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Tax rate
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stephorama



Joined: 19 Sep 2010

PostPosted: Sun Oct 17, 2010 5:05 pm    Post subject: Reply with quote

Reading a sample contract sent to me by a recruiter. This is what it says:

Based upon your salary, the income tax rate is approximately 3.3% of your gross income and the residential tax rate is 10% of the income tax. Income tax rate is dependent upon your salary.

The sample contract does not state a salary but it does refer to employee - all over the place.

So, what the heck is that residential tax rate all about and when I interview with these folks in about an hour should I mention this tax thing then or wait for an offer?
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tamaralynn



Joined: 04 Apr 2011
Location: Canada

PostPosted: Tue Apr 12, 2011 1:39 pm    Post subject: Reply with quote

Does anyone know if anything has changed for 2011? I noticed that the last message on this thread is from last year.
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RMNC



Joined: 21 Jul 2010

PostPosted: Sat Apr 23, 2011 6:02 am    Post subject: Reply with quote

Nope, nothing has changed. If your contract says "employee" then you should not be getting taxed 3.3%.

Simply put, do not sign a contract that says 3.3%, it's illegal.
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duke of new york



Joined: 23 Jan 2011

PostPosted: Wed Jun 01, 2011 11:11 pm    Post subject: Reply with quote

Does anybody have a working link we can cite when telling recruiters/employers that a 3.3% income tax rate is too high?
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duke of new york



Joined: 23 Jan 2011

PostPosted: Thu Jun 02, 2011 1:42 am    Post subject: Reply with quote

Also, this is where a recruiter directed me when he insisted 3.3% was the correct rate:

http://www.opportunitykorea.com/a_menu/menu2_5.asp

This wasn't OK, but a different recruiter. I took this to mean I probably shouldn't trust OK Recruiting either, but after looking around Dave's, it seems like they are one of the more reputable ones. What gives? Do they just have totally wrong tax info on their site?
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ontheway



Joined: 24 Aug 2005
Location: Somewhere under the rainbow...

PostPosted: Fri Jun 03, 2011 12:10 pm    Post subject: Reply with quote

duke of new york wrote:
Does anybody have a working link we can cite when telling recruiters/employers that a 3.3% income tax rate is too high?



http://www.nts.go.kr/eng/help/help_52.asp
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duke of new york



Joined: 23 Jan 2011

PostPosted: Fri Jun 03, 2011 7:15 pm    Post subject: Reply with quote

Thank you, ontheway! Good to have something tangible to shove in the face of tricky recruiters.
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duke of new york



Joined: 23 Jan 2011

PostPosted: Fri Jun 03, 2011 9:43 pm    Post subject: Reply with quote

Just to be clear, the calculator tool on that link says it refers to the 2007 Simplified Tax Table, but the spreadsheet applies to income from 2008 and later. Since they give different withholding amounts, I'm assuming the calculating tool is outdated and we should refer to the spreadsheet. But is the 2008 spreadsheet up to date, or is there a more recent Simplified Tax Table?
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ontheway



Joined: 24 Aug 2005
Location: Somewhere under the rainbow...

PostPosted: Sun Jun 05, 2011 7:06 am    Post subject: Reply with quote

duke of new york wrote:
Just to be clear, the calculator tool on that link says it refers to the 2007 Simplified Tax Table, but the spreadsheet applies to income from 2008 and later. Since they give different withholding amounts, I'm assuming the calculating tool is outdated and we should refer to the spreadsheet. But is the 2008 spreadsheet up to date, or is there a more recent Simplified Tax Table?



The problem with the tax withholding rate is that nobody really knows what your rate should be before the fiscal or calendar year ends and you actually file your taxes. So the tax table and the tax calculator are estimates.

Recently, the tax system has changed and the 30% income exclusion for tax computation purposes for foreigners in Korea has been repealed. This was due in large part to teachers complaining about not being treated equally - so now we have to pay more. Probably both the table and the calculator are out of date.

The Tax Office has informed our school (we asked specifically) that the tax calculator is still accurate for 2011 and we can use that for withholding - so all teachers have that amount withheld.

However, if a school uses the newer tax table for your withholding, you really can't complain, as that's a reasonable ballpark estimate of taxes due, even though it's higher than the tax calculator (which I still think will underwithhold for some people).

What you don't want is to have an arbitrary 3.3% or 5% or whatever withheld. (Remember, since Korean income taxes are progressive, you could actually be at 3.3%, 5% or up to 36% if your income is high enough, so check the tax calculator or table.)

It's not always dishonesty that causes school to use 3.3% or 5%. There are new schools, new owners, new managers etc. who don't know what they should do who take advice from others who give them bad information - just like a lot of the info here on Dave's. There are accountants who tell their clients (schools, hogwans etc.) that they should or even must, by law, withhold at these higher rates. And, if you're Korean and your Korean accountant tells you that you should withhold this higher amount because you (the owner) could end of paying the unwithheld balance if the worker doesn't pay enough - who do you believe?

