Any countries has these kind of compulsory liabilities to the people and entities, but it’s a bit different rate and various kinds country by country.
1. Corp. Income Tax
There will be no tax in Korea for an entity which is not profitable during his fiscal year (12months). Tax rate is 11% if the Income before tax amount is less than 200mil.won, it’s 22% for the amount more than 200mil.won. So when an entity make 300mil.won Income before tax, total tax would be 44mil.won; 22(200*11%)+22(100*22%).
2. VAT(Value Add Tax)
10% or zero rate for VAT, an entity need to pay 10% VAT of all purchase, and also need to withhold 10% of VAT for his sales amount from his clients, and need to pay the net amount(10% Sales amount-10% purchase amount). Mainly farm product which is not processed are 0% VAT.
3. Employee Income Tax
Entity need to withhold the class A Income Tax for his employees and business income tax for his various contractors based on salary or income amount paid. This is the employers’ responsibility, usually monthly basis.
4. Retirement Fund
An Employer need to pay one month salary for the retirement fund to his employees’ retirement fund account when the employee is working for the company more than a year. This is very unique system which is not that smart for the social security program which is an entity paid.
5. 4 major insurance program
This is the social security program in Korea, saying National pension, Health Insurance, Unemployment insurance and Workmen’s compensation, employee portion is around 8% and employer portion is around 10% of the salary amount paid monthly.
All of these above items could be a surprise if you didn’t count from the beginning, and also it’s painful when you pay without budget in a certain period of time.
Jz designed the payroll and compensation package for the last 30 years while considering all of above items for employees and entities to look at the maximized satisfaction for labour and management parties simultaneously.
Please send me an email if you need more information on the above items to firstname.lastname@example.org, have a good day!