국세청		Press Release- Reference Material

Press Release	Jan. 6, 2025 (Mon), 12:00 pm	Release on	Jan. 6, 2025 (Mon), 10:00 am

Supporting 600,000 Foreign Workers in Korea

with 2024 Year-end Tax Settlement

- Guide in English, YouTube videos, Manual now available to answer your questions! -

□  Foreign workers in Korea, excluding daily workers, must complete the year-end tax settlement for their wage and salary income for the year 2024 by the end of February 2025. This requirement applies irrespective of nationality or length of stay.

※  The number of foreign workers required to undergo year-end tax settlement:  510,000 (2021) → 540,000 (2022) → 610,000 (2023)

〇  The year-end tax settlement timeline, deduction items, and tax calculation methods are, in principle, the same for foreign workers and Korean nationals.

- A notable exception lies in the income deduction for deposits made to home-purchase savings accounts. This deduction is available only to taxpayers registered as the head of a household under the Resident Registration Act. Since foreign nationals cannot be recognized as the head of a household under this law, they are ineligible for this specific deduction, even if they are residents of Korea.

〇 Taxpayers seeking to take advantage of special taxation systems exclusive to foreigners, such as the 19% flat income tax rate or income tax reduction for foreign engineers, are advised to thoroughly examine the eligibility criteria.

□  The National Tax Service (NTS), under the leadership of Commissioner Kang Minsu, provides a range of guidance services to assist foreign workers who may face challenges due to limited Korean language proficiency or unfamiliarity with the local tax system. The aim is to ensure that all foreign workers can complete their year-end tax settlements without difficulty.

〇  Foreign workers can access detailed information on year-end tax settlement through various resources NTS offers. These include the Easy Guide (English) and foreign language manuals (English, Chinese, Vietnamese) available on the English website of NTS. Additionally, the NTS YouTube channel features instructional videos in English. For personalized assistance, NTs operates a dedicated Help Line for foreigners at 1588-0560 (English).

〇  This year, an information leaflet outlining key details of the special taxation system exclusive to foreign workers has been produced in four languages (Korean, English, Chinese, and Vietnamese). These leaflets can be obtained at relevant institutions, including tax office service desks, embassies and foreign worker support centers.

□  The NTS　reviews year-end tax filings to verify their accuracy. Foreign workers are strongnly advised to consult the provided guidance and ensure compliance when filing their taxes. Improperly claiming deductions may result in penalties of up to 40% in additional tax.

Drafting	International Taxation Bureau	Director	CHUN AEJIN	(044-204-2801)
Division	International Tax Resources Division	Deputy Director	PARK JINWOO	(044-204-2817)

1		Guidance for Foreign Workers on Year-end Tax Settlement for 2024

□  Foreign workers who earned wage and salary income in Korea during 2024 (excluding daily workers) must finalize their year-end tax settlement by the time they receive their February 2025 salary, This requirement applies regardless of nationality, length of stay, or income amount.

〇  Based on the year-end settlement outcome, the final tax amount will be compared with the amount withheld monthly by the withholding agent (the employer). If the amount withheld exceeds the final tax amount, the taxpayer will receive a refund for the difference. Conversely, if the amount withheld is insufficient, the taxpayer will be required to pay the difference.

□  In principle, the year-end tax settlement process for foreign workers is the same as it applies to Korean workers.

〇  Foreign workers wishing to simplify document submission for their year-end tax settlement are encouraged to utilize the ‘one stop service.’* To do so, they must log in to Hometax and complete the process to confirm their consent to information provision by January 15, 2025.

*  The taxpayer only has to give consent to information sharing, and the NTS will send all the data needed for simplified tax settlement directly to the taxpayer‘s employer.

| 2024 Year-End Tax Settlement Schedule |

□  The NTS provides a range of filing guidance services to assist foreign workers complete their year-end tax settlement without difficulty.

〇  Withholding agents (employers) are encouraged to utilize the foreign language resources* published by NTS to help their foreign employees with limited Korean proficiency to prepare for their year-end tax settlement.

*  These include Easy Guide (English), foreign language manuals (English, Chinese and Vietnamese) and instructional videos on YouTube among others.

2		Important Tips for Foreign Workers

□ Deductible items vary based on residency status of foreign employees.