Of course, there are the experienced owners who use the independent contractor system to hide income and reduce their own tax bill (it's not really to cheat the teacher, sometimes) and others who pocket the overwithholding. There are full service accounting professionals who pocket overwithholding as well, unbeknown to school owners.

So, use the tax table or the withholding calculator, but avoid contracts that have taxes withheld at rates higher than the greater of the two.

http://www.nts.go.kr/eng/help/help_52.asp
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duke of new york



Joined: 23 Jan 2011

PostPosted: Sun Jun 05, 2011 7:59 am    Post subject: Reply with quote

ontheway wrote:
duke of new york wrote:
Just to be clear, the calculator tool on that link says it refers to the 2007 Simplified Tax Table, but the spreadsheet applies to income from 2008 and later. Since they give different withholding amounts, I'm assuming the calculating tool is outdated and we should refer to the spreadsheet. But is the 2008 spreadsheet up to date, or is there a more recent Simplified Tax Table?



The problem with the tax withholding rate is that nobody really knows what your rate should be before the fiscal or calendar year ends and you actually file your taxes. So the tax table and the tax calculator are estimates.

Recently, the tax system has changed and the 30% income exclusion for tax computation purposes for foreigners in Korea has been repealed. This was due in large part to teachers complaining about not being treated equally - so now we have to pay more. Probably both the table and the calculator are out of date.

The Tax Office has informed our school (we asked specifically) that the tax calculator is still accurate for 2011 and we can use that for withholding - so all teachers have that amount withheld.

However, if a school uses the newer tax table for your withholding, you really can't complain, as that's a reasonable ballpark estimate of taxes due, even though it's higher than the tax calculator (which I still think will underwithhold for some people).

What you don't want is to have an arbitrary 3.3% or 5% or whatever withheld. (Remember, since Korean income taxes are progressive, you could actually be at 3.3%, 5% or up to 36% if your income is high enough, so check the tax calculator or table.)

It's not always dishonesty that causes school to use 3.3% or 5%. There are new schools, new owners, new managers etc. who don't know what they should do who take advice from others who give them bad information - just like a lot of the info here on Dave's. There are accountants who tell their clients (schools, hogwans etc.) that they should or even must, by law, withhold at these higher rates. And, if you're Korean and your Korean accountant tells you that you should withhold this higher amount because you (the owner) could end of paying the unwithheld balance if the worker doesn't pay enough - who do you believe?

Of course, there are the experienced owners who use the independent contractor system to hide income and reduce their own tax bill (it's not really to cheat the teacher, sometimes) and others who pocket the overwithholding. There are full service accounting professionals who pocket overwithholding as well, unbeknown to school owners.

So, use the tax table or the withholding calculator, but avoid contracts that have taxes withheld at rates higher than the greater of the two.

http://www.nts.go.kr/eng/help/help_52.asp


OK, this stuff is making sense now. The final question I have, then, is, since an arbitrary ~3.3% or whatever rate is unacceptable for a contract, what should a contract state? I've seen contracts in the contract review thread that say something like, "taxes will be withheld according to Korean tax law," which sounds more appropriate, but the reviewers always say it should be more specific to avoid getting the wrong rate. How can you get something more specific, or is wording like that acceptable if the contract as a whole appears fair and legal? I guess if everything else is acceptable, you can count on the relevant government office to help you make sure your taxes are being withheld correctly?

I feel like I'm jumping all over the place, so let me be concise: What EXACTLY should your contract say regarding the tax rate?
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duke of new york



Joined: 23 Jan 2011

PostPosted: Sun Jun 05, 2011 8:01 am    Post subject: Reply with quote

And by the way, thank you so much for taking the time to explain this stuff here, ontheway. This has been very helpful.
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sanityorlove



Joined: 11 Apr 2011
Location: Massachusetts, USA

PostPosted: Thu Nov 10, 2011 5:28 pm    Post subject: Reply with quote

yeah, what he said. we ever gonna get an answer to that question? Smile
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diddymao



Joined: 29 Sep 2011

PostPosted: Tue Nov 15, 2011 9:52 pm    Post subject: Reply with quote

I wish taxes were not so complicated.
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wanderkind



Joined: 01 Jan 2012
Location: Ireland

PostPosted: Tue Oct 15, 2013 7:50 am    Post subject: Reply with quote

2 Questions:

A) Can someone point me to a current resource for taxation standards? The ones I've found perusing threads are generally defunct or a few years old.

B) From monthly pay stubs working with my previous employer (which I'll admit, I didn't look at until after my contract ended, as it involved navigating a labyrinthine internal computer system which defeated me on several occasions...scrub move for sure) I'm pretty sure my employer didn't make the correct deductions. I haven't seen them ALL but the ones I've looked at are wildly inconsistent. 1% 1 month, 4% another, on the same income. HI and Pension were fine though.

For the purposes of my tax filing back in Canada, what should I say I was taxed here?
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neilio



Joined: 12 Oct 2010

PostPosted: Thu Feb 27, 2014 9:56 pm    Post subject: Reply with quote

http://www.nts.go.kr/eng/index.asp

note bottom left links

note help line

booyah
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