In Korea, as in any Western country, if you’re employed legally, income tax is a mandatory deduction from your payroll. As an employee in Korea, you will pay a yearly income tax just as any Korean employee. There are few differences between a Korean and an expat filing for income tax. Income tax is automatically deducted from your paycheck, unless you and your employer have made other arrangements, and will be balanced at the end of each tax year.
In Korea, capital gains, global income and retirement income are all taxed, so whether you are working or not, if you are receiving any form of income, you will likely have to file for income tax on a yearly basis. There are some exemptions as to who needs to file for income tax, and if you think you may fall into an exempt category, you can visit this website and download the applicable forms found under “Income Tax”: http://www.nts.go.kr/eng/index.asp. This website has lots of helpful information about taxation for foreign workers and residents in Korea.
Korea’s taxation calendar begins on the first of June and ends on the 31st of May the following year. Generally, by April you should begin to file your taxes and get everything in order. For all necessary forms and for help, please visit the National Tax Service (website found in above paragraph). They have all the necessary forms and will help you throughout the tax filing process.
Income tax is generally deducted from your monthly paycheck if you are working in Seoul. If you have areas of income coming from outside Korea, you will have to claim these as well. The tax brackets are basically as follows:
- Up to 12 million won per year, the income tax rate will be 6%.
- 12 million to 46 million won per year, the tax rate will be 16%.
- Between 46-88 million won per year, the tax rate will be 25%.
- More than 88 million won per year, the tax rate will be 35% of the income.
You need to have the following documents when presenting your income tax file to your district tax office:
- A copy of your alien registration card
- Applications for tax credits or exemptions as well as documentation proving why you should be exempt from these credits
- Income statements and any other documents that show your yearly income
- Any other documentation that you may be asked to provide under Korea’s Income Tax Act
You do not have to file in person and can pay at any bank or post office before May 31st. There is also a way to file your taxes online; however, it is entirely in Korean. Regardless, you will need all of these documents sent along when you file your taxes.
While some countries have agreements with Korea to get tax-back, or to be exempted from income taxation, many do not have any such agreements. As this situation is volatile and always changing, it is best for you to contact your local embassy to obtain correct and up-to-date information on the matter.
If you have any questions about this matter at all, you can contact the National Tax Service or your local district tax office. For a list of the district tax offices in Seoul, please visit this website: http://www.nts.go.kr/eng/help/help_41_1.asp?top_code=H001⊂_code=HS04&ssub_code=HSD1
If you wish to call the National Tax Service, they have a 24 hour hotline which caters to expats. You can get information in 18 different languages and the staff is knowledgeable and able to help you with any questions you may have. During office hours you can reach the hotline at 397-1440 or after hours, you can call 1588-0560.