Flat Income Tax Rate for Expats in Korea
In this article, I will discuss the Korean flat tax.
This flat tax rate is based on the Special Tax Treatment Control Law (조세특례제한법;조특법), Article 18-2 from the 2003 fiscal year to encourage foreigners of ability to bring in Korea to catch up the high technology while giving a tax benefit.
This flat tax rate is eligible to;
1. all of foreigners including who's not resident when he was employed
2. non-resident employee
3. foreign investor can be an employee
But the following foreigner will not be eligible;
1. Daily workers, part timers
2. part-time directors(non-executive, non-active director) who's staying overseas
There is no non-taxable income when you apply this fixed rate for example 200,000won car allowance, 100,000won lunch meal as well as kid allowance 100,000won.
You can pay this 17% income tax monthly with the application to the tax office.
If your income was more than 150mil.won alone in Korea, you'd better to go with this flat tax rate in my country.
National Tax 17%+ Local Tax 1.7%= Total 18.7%
If you wanted to compare immediately, please hit the https://www.nts.go.kr/eng/help/help_53.asp#result, you can calculate and simulate all of your deductible items as well.
This 18.7% fixed rate will be raised to 20.9%(19%+1.9%) from 2017 FY and lasting 3 years again, so it's valid until the end of 2019 according to the Government proposal to the Yeoeuido.
It's still a nice rate if your gross income is more than 150mil.won with dependents, but you need to calculate precisely whether this fixed rate is really cheaper than normal one with a various deductions.
Actually this rate is to give a favor to a Foreign High-Tech Engineers in 2003 but nowadays it's for High Salaried Officers who's living in Korea, so a lot of Korean complaining about this as a discrimination in disadvantage.
If he's in Korea before Jan. 2014, this flat tax rate is effective until 2018 December(5 years), I mean you can have this favor only 5 years from the date you landed in my country.