□  Foreign workers classified as residents of Korea are eligible to claim the same general deductions available to Korean residents. However, an exception applies to the deduction for deposits made to home-purchase savings accounts. This deduction is only allowed for heads of households (Act on Restriction on Special Cases Concerning Taxation, Art. 87).

*  Foreign nationals cannot be recognized as heads of households under the Resident Registration Act and therefore are not eligible to enjoy the income deduction for home-purchase savings. However, they can still claim deductions for housing funds (Income Tax Act, Art. 52) and tax credits for monthly rents (Act on Restriction on Special Cases Concerning Taxation, Art. 95-2).

〇  Foreign workers classified as non-residents should be aware that certain income deductions and tax credits* available to residents may not apply to them.

*  These include personal deduction for dependents, special income deductions, tax credits for children, and special tax credits, among others.

□ Foreign workers may opt for a flat income tax rate.

□  Foreign workers, unless employed by a company with which they have a special relationship,* may opt for a special flat tax rate of 19% applicable for up to 20 years from the tax year in which they began working in Korea, or the basic tax rate.

*  ‘A special relationship‘ is determined by criteria such as the foreign worker owning 30% or more of the equity shares in the employing company.

〇 Taxpayers opting for the flat income tax rate should be aware that they forfeit eligibility for other tax benefits, including tax exemptions, deductions, reductions and credits provided under the Income Tax Act. For example, while National Health Insurance premiums paid by the employer are considered non-taxable income under the basic tax rate, they are treated as taxable income when the flat tax rate is chosen,

	Example of Wrongfully Applied Flat Tax Rate for Foreigners
◈ Where the foreign representative B of stock company A owns 100% of the company’s shares but a flat tax rate (19%) was applied ⇒ The flat tax rate shall be rejected and the basic tax rate shall apply

□ Foreign engineers who meet eligibility requirements may enjoy income tax reduction.

□  Foreign engineers who provide services in Korea under an engineering technology license agreement or qualify as researchers, may enjoy a 50% income tax reduction on their earned income for ten years.

*  If employed by a ‘specialized leading enterprise‘ as defined under Article 16 of the Act on Special Measures to Strengthen Competitiveness and Stabilize Supply Chain of Materials, Components, and Equipment Industry, foreign workers may receive a 70% reduction for the first three years of employment in Korea (applicable only if the worker began working in Korea on or before December 31, 2022).

	Be sure to check the eligibility requirements before claiming tax reduction for foreign engineers.
◈ Foreign engineers must meet one of the following two conditions to be eligible for income tax reductions. Be sure to check whether you qualify (Enforcement Decree of Act on Restriction on Special Cases Concerning Taxation, Art. 16): ‘① The individual provides services in Korea under an engineering technology license agreement (with a contract value of USD 300,000 or more); or ② The individual is employed as a researcher in Korea, such as at a research institute affiliated with a Korean company, and holds a bachelor‘s or higher degree in the natural or engineering sciences, and has at least five years of work experience at a foreign research institute prior to working in Korea.

□ Foreign teachers may enjoy income tax exemption under applicable tax treaties.

□  A foreign teacher who is a citizen of a jurisdiction that has a tax treaty with Korea, including a tax exemption clause for teachers and/or professors, and meets the necessary requirements, may qualify for an income tax exemption on income from teaching and research activities. The exemption applies for the period specified in the treaty.

* The specific tax exemption requirements differ for each tax treaty. Taxpayers are strongly advised to check the original text of the treaty between Korea and their country of residence before claiming the tax exemption.

Be sure to check the applicable tax treaty based on your country of residence.

◈  To view the tax treaty provisions, visit the National Tax Law Information System (taxlaw.nts.go.kr) → Proceed to  ｢Statutes｣ → ｢Tax Treaties｣

Exemption Clause	Tax Treaty Partners
N/A	15 jurisdictions including Norway, Sweden, Singapore and Hong Kong
2-yr exemption	74 jurisdictions including US, Vietnam, Spain, Japan, France and Australia
3-yr exemption	Goergia, China, Qatar, Tajikistan (4 jurisdictions)
No period limit	Albania and Hungary (2 jurisdictions)

3		Information Services to Support Foreign Workers’ Year-end Tax Settlement

□  The National Tax Service‘s English website provides the ｢Easy Guide｣, offering essential information in both Korean and English, as well as ｢Foreign Language Manuals｣ (in English, Chinese and Vietnamese) on how to complete year-end tax settlement accompanied by calculation examples.

