Subscribe
E-Paper
 |
| Logo for National Tax Service |
By Lee Kyung-min
Salaried foreign workers should file a year-end tax settlement for the past 11 months plus their upcoming February salary, the tax agency said Monday.
Greater tax incentives will be available to them as a revised law will recognize mortgages and monthly rent payments as deductibles. The law that took effect Jan. 1 removed a clause under which only Koreans were eligible to seek the benefit. But this will be applicable for year-end tax settlements for next year, not this year.
The National Tax Service (NTS) said foreigners earning a regular income in Korea should fill out the necessary forms and submit them to their employers between Jan.15 and Feb. 28. Their employers will then deliver the collected forms to the NTS by March 10.
The year-end process is a requirement whereby the tax authorities will settle whether workers should pay more or be reimbursed for income taxes paid over the past year.
This will follow a review of annual income statements for the past year including obligations paid to the government such as state-run healthcare and national pension premiums.
If the final amount settled is greater than the amount paid, workers should pay the difference. If it is the other way around, the government will refund workers the difference.
Foreign workers can choose whether to use the same calculation method as Koreans, or apply a flat 19 percent rate.
For foreigners recognized as having an engineering specialty, up to 50 percent will be deductible for income earned over the past five years.
This will be applicable to those who began working in Korea after Jan. 1, 2019. The deductible will be only up to 20 percent for those who did before Dec. 31, 2018.
However, non-taxable benefits such as national health insurance premiums paid by their employers will also be included in taxable income because the regulations on non-taxable, deductible, reduction and tax deductions do not apply when a single tax rate is applied.
Up to 70 percent of income will be recognized as deductible for foreign employees at firms recognized by the government as institutions that help foster competitiveness in Korea's components, parts and equipment industries. This will be applicable for three years for those who began working in Korea after Jan. 1, 2020. The tax incentive will be extended for two more years, but the maximum amount deductible will be capped at 50 percent.
Income earned via teaching and research activities for a period of two years will be exempt for foreigners from countries with which Korea has signed a related tax treaty. This will not be granted to English teachers at private cram schools or English instructors at private camps.
More detailed information will be available at nts.go.kr including an easy guide and online calculators. In-person consultations will be given in English. Services are also available in Chinese and Vietnamese.
In 2019, 586,000 foreigners reported a combined 904.3 billion won ($820 million), an increase from 573,000 foreigners reporting a combined 783.6 billion won in 2018. In 2017, 558,000 people reported a combined 770.7 billion won.
