NationalSymbols of the Republic of Korea
Q&A / FAQ
FAQ
  • Employee
  • Individual
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1. What kind of tax is there in Korea?

Taxes in Korea are comprised of national and local taxes. National taxes are divided into internal taxes, customs duties, and three earmarked taxes; the local taxes include province taxes and city & county taxes as shown below.

National Taxes

  1. Internal Taxes

    1. Direct Taxes

      • - Income Tax

        - Corporation Tax

        - Inheritance Tax

        - Gift Tax

        - Comprehensive real estate holding tax

    2. Indirect Taxes

      • - Value-added Tax

        - Special Excise Tax

        - Liquor Tax

        - Stamp Tax

        - Securities Transaction Tax

  2. Customs Duties

  3. Earmarked Taxes

    • - Transportation Tax

      - Education Tax

      - Inheritance Tax

      - Gift Tax

      - Special Tax for Rural Development

Local Taxes

  1. Province Taxes

    1. Ordinary Taxes

      • - Acquisition Tax

        - Registration Tax

        - Leisure Tax

        - License Tax

    2. Earmarked Taxes

      • - Community Facility Tax

        - Regional Development Tax

        - Local Education Tax

  2. City & Country Taxes

    1. Ordinary Taxes

      • - Inhabitant Tax

        - Property Tax

        - Automobile Tax

        - Farmland Tax

        - Butchery Tax

        - Tobacco Consumption Tax

        - Motor Fuel Tax

    2. Earmarked Tax

      • - Urban Planning Tax

        - Business Place Tax

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2. How 'resident' is treated differently from 'non-resident' for the tax purpose?

For tax purposes a person is either a resident or a non-resident of Korea depending on his status on residence or domicile. Resident individuals are taxed on their worldwide income. Non-resident individuals are taxed only on Korean-source income. Although similar, the definition of income applicable to non-residents is broader than that of income applicable to residents. Income derived by residents and non-residents is subject to global and scheduler taxation.

▶ Under global taxation, real estate rental income, business income, wages and salaries, temporary property income, pension income, and other incomes are aggregated and taxed progressively.

▶ Under scheduler taxation, capital gains, retirement income, and timber income are taxed separately at varying tax rates.

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3. Should I pay taxes when I receive any payment from a Korean firm on translation service?

According to the tax convention between Korea and your country, it may be taxed if you earn an income from the performance of personal service in Korea. But you may not be withheld tax in Korea if you have not been in Korea in a taxable year under the tax convention.

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4. Am I required to pay Korean income tax on speech payments?

Whether the remuneration paid to you for your speech in Korea is taxable depends on the tax treaty between Korea and your country. If it falls into taxable income, a payer is required to withhold income tax at the rate of 22% (including inhabitant tax) from the amount payable thereon at the time of such payment, and to pay it to the government by the tenth day of the following month.

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5. What kind of taxes do I have to pay if I do not run any business for about 6 months in Korea?

If you complete the Request for Certificate of Income Form and file it to the district tax office concerned, you receive the Certificate of Income specifying the amount of income and other necessary matters.

For your reference, there are many tax offices spread out all over the country. To search for the district tax office closest to you, click on the map presented on About NTS of our website

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6. What kind of taxes do I have to pay if I do not run any business for about 6months in Korea?

A person, who engages in the supply of goods or services independently in the course of business, whether or not for profit, is liable to pay value added tax. You, therefore, have to file a VAT return on the tax base and the tax amount payable in respect of each taxable period within 25 days after the expiration of the taxable period concerned.

The taxable period for VAT is divided into two.

ⅰ) First period: January 1 to June 30

ⅱ) Second period: July 1 to December 31

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7. How do I get tax registration in Korea?

Where you make Taxable Supplies that is the supply of any goods and services which are subject to VAT at any rate including zero-rate, you should register with the tax office which has jurisdiction over it within twenty days from the date of starting a business. If you do not register on time, you may be incurred a financial penalty.

To register for VAT, you must complete the Application for Registration Form and send it to the district tax office concerned.

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8. How does non-resident who is an independent contractor complete his tax responsibility?

Unless it is exempted under the applicable tax treaty, persons paying an amount of income from domestic sources to non-residents (excluding non-residents having real estate income or timber income) not attributable to a domestic business place, shall withhold as income tax at source of the income the applicable amount enumerated in the relevant tax laws.

The tax withheld must be paid to the government by the 10th day of the following month in which such tax was withheld. In case of personal service income, 20% of the amount payable shall be withheld.

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9. Who is liable to value added tax?

A person, who engages in the supply of goods or services independently in the course of business, whether or not for profit, is liable to value added tax. Taxpayers include individuals, corporations, national and local governments, associations of local authorities, any bodies of persons, and unincorporated foundations of any other organizations are generally subject to Value Added Tax.

A person who newly starts a business shall register the required particulars of each business place within twenty days from the business commencement date. The particulars may be registered before the business commencement date. Then the tax office having jurisdiction over the business place of the trader shall issue a business registration certificate to the trader concerned.

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10. What do you mean by zero-rating in term of value added tax?

The supply of the following goods and services is zero-rated and the input tax incurred is refundable. Zero-rating is applicable only to traders who are residents or domestic corporations. However, in the case of international transportation service by ships or aircraft, traders who are non-residents or foreign corporations are subject to zero-rating on a reciprocity basis.

ⅰ) Goods for exportation
ⅱ) Services rendered outside Korea
ⅲ) International transportation service by ships and aircraft
ⅳ) Other goods or services supplied for foreign exchange earning

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11. How the Reverse Charge System work in Korea?

A person who receives supply of services from a non-resident or foreign corporation in case of ⅰ) or ⅱ) shall collect the VAT at the time of the payment for such services and pay the amount to the government, except in cases where services received are used in taxable operations.

ⅰ) A non-resident or a foreign corporation not owning a place of business in Korea
ⅱ) A non-resident or foreign corporation with a permanent establishment supplies service not attributable and related to a domestic place

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12. Do I have to pay national pension contribution?

The general coverage criteria for the National Pension are age and residence, not income. All residents in Korea over 18 and under 60 years of age, regardless of their income, are covered under this Scheme. Accordingly, foreigners over 18 and under 60 years of age residing in Korea are covered under the Scheme except for special cases.

The Scheme is mainly financed by contributions paid by insured persons and their employers. The contribution of Workplace-based Insured Persons is equally shared by the employer and the employee (the Insured Person).

For details, please contact National Pension Company(www.npc.or.kr)

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