption (TEE) system where contributions are subject to taxation while the other two flows are not. Others may choose the EET system where only benefit payout is tax levied.

       In Thailand, the government opts for tax exemption on all of the three streams, i.e., the EEE system, to offer a full incentive for earning retirement savings through provident funds.

          Under the EEE system, tax exemptions are structured as follows:               
          1. Contributions
              1.1  Employee contribution: The actual sum not exceeding 10,000 baht per annum is tax deductible. The excess of 10,000 baht but not more than 290,000 baht per annum is exempted upon condition that it does not exceed 15% of the wage.
              1.2  Employer contribution: The actual sum is deductible as expense but not exceeding 15% of the wage.

          2. Return on investment
               The whole sum is tax-exempted.

         3. Benefit payout
              The whole sum is tax-exempted upon condition that the member reaches his or her retirement age as stipulated in the company article but not less than the age of 55 and has maintained a continued membership for not less than five years.

       The provident fund is set up to provide adequate saving after retirement and the tax incentive scheme is granted to support such purpose. For those who do not maintain membership until retirement, therefore, will not gain full tax benefits or not at all.

     Employer

          Employer's contribution is deductible as expenses for corporate income tax. However, the deductible amount must not exceed 15% of the wage.

      Fund

          Returns on investment are tax exempted.

      Employee

Case 1: Termination of employment with employment period of less than 5 years                   
          The total benefit is included in the taxable income:

             Total benefit =    the employer’s contribution
                                       + returns on investment from the employee’s contribution
                                       + returns on investment from the employer’s contribution

Case 2: Termination of employment with employment period of more than 5 years                      
          Members can choose either to include the total benefit in the calculation of the taxable income or to separate tax payment for the specific amount, in which case the tax calculation is as follows:

          Taxable Amount =  [ Total Benefit Received – ( 7,000 x Years of Employment ) ]*0.5

          NOTE: only an employment period of at least 183 days is counted as one year of employment.

Case 3: Termination of membership during employment
          The total benefit is included in the taxable income.

To assess your taxable income for your accrued benefits in the provident fund,
    try our tax calculator.

In case of getting a new job, study how to reserve your benefits during job change.

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Last update : April 3, 2006