○  Additionally, the NTS has an official YouTube channel, offering essential guidance through 10-minute videos titled ｢Year-end Tax Settlement for Foreign Workers｣. For personalized assistance, foreign workers can call the the NTS Helpline for Foreigners at 1588-1560, where advice is available in English.

○  This year, the NTS has also produced an information leaflet outlining key details of the special taxation system for foreign workers (such as flat income tax rate for foreign workers, tax reduction for foreign engineers, and tax exemption for foreign teachers) in different languages. These leaflets are now available at relevant institutions and customer service desks in tax offices nationwide.

| How to access services to aid foreign workers’ year-end tax settlement |

Service Type		How to Access
	Phone (English)	1588-0560, 09:00 ∼ 18:00 (Not available in 11:30∼13:00)
	Online Q&A (English)	www.nts.go.kr/english/main.do > Help Desk > Q&A
	Easy Guide for Foreigners’ Year-end Tax Settlement (English)	www.nts.go.kr/english/main.do > Resources > Publication > 2024 Easy Guide for Foreigners' Year-end Tax Settlement
	Year-end Tax Settlement Manuals for Foreigners (English, Chinese & Vietnamese)	www.nts.go.kr/english/main.do > Resources > Publication > 2024 Year-end Tax Settlement Manual for Foreigners
	Special Taxation for Foreigners Leaflet (English, Chinese & Vietnamese)	www.nts.go.kr/english/main.do > NTS News > News and Updates > Special Taxation System for Foreigners
	YouTube Videos (English)	www.youtube.com/user/ntskorea

【Appendix】

1. How to Obtain Supporting Documents Needed to Claim Income Deductions & Tax Credits

2. Determination of Resident and Non-resident Status under the Income Tax Act

3. Eligibility for Income Deductions & Tax Credits

4. Foreigners’ Guide to Calculating Tax Amount for Year-end Tax Settlement

5. Special Taxation System for Foreigners Leaflet

6. FAQ on Year-end Settlement for Foreigners

Appendix 1		How to Obtain Supporting Documents Needed to Claim Income Deductions & Tax Credits

□ When One Stop Service is used to submit supporting documents for tax settlement

	| 일괄제공서비스 일정 |

○ (Employers) By Nov. 30, 2024, the employer must register the employee list by: ①retrieving the previous year‘s list of employees, ②using the spreadsheet template provided by NTS to draft a list and uploading it, or ③ directly keying in the employee information in Hometax.

▪ Hometax → Tax Credits & Year-end Tax Settlement → Simplified Tax Settlement

→ One Stop Service → (For Employers) Application･Management

*  The initial application deadline is Nov. 30, 2024. Modifications and corrections may be made until Jan. 10, 2025.

○ (Foreign Workers) From Dec. 1, 2024 to Jan. 15, 2025, the taxpayer can confirm and give consent to the scope of data shared by Hometax with the employer to complete the process.

▪ Hometax→ Tax Credits & Year-end Tax Settlement → Simplified Tax Settlement

→ One Stop Service → (For Workers) View･Consent･Cancel

□ When the employee needs to get documents issued manually

○  The taxpayer must submit supporting documents to the employer if additional information is required beyond what is provided by NTS via Hometax.

Supporting Documents	Issued for	Issuing Body
Certificate of Alien Registration	Foreign workers employed in 2024 or foreign workers with changes in dependents	Immigration Office
Insurance premium payment receipt	Holders of life insurance policies, etc.	Insurance companies
Certificate of Medical Services (Medication) Fees Payment	Workers eligible for medical expenses deduction	Hospitals, Pharmacies
Education Fees Payment Receipt	Taxpayers or dependents who are in school	Education institution
Donation Receipt	Workers who have made donations	Donation receiving organizations
Confirmation of credit card spendings, etc.	Workers eligible for deduction for credit card spending	Card companies

Appendix 2		Determination of Resident & Non-resident Status under the Income Tax Act

