Korean Job Discussion Forums

[dee]

Hey everyone, just wanted to share this with you...

Went to my boss a few weeks ago about my tax rate after discovering that my 3.3% wasn't right. I told them I'd checked on the net and spoken to the tax office and the rate should be more like 1.75%. My boss flipped a lid and said I was way off and shouldn't have broken her trust by looking into it. She was really pis*ed.

So, I wrote them a letter (even thought they don't speak English I thought they might get the gist) apologising for any offence caused but stating the facts about my tax, pension and medical insurance - all from the official web sites (which I included in the letter). No response after a week so I asked if we could speak about it some time.

Then, after classes today, the boss couple asked me to come talk to them about my tax and stuff. My K co-teacher translated. They started by saying that the 3.3% was legit and showed me a complicated piece of paper, but I stuck to my guns and disagreed even though they shoved these elaborate calculations in front of me. Then (this was almost funny!), as I continued to disagree, boss man decided to go to the tax site and show me. He called me round to the computer and proceeded to punch the numbers into the government tax calculator. I saw his mistake straight away. It asked for the amount in thousands but he'd typed in millions. So I promptly got KT to explain and, there we have it, the correct tax rate came up - and it was no where near 3.3%!!! Ha ha!! Have it! But, I gotta say, they took the news pretty well. I thought they were gonna throw another wobbly but boss man just explained to boss woman and she said, 'ok, we'll only deduct that amount from now on'!!! (Still not sure if they're actually paying the tax though). So, I'm pretty happy with that. Then, onto my insurance and pension. They said it's perfectly ok for me to use their insurance if anything happens. I'm not sure if that's legit so I said so and they said I could have them pay for cover from my salary if I really wanted but there is no need. I said I'd think about it.

As for the pension scheme. Well, I had a letter from the NPS a few weeks ago asking me to declare my income and pay deductions from my bank account, or have my boss submit their NPS details to have it deducted from my salary. So, I showed them this letter and they told me not to worry, that I needn't pay the pension as I'm leaving in a year anyway. I just really think they are clueless as to what's expected by law. I dunno, am I wrong, or is it not compulsory to pay into the pension scheme, even if you do get it back in the end (as a Brit/Am'can/C'dian). Anyway, they said they'd look into it if I really wanted them to and I said yes, since I've been asked to declare and contribute, I think they should. At first they thought I'd contacted the office, but I assured them that the letter was sent without any pushing on my behalf.

At the end of all this, there were actually a few smiles, and a big sense of relief. I almost saw some humilty in them. My boss told me in so many words, that if the shite hits the fan, they'll look after me. Now, I don't know how much I can believe this, I mean, if the shite really hits the fan and I got fined or something, but it was comforting nevertheless. They said 'while I work for them they'll look after me'.

I mean, truth be told, I had to apologise again to them for, I guess, underminging their authority by even looking into my tax into the first place, but I reckon that's a small price to pay for the satisfaction and sheer joy of standing up for myself and getting my tax rate practically halved. Woohoo, what a victory!!

[wylies99]

[merkurix]

[wylies99]

It would have been better to be "poker-faced" than to apologize.

My point was that this could be a long-running battle. They need to know that you won't just bring it up once and then your courage will melt away.
You're going to have to stay on them about this.

[plokiju]

You definitely didn't need to apologize but it lets them save face so is probably a good thing that you did, as far as maintaining a good working relationship (or rather so they don't turn on you right away and think of ways to get rid of you). You will have to keep on them though and get less nice each time.

Pension is compulsatory and they should be paying into it. Most bosses seem to either have no idea what is required by law or just like playing the ignorance card. They won't be happy about paying their share of your pension though. Glad things worked out for you. Some bosses threaten firing you if you bring up the pension.

[ttompatz]

[dee]

Okay ttompatz, a little bit harsh, and you really should have read my post properly. I have no intention of just letting the pension issue slide, especially since the pension office have already been in touch with me to declare. And, as far as my medical goes, yes, I know it's a necessity - I had my bag stolen on the subway a couple of weeks ago which woke me up to the fact that ANYTHING unexpected and