Expatriate tax ebook - Korea

Facts and figures
Pre arrival procedures
Employment visas
Tax year
Tax returns and compliance
Income tax rates
Sample income tax calculation

Pre arrival procedures
Expatriates who require a work visa must apply for this before taking up employment in Korea. It is therefore important that the expatriate’s employment contract and benefit package is structured in a tax-efficient manner before the contract is submitted to the Korean Immigration Department.

Employment visas
Under the requirements of the Immigration Authorities, expatriates taking up employment in Korea must apply for an employment visa before commencing employment.

If the expatriate’s spouse and dependent family relocate to Korea, they will require dependent visas. It should be noted that spouses entering Korea on dependent visas are not normally allowed to take up employment in Korea and must apply for a separate employment visa if they wish to work in Korea.

Tax returns and compliance
There are two filing deadlines: 10 March for salary and wage income earners (employer’s responsibility) and 31 May for individuals earning global income. Taxes are due by the respective dates mentioned above.

Tax year
The Korean fiscal year runs from 1 January to 31 December.

Income Tax Rates
Income tax rates for 2010 and 2011

Taxable Income (KRW)	Rate (%)	Tax Amount (in %)
0 – 12,000,000	6
12,000,001 – 46,000,000	15+	720,000
46,000,001 – 88,000,000	24+	5,820,000
Over 88,000,000	35 +	15,900,000

The resident surtax (10% of the income tax amount) will be added to the above individual income tax.

Sample income tax calculation
Assumptions

- Exchange rate: 1050 KRW/USD
- Dependent: wife and two children (elementary students)
- Company house & car expense provided by the company
- Compensation

	USD	KRW
Basic salary	150,000	157,500,000
Company house *	90,000	94,500,000
Holiday travel	20,000	21,000,000
Utility (reimbursement)	12,000	12,600,000
Medical benefit	12,000	12,600,000
Car expense *	18,000	18,900,000*
Child education (reimbursement)	25,000	26,250,000
Total	327,000	343,350,000
Company house & car expense	(108,000)	(113,400,000)
Total compensation	$219,000	W229,950,000

*These are not individual compensation but company expenses, so these amounts are not included in the total amount of individual compensation.

Tax calculation

- Method I: graduated tax rate application

- Method II: tax rate of 15% as a flat rate with no tax exemption/credit

Method I
Gross income	W229,950,000
Non-taxable income	0
Taxable income	229,950,000
Deduction on salary & wage income	(21,997,500)
Basic exemption	(7,000,000)
Special deduction for education expense	(4,000,000)
Tax base	196,952,500
Tax rate (graduated rate)	35%
Computed income tax	54,033,375
Income tax credit	(500,000)
Income tax	53,533,370
Resident tax	5,353,330
Total income taxes	W 58,886,700
Method II
Gross Income	W229,950,000
Flat tax rate (15%)	15%
Income tax	34,492,500
Resident tax	3,449,250
Total income taxes	W 37,941,750
Lower of method I or 2 :	W 37,941,750

Information about Korea:

Last updated 16 June 2011

Please be aware that the data included in this expatriate tax e-book is correct at the time of publication. Please do not act on the information contained within this e-book without first seeking expert, professional advice.
Disclaimer

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For further information on expatriate tax services in Korea, please contact Dong-Bum Kim

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