□  A ‘resident‘ is an individual who has his/her domicile in Korea, or a place of residence for at least 183 days in Korea. A ‘non-resident‘ is any individual who is not a resident (Income Tax Act Art.1-2)

◈ If a person had a place of residence in Korea for at least 183 days* during one taxable period, the person shall be deemed to have had a place of residence for at least 183 days. The period of residence is counted from the day after the date of his/her arrival in Korea to the date of his/her departure. When the purpose of one’s departure from Korea is deemed to be temporary, such as sightseeing or medical treatment, the duration of sojourn abroad is also counted toward the duration of residence. (Enforcement Decree of Income Tax Act, Art. 4)

*This does not mean that the person has to have stayed in Korea for 183 consecutive days.

○  The concepts of domicile and residence, used to determine resident status, are as follows:

-  (Domicile) A domicile is determined by the objective facts of living circumstances, such as the existence of a family living together and assets held in Korea. (Enforcement Decree of Income Tax Act, Art. 2-1)

※  Domicile is determined based solely on the living circumstances in Korea, not compared with the living circumstances abroad.

A person is deemed to have a domicile in Korea	∙When the person resides in Korea and has an occupation which usually requires him/her to continually reside in Korea for at least 183 days. ∙When the person residing in Korea has a family member with whom he/she shares a living, and is deemed to continually reside in Korea for at least 183 days in view of his/her occupation and/or state of asset ownership. ∙When a crew member of a vessel or aircraft serving overseas routes has family with whom he/she shares a living residing in Korea, or has his/her usual place of stay during off-duty periods located in Korea,
A person is deemed not to have a domicile in Korea	∙When a person living or working abroad has a foreign nationality, or a permanent residency permit issued by the foreign country, and has no family member in Korea with whom he/she shares a living, and based on his/her occupation or the state of asset ownership, is not deemed likely to return to reside mainly in Korea.

-  (Place of residence) A place of residence means a place other than  a person‘s domicile where he/she lives for a significant length of time, and in which there is no living relationship formed as close as in a domicile (Enforcement Decree of Income Tax Act, Art. 2-2).

□  Determination of resident status of executives, employees, etc. dispatched abroad, such as to overseas subsidiaries of Korean companies

-  Executives or employees dispatched to an overseas place of business or subsidiary of a resident or a Korean corporation, or employees of the Korean government working abroad, are deemed as residents of Korea (Enforcement Decree of Income Tax Act, Art. 3).

Appendix 3		Eligibility for Income Deductions & Tax Credits

Item		Korean National		Foreign National
		Resident	Non-resident	Resident	Non-resident
Gross Wage & Salary Income		Including foreign source income	Korea source income only	Including foreign source income	Korea source income only
Personal deductions Income Tax Act Art. 51	Basic deductions (Taxpayer, spouse, dependents)	◯	Only for the taxpayer	◯	Only for the taxpayer
	Additional deductions (Senior citizens, persons with disabilities, etc.)
Special income deductions Income Tax Act Art. 52	Insurance premium	◯	X	◯	X
	Housing funds	◯	X	◯	X
Other income deductions Act on Restriction Special Cases Concerning Taxation	Deposits to Home-purchase Savings Accounts Art. 87	◯	X	X	X
	Contributions to Employee Stock Ownership Associations Art. 88-4	◯	◯	◯	◯
	Long-term Collective Investment Securities Savings Art. 91-16	◯	X	◯	X
	Long-term Collective Investment Securities Savings for Youth Art. 91-20	◯	X	◯	X
	Credit Card Spending Art. 126-2	◯	X	◯	X
Tax Credits	Tax Credit for Children Income Tax Act Art. 59-2	◯	X	◯	X
	Special Tax Credits (Insurance premium, medical expenses, etc.) Income Tax Act Art. 59-4	◯	X	◯	X
	Foreign Tax Credits Income Tax Act Art. 57	◯	X	◯	X

✓ It is the responsibility of the taxpayer to check the relevant laws, including Income Tax Act and the Act on Restriction of Special Cases Concerning Taxation, to understand the requirements and whether they qualify to claim the deductions and credits listed on this table as well as other tax benefits.

Appendix 4		How to Calculate Tax Amount for Year-end Tax Settlement

1. General Calculation Process for Year-end Tax Settlement

Step 1

Gross wage & salary income

Annual wage & salary income

(-)Non-taxable income

= Gross wage & salary income

○ Non-taxable income

- Personal vehicle allowance (KRW 200,000/mo)

- Work-related tuition support

- Employer’s contribution to payment of Natl Health Insurance premium & Employment Insurance premium, etc.

Step 2

Adjusted wage & salary income

Gross wage & salary income

(-) Wage & salary income  deduction

= Adjusted wage & salary income

○ Schedule of wage & salary income deduction (in KRW)

Gross wage & salary	Wage & salary income deduction (Max 20M)
5M of less	Gross wage & salary × 70%
Over 5M to 15M or less	3.5M ＋ (amount over 5M × 40%)
Over 15M to 45M or less	7.5M ＋ (amount over 15M × 15%)
Over 45M to 100M or less	12M ＋ (amount over 45M × 5%)
Over 100M	14.75M ＋ (amount over 100M × 2%)

Step 3

Tax base

Adjusted wage & salary income

(-) Various income deductions:

ㆍPersonal

ㆍPension insurance premium

ㆍSpecial

ㆍOthers

(+)Amount exceeding the upper limit of aggregate income deduction

= Tax base

○ Personal deductions

- Basic deduction, additional deduction

○ Deductions for pension insurance premium

- Taxpayer’s contribution to national pension, gov employees pension, etc.

○ Special and other income deductions

Special income deductions	Other income deductions
Insurance premium Housing funds	Contributions to Employee Stock Ownership Associations Long-term Collective Investment Securities Savings Credit card spending, etc.

○ Amount exceeding the upper limit of aggregate income deduction

- If the income deductions total exceeds the upper limit of 25M, the amount in excess is added to the tax base

Step 4

Calculated tax amount

Tax base

(×) Tax rate

= Calculated tax amount

Tax base bracket	Tax rate	Calculated tax (in KRW)
14M or less	6%	Tax base × 6%
Over 14M to 50M or less	15%	0.84M + (amount above 14M × 15%)
Over 50M to 88M or less	24%	6.24M + (amount above 50M × 24%)
Over 88M to 150M or less	35%	15.36M + (amount above 88M × 35%)
Over 150M to 300M or less	38%	37.06M + (amount above 150M × 38%)
Over 300M to 500M or less	40%	94.06M + (amount above 300M × 40%)
Over 500M to 1B or less	42%	174,06M + (amount above 500M x 42%)
Over 1B	45%	384.06M + (amount above 1B × 45%)

Step 5

Determined

tax amount

Calcuated tax amount

(-) Tax credits

= Determined tax amount

○ Tax reduction/exemptions and credits

- Income tax reduction/exemption for new employees of SMEs: Tax credits for wage & salary income, children and pension accounts, special tax credits, monthly tax credits, taxpayer associations credits, etc.

Step 6

Tax payable (refundable)

Determined tax amount

(-) Tax prepaid

= Tax payable (refundable)

○ Tax prepaid

- Monthly amount withheld from wage & salary income according to the ‘simplified tax withholding schedule‘ or at a ‘19% flat rate‘

2. Calculation Method for Taxpayers Opting for 19% Flat Rate

Step 1 Annual wage and salary income	Non-taxable income included	○ Non-taxable income - Personal vehicle allowance (KRW 200,000/mo) - Work-related tuition support - Employer’s contribution to payment of Natl Health Insurance premium & Employment Insurance premium, etc.
Step 2 Determined tax amount (=Calculated tax amount)	Annual wage & salary income (×) 19% = Determined tax amount
Step 3 Tax payable (refundable)	Determined tax amount (-) Tax prepaid = Tax payable (refundable)	○ Tax prepaid - Monthly amount withheld from wage & salary income according to the ‘simplified tax withholding schedule‘ or at a ‘19% flat rate‘

Example: Basic Tax Rate vs 19% Flat Tax Rate

< Basic information > □Danny worked for ABC Company in 2024 and earned income as follows: - Annual wage & salary income: 200M won (including non-taxable income of 50M won) □Family relations: Taxpayer (Danny, aged 36), Spouse (Jin, aged 38)_ * Jin makes not more than 1M won in annual income, and is a dependent for whom the taxpayer can claim basic deduction. □Expenditures - National Pension contribution ₩2,500,000 - National Health Insurance premium: ₩1,500,000 □Tax prepaid: ₩44,334,000
Calculation Based on Basic Rate		Calculation Based on 19% Flat Rate
Annual wage & salary income Non-taxable income	₩200,000,000 5,000,000	Annual wage & salary income	₩200,000,000
Gross wage & salary income Deduction for wage & salary income	₩195,000,000 16,650,000
Adjusted wage & salary income	₩ 178,350,000
Personal deduction (Basic deduction)	3,000,000
Pension contribution deduction	2,500,000
Special income deduction (Natl Health Insurance premium)	1,500,000
Tax base	₩ 171,350,000
Calculated income tax (Basic income tax rate) Tax credit for wage & salary income	₩ 45,173,000 200,000
Determined tax amount Tax prepaid	₩ 44,973,000 (-) 44,334,000	Determined tax amount Tax prepaid	₩ 38,000,000 (-) 44,334,000
Tax due	₩ 639,000	Tax due	₩ -6,334,000

Appendix 5		Special Taxation System for Foreigners Leaflet

Appendix 6		FAQ on Year-End Settlement for Foreigners

1		I am a foreign national earning salary in Korea. What is the year-end tax settlement? As far as I know, my employer already pays my taxes each month.

○  The year-end tax settlement is the process by which the withholding agent (your employer) finalizes the income tax amount an employee is required to pay for the tax year.

-  The final tax amount payable is determined based on the income you earned during the tax year and the deductions and credits claimed in your return.

○  Once the final tax amount is determined through the year-end tax settlement process, it is compared against the aggregate of tax withheld by your employer each month. If the sum withheld exceeds the final tax amount, the amount in excess will be refunded to you (added to your salary). If, on the other hand, the withheld amount is less than the final tax amount, you will be required to pay the difference (deducted from your salary).

※  Relevant provisions: Income Tax Act Articles 134 and 137.

2		If I leave the company in the middle of the year, how do I do the year-end tax settlement?

○  If an employee resigns during the year, the withholding agent (employer) will perform the tax settlement and collect the tax due when the payment is made for the employee‘s salary of the final month with the company.

○  Therefore, if you are leaving the company in the middle of the year, you must submit to your employer the report of income deduction and tax credit with supporting documents before receiving your last month salary.

※  Relevant provision: Income Tax Act Article 137.

3		If a foreign national who is a resident of Korea has income from work performed in another country, should this be combined with income earned in Korea for year-end tax settlement?

○  Foreign nationals who are residents of Korea are, in principle, required to combine all income earned in Korea and elsewhere for the year for year-end tax settlement.

-  However, if the foreign national who is a resident of Korea has maintained a domicile or residence in the country for a total of 5 years or less within the 10 years preceding the end of the tax year, only the portion of foreign source income that is either paid in Korea or remitted to Korea needs to be included in the year-end tax settlement.

※  Relevant provisions: Income Tax Act Articles 3 and 20.

4		If the taxpayer choose the flat tax rate of 19%, are the employer’s contributions to National Health Insurance and Employment Insurance treated as taxable income?

○  For foreign workers who opt for the flat tax rate, the legal provisions governing income tax benefits, such as tax exemptions/reductions, income deductions and tax credits no longer apply. Therefore, the employer-paid contributions to National Health Insurance and Employment Insurance, which are non-taxable under the Income Tax Act is treated as taxable income when the flat rate is chosen.

※  Relevant provisions: Act on Restriction on Special Cases Concerning Taxation Article 18-2 and Income Tax Act Article 12-3

5		The period for which the flat tax rate of 19% can be applied has been extended from 5 years to 20 years. When does this rule take effect?

○  This rule applies to income generated on or after January 1, 2023, which means that it may be applied for the year-end tax settlement for the 2024 tax year.

※  Relevant provisions and tax rulings: Act on Restriction on Special Cases Concerning Taxation Article 18-2, Written-2023-International Tax Base-1002, 2023.06.09.

6		When applying the revised rule extending the flat rate applicability to 20 years, how do we set the reference date from which the period is counted, currently defined as“the first day of working in Korea”?

○  The first day of working in Korea is January 1, 2014 for foreign workers who began working in Korea on or before that date. However, for those who had left Korea before 2013 and returned and began to work in Korea again in 2014 or after, it will be the first day of working in Korea since their first return to the country after January 1, 2014.

※  Relevant tax ruling: Income Tax Policy Division of Ministry of Economy and Finance-135, 2023.02.21.

7		Is it always better for the taxpayer to opt for the flat tax rate (19%)?

○  The flat tax rate is a special tax system offered on a limited basis to foreign workers who comply with their tax obligations. It is difficult to say as a rule that the flat tax rate is either advantageous or disadvantageous, as tax liability will vary depending on the individual‘s tax base and the deductions and credits he/she is qualified to claim,

-  Therefore, foreign workers are advised to use the Year-End Tax Simplification Service and get an estimate of tax liability to make an informed choice of tax rate.

8		Can I claim a deduction for medical expenses incurred for treatment received and paid for overseas?

○  No, medical expenses incurred at healthcare institutions outside Korea are non-deductible.

※  Relevant provisions: Income Tax Act Article 59-4 (2) and Enforcement Decree of Income Tax Act Article 118-5 (1)

9		Is my credit card spending overseas deductible?

○  No, credit card spending outside Korea is not deductible.

※  Relevant provision: Act on Restriction on Special Cases Concerning Taxation Article 126-2 (1)

10		Can a foreign worker employed in Korea claim a deduction for education expenses paid for a child attending school abroad?

○  No, education expenses paid by a foreign resident of Korea for a child attending school overseas are not deductible.

※  Relevant provisions: Income Tax Act Article 59-4 (3) and Enforcement Decree of Income Tax Act Article 118-6 (4) and (5)

11		Can a foreign resident of Korea claim the basic deduction for a spouse who resides in their home countryd? If it is possible, what supporting documents must be submitted?

○  Even if the spouse does not reside with the taxpayer in Korea, the taxpayer in the above scenario may claim the basic deduction if the spouse‘s annual income is 1M won or less. To do so, the taxpayer needs to submit a document that proves the spousal relationship—e.g. a certificate of family relationship, a marriage certificate, or similar documents issued by the other jurisdiction—as well as certificate of the spouse‘s income issued by a relevant foreign authority.

※  Relevant provision: Income Tax Act Article 50

12		Can a foreign resident of Korea claim the basic deduction for direct ascendants residing in their home country? If so, what supporting documents must be submitted?

○  A foreign resident of Korea can claim the basic deduction for direct ascendants who are his/her dependents residing in their home country. To do so, the following documents must be submitted: proof of relationship with the direct ascendants, such as a family registry document issued under the relevant foreign law, a certificate from the competent foreign authority verifying the ascendant‘s income, and an evidence of actual support being provided to the direct ascendant—e.g. records showing remittance of living expenses).

※  Relevant provision and tax ruling: Income Tax Act Article 50, Income Tax Policy Division of Ministry of Economy and Finance-84(2010.2.10.)

13		What requirements should foreign teachers meet to qualify for income tax exemption?

○  Tax exemption eligibility requirements vary by country with which a tax treaty has been concluded. Therefore, taxpayers need to review the tax treaty between Korea and the country of their residence for specific requirements. To find the relevant tax treaty, visit the National Tax Law Information System at taxlaw.nts.go.kr. Hover over the Statutes tab in the navigation menu, then select Tax Treaties.

○  For example, if you are a US resident, you must meet the following conditions to qualify for income tax exemption on your salary:

-  Invited to work in Korea by a central government body, a local government body, or an accredited educational institution

※  Foreign teachers invited to work in Korea by private language academies or English camps operating in English Villages do not qualify.

-  Term of invitation must not exceed 2 years.

※  Applicable Treaty: Korea-US Tax Treaty Article 20 (1)

-  Purpose of invitation must be to have the person teach or do research at a university or an accredited educational institution

-  The primary purpose of visit must be to teach or to do research at a university or an accredited educational institution

※  Foreign nationals who entered Korea for purposes other than the above do not qualify for income tax exception.