| Korean Immigration has recently implemented new policies on the E2 visa requirements, such as requiring medical records, criminal records, and interviews at overseas Korean embassies. This is a very fluid situation and there is a general opinion that the execution of the policy will continue to be refined. As a result, we cannot guarantee that our information will be current, to the moment. If you wish for the latest information and safe guidance, we please encourage you to contact Rowan at ESL-Planet, who is always at the forefront of industry changes and helping teachers get good jobs.
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If you have specific questions related to your taxation, we recommend that you contact the Korean tax office's helpline for foreigners at 02-397-1440.
There are national taxes paid to the central government in the form of income (소득세) and education taxes (교육세), taxes paid to provincial governments in the form of registration taxes (등록세), and resident tax (주민세), property tax (재산세), and automobile tax (자동차세) paid to city or other local governments.
Foreign nationals have the same responsibilities in paying taxes as to Korean citizens.
[edit] Types of Taxes 종류
[edit] Resident Tax 주민세
Paid by every August 1 to the local government where you reside. The amount is determined according to your income (소득할) and in by parity (균등할), having no relation to your income.
[edit] Automobile Tax 자동차세
Those who own automobiles pay automobile tax twice each year, by the first day of June and December. If you pay for the whole year one time, you receive a 10% discount. If you register to be able to pay every three months, you may then pay in March, June, September, and December. When you purchase an automobile, you will be required to pay aquisition tax (취득세) (2% of the cost of aquisition) and registration tax (등록세) (calculated by the cost of aquisition and the tax rate) to the provincial authorities. You must have liability insurance (책임보험), and will be fined if you do not.
[edit] Integrated Land Tax 종합토지세
Integrated Land Tax must be paid by those owning land every June 1st. It is levied based on the Register Book (등기부등본) and the land register (토지대장).
[edit] Property Tax 재산세
People owning structures are taxed according to the value of the property every June 1st.
[edit] Payment Methods 납입방법
Take the payment notice (납입고지서) sent you by your local government to a bank or post office. For the convenience of the taxpayer, there are automated methods of payment available, such as automatically from one's bank account, with a credit card, and with online banking.
[edit] Appeals 세금부과 불복신청
You may appeal (불복신청) against the taxes being levied against you based on claims of illegality or excessiveness, within 90 days. Consultations with the authorities in the case of regional taxes may be sought at the tax section (세무과) of the local government imposing the tax, or with the local office of the National Tax Service (국세청) for national taxes. Call the National Tax Service anywhere in the country at 1588-0060 or go to the "tax consultation" (세무상담) section of its [www.nts.go.kr homepage].
[edit] What an ESL teacher needs to know about tax
Basically, there are two categories of taxation pertaining to you: a general residential tax and a pension tax. The general residential tax rate is dependent on the city or district in which one teaches and should average approximately 3.5% while the required pension tax will average an additional 4.5%.
Bearing that in mind, one cannot totally rely on the employer to deduct the correct amount of taxes from a salary. It is advisable to closely monitor the deductions in order to avoid having to pay the Korean government any back taxes at a later date. If tax deductions are less than 7%, then the employer is not deducting the proper percentages from your salary and the employee will eventually be responsible for making up the difference.
An employee should not agree to an employer’s proposal to deduct a lesser amount of taxes or not to deduct any taxes from your compensation. Such an agreement could cause financial grief if the Korean Tax Department conducts a review of the employer’s tax policies. If one is not closely monitoring the tax deduction amounts, then it would be prudent to have sufficient funds available to pay the Korean Tax Department if an audit finds you in arrears.
Some unscrupulous employers may try to convince employees that they have been granted “special rates” by the government in order to avoid having to pay the correct amount of taxes due. In this case, one must insist that you will not agree to such a “deal” and want the proper amount of taxes deducted each pay period.
The Korean Pension Tax is, in effect, a social security tax and the person to whom the agreement applies will be accorded the same benefits under the Korean National Pension Act as the country provides to its own nationals.
Korean social security laws allow lump sum refunds to be paid only to non-Korean nationals of countries whose social security systems pay corresponding contribution refunds to Korean nationals working abroad or to nationals of those countries who have signed agreements with Korea to provide reciprocal refunds.
For example, countries such as South Africa, Australia and New Zealand have not entered into any such agreement with Korea. As a result, nationals of those countries who have engaged in teaching assignments or varied working arrangements in Korea are not entitled to any of the benefits provided under the Korean social security laws. However, the applicable 4.5% pension tax must still be deducted from salaries due.
There is currently an agreement between Korea and New Zealand insuring that a New Zealander working a minimum of 325 days can only be taxed once in either country.
It is very important that one investigate what taxation policies/agreements, etc. exist between a country and Korea before accepting a Korean teaching engagement. Another important point is that should the employee be unable to fulfill a full twelve month contractual obligation because of medical, personal or other reasons, certain tax liabilities in one's own country relative to foreign income earned may be imposed.
For those insecure with the monitoring of your tax deductions, one can obtain tax advice from certified public accountants, many of whom are affiliated with international accounting firms or from international law offices. As a non-resident, one is liable for taxes only with respect to income earned from sources within Korea.
All of the above information may well be affected by the 2005 Korean Tax Reform proposals. The Ministry of Finance and Economy (MOFE) announced proposals to reform taxes on August 26, 2005. Proposals include tightening of the anti-tax haven rules, redefining the existing definition of what constitutes a domestic company for Korean tax purposes and amending the income tax system to support the new corporate pension plan.
The MOFE expects to finalize consultations among government ministries and submit final proposals which would become effective as of January 2006.
Certain changes in the prevailing tax laws will undoubtedly affect foreign citizens teaching in Korea. Among the MOFE proposals are a deductable allowance for some necessary expenses incurred as a result of obtaining employment in Korea such as air fare, accommodations and meals. These allowable deductions will be of obvious benefit when determining your taxable income for withholding tax purposes.
As a result of the aforementioned, it is very important that you are fully aware of one's Korean tax liabilities, the effects of the new laws on any applicable pension tax, etc. before finalizing a contract agreement with a prospective school employer.
[edit] See also
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