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By Yoon Ja-young
Wage-earning workers of foreign nationality should file a year-end tax settlement just as workers of Korean nationality do, the tax agency said Sunday. The agency provides various services to support foreign employees in filing their taxes in the country.
According to the National Tax Service (NTS), all foreign employees, excluding day laborers, should file their year-end taxes for 2021 by the day on which wages for February this year are paid, regardless of their nationality, length of residency or amount of income. If the salary for February is not paid until the last day of February, the year-end tax settlement should be done by that day.
The method and deadline for foreign workers to file their year-end taxes are identical to those for Korean workers. They should submit their income deduction and tax deduction reports, as well as the related supporting documents, to their employers, instead of submitting them to the tax office. Depending on the results of the year-end settlement, employees will either pay more or be refunded for income taxes overpaid during the past year.
Foreign workers can also use the simplified year-end tax settlement service for the first time this year. It lessens the burden on each tax filer, as the tax agency forwards employees' year-end tax settlement data directly to employers with the employees' consent.
The NTS urged employers to help foreign employees with their year-end tax settlements, advising them to use the "Easy Guide for Foreigners' Year-end Tax Settlement," which is available on the agency's English website, on top of its English-language hotline for foreign nationals at 1588-0560, where it responds to inquiries.
This year, the tax agency also started a video guide for the year-end tax settlement with English, Chinese and Vietnamese subtitles through its English website and YouTube channel.
The NTS said that there are some changes that foreign workers should note when filing the year-end tax settlement for 2021. Starting from wage and salary income attributable to 2021, foreign employees can receive income deductions and tax credits for housing-related expenses, such as funds used for housing and monthly rent paid, in the same way that Korean employees do. However, foreign workers can't get deductions for deposits they made into savings accounts for housing purchases. Also notable is that the scope of employers providing income tax reductions or exemptions for foreign engineers has been expanded.
In the case of English instructors, the NTS said that income tax related to lectures and research can be exempted for a certain period ― in most cases two years ― if the person is able to claim eligibility under a tax exemption clause for teachers and professors based on tax treaties between Korea and countries like the U.S., the U.K. and Australia. It stressed that English instructors should check individually at the NTS, as conditions differ depending on the tax treaty counterpart.
The number of foreign workers who settled their year-end taxes was 545,000 last year, down 7 percent from the previous year, due to the decrease in the number of foreign nationals entering the country amid the COVID-19 pandemic. They filed 962 billion won ($802 million) total in taxes last year, up 6.4 percent from the previous year.
Among the foreign workers who filed year-end tax settlement last year, Chinese nationals accounted for the largest portion at 36.3 percent, followed by Vietnamese, Nepalese, Cambodians and Filipinos. In terms of the amount of year-end taxes filed, Americans accounted for 37.8 percent, followed by Chinese, Japanese, Canadians and Australians.
