The following Korean Tax Law News is a publicly released Korean tax notification that is intended for foreigner companies in Korea. The notification was not translated or drafted by this law firm. For any questions on this notification please Contact Us.
Korean Tax Law News
☞ The following Korean tax information is translated from Korean for foreign-invested companies, and is not legally binding.
※ Year-end tax settlement by foreign workers in Korea
□ With the increase in foreigners residing in Korea, the number of foreign workers in Korea has increased every year as well.
○ For the convenience of foreign workers‘ year-end tax settlement in Korea, here are a few tips on year-end tax settlement for foreign workers this year.
□ If a foreigner has wage and salary income generated in Korea, he/she should perform year-end tax settlement just like domestic workers, regardless of his/her sojourn period and amount of wage and salary income.
○ If the amount of tax withheld every month is larger than the year-end tax settlement amount, the difference can be refunded. In this regard, foreigners should perform year-end tax settlement even if their wage and salary income is small.
※ Year-end tax settlement schedule (identical for both foreigners and Koreans)
▪Preparation of documents certifying income deduction and submission of return
(employee → company): Jan. 20. ∼ Feb. 28, 2018
▪Issuance of year-end tax settlement withholding receipt (company → employee):
Jan. 20 ∼ Feb. 28, 2018
▪Submission of withholding of income tax report and statement of tax payment (company→National Tax Service): By Mar. 12, 2018
□ A foreign worker‘s year-end settlement schedule, method and deduction items are mostly identical to those of domestic workers.
☞ For more information, please contact the International Tax Resource Management Office of the National Tax Service (82-44-204-2872~74).
○ However, special treatment in taxation such as the flat income tax of 19% and tax reduction or exemption for foreign engineers applies only to foreigners, while some deduction items such as housing fund deduction, housing purchase savings deduction, monthly rent deduction do not apply to foreigners.
□ The National Tax Service provides various services to assist foreign workers‘ year-end settlement such as a help line for foreigners and an automatic calculation service for year-end tax settlement in English.
▪ Customer satisfaction center (for foreigners): ☎ 1588-0560
▪ On-line consulting: www.nts.go.kr/eng > Help Desk > Q&A
▪ Automatic calculation program for year-end tax settlement (English)
(Q) A company purchased olympics tickets to distribute them free of charge to employees. In this case, can the ticket prices be considered deductible expense?
(A) The expenses that a domestic company incurred for purchasing olympic tickets for free distribution to employees can be included in deductible expense when calculating the income of the company’s each business year, in accordance with Articles 19 (2) and 26 of the Income Tax Act.Source: National Tax Service (Nov. 30, 2017)
(Q) If retainer fee was paid to a legal representative, which year does the fee become included in deductible expense?
(A) If a domestic company paid or is planning to pay retainer fee (limited to fees without the right of return) to a legal representative of a business-related law suit, such fee shall be included in deductible expense of the business year in which the obligation for payment occurred in accordance with the contract with the legal representative. Source: National Tax Service (Dec. 11, 2017)
- Korean Year-End Tax Settlement: Common Errors & Omissions
- Korean Tax Risk of Foreign Corporation Deemed “Actual Business Management Locale” within Korea: Korea Tax Law Basics
- Foreign Tax Incentives to be Cut: 17% Flat Tax Law Revised
- Korean Tax Law Amendment Press Release by Korean Government
- Tax Incentives May Decrease for Foreign Companies doing Business in Korea: Tax Law Updates
- Can a Foreign Company be Deemed a Domestic Company for Tax Purposes and Taxed on Worldwide Income?