Assume that the contract of employment is terminated when the basic salary of an employee is Br 7,200.

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Compute the tax on the severance payment if the employee left the organization after serving for:

a) 7 years
b) 7 years and 9 months
c) 35 years

1 answer

To compute the tax on the severance payment for the employee based on their years of service, we first need to determine the severance payment formula that is typically applicable in such situations.

However, since you have only provided the basic salary (Br 7,200) and the years of service, we will proceed with the assumption that the severance payment is computed as a certain multiple of the last month's salary per year of service.

Let's suppose for this scenario that the severance pay is equivalent to one month's salary for every year of service.

Basic Calculations:

  • Basic Salary: Br 7,200
  • Severance Pay Calculation: Severance Pay = (Years of Service) x (Monthly Salary)

Assuming no special tax rules and only considering general tax implications, let's calculate the severance payment and then tax it based on a given percentage if applicable (however, you must specify a tax rate if necessary).

a) For 7 Years of Service:

  • Severance Pay = 7 * Br 7,200 = Br 50,400

b) For 7 Years and 9 Months of Service:

  • Total Years of Service = 7 years + 9 months = 7.75 years
  • Severance Pay = 7.75 * Br 7,200 = Br 55,800

c) For 35 Years of Service:

  • Severance Pay = 35 * Br 7,200 = Br 252,000

Summary of Severance Payments:

  • a) 7 years: Br 50,400
  • b) 7 years and 9 months: Br 55,800
  • c) 35 years: Br 252,000

Tax Calculation:

To proceed with the tax calculation, please provide the applicable tax rate, or let me know how you would like to calculate the tax on the severance payments derived above.

If the tax rate is, for example, 10%, it would be:

  • a) Tax on Severance = 10% of Br 50,400 = Br 5,040
  • b) Tax on Severance = 10% of Br 55,800 = Br 5,580
  • c) Tax on Severance = 10% of Br 252,000 = Br 25,200

Please confirm the tax rate or specifications, and I can give a more detailed response!