What Is TAS 19? Which Companies Need It and What HR Must Prepare
Short answer: TAS 19 (Thai Accounting Standard No. 19, Employee Benefits) requires companies to record a "liability" for money they will pay employees in the future, especially retirement severance pay, in their financial statements from today, rather than waiting until the payment is actually made.
Why record it from today?
Under Thai labour law, an employee who works until retirement is entitled to severance pay of up to 400 days of their final wage. This obligation builds up a little every year the employee works, so the accounting standard requires it to be recognised as a liability gradually each year. That way the financial statements reflect the company's true obligations.
How is it calculated?
An actuarial method called the Projected Unit Credit (PUC) method is used, which estimates:
How much salaries will rise each year until retirement
The likelihood that employees resign or die before retirement (using the Thai mortality table TMO2017)
The present value, discounted using government bond yields (with reference to ThaiBMA)
Which companies need to do it?
Companies that use full Thai Financial Reporting Standards (TFRS), such as listed companies, must apply TAS 19 and usually have an actuary calculate it.
Non-publicly accountable entities (NPAEs) must also recognise retirement severance pay as a liability, measured at the best estimate at the end of the reporting period and discounted to present value where the effect is material. The standard does not require an actuarial calculation, but many companies choose one so the figures are reliable and easy to explain to auditors.
What data does HR need to prepare?
Employee list with date of birth, start date and gender
Current salaries
Salary increase history and staff turnover rates
Any other benefit rules the company provides, such as long-service awards
Frequently asked questions
How often does it need to be recalculated? Usually every year, at the end of the accounting period.
What kind of report do auditors accept? A report that clearly shows the assumptions, the calculation method and a reconciliation of the liability from the start to the end of the year.
How long does it take? It depends on the number of employees and how ready the data is. If the data in the list above is complete, the work is much faster.
Let First Draft calculate your TAS 19 obligation, with a bilingual report ready for your auditor. Call +66 80 950 5995 or see our TAS 19 service
About the author: The First Draft Team, with 10+ years of experience across a wide range of industries and in TAS 19 employee benefit valuation.
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