20 years Flat tax rate(19%) is enough to induce Expat talent?
2022 tax revision plan was passed on Dec. 23, 2022, strengthening incentives to induce the influx of outstanding foreign talent
-Expansion of income tax reduction for foreign engineers and talented Koreans who have returned to Korea.
The government is strengthening tax incentives to expand the inflow of excellent foreign talent into Korea.
In the “2022 Tax Reform Plan” approved by the National assembly on the 23rd 2022, the Ministry of Strategy and Finance announced that it would revise the Restriction of Special Taxation Act in this direction to promote foreign investment and strengthen support for technology development using overseas experts.
First, the deadline for applying a flat 19% income tax rate for foreign workers, which is five years from the start of work in Korea, will be extended to 20 years, and the tax law will be amended so that a single tax rate will be applied for 20 years upon entry into Korea. Its purpose is to induce long-term domestic employment of outstanding foreign personnel.
The 19% flat tax rate applied to foreign workers is slightly higher than the 15% rate applied to the current income tax base of 46 million won or less, and significantly lower than the 24% rate applied to the income tax base of 88 million won or less. And practically if your gross salary income is more than 150mil.won, you need to contact a tax advisor to simulate your income tax to see whether this flat tax rate is favourable or not.
This special exception applies to income generated after January 1 of 2023FY, and applies even if the special case is applied as of January 1 of the 2023 year or if the special case was previously applied.
If you already got this flat tax rate for 5 years, you can apply for this tax rate for 15 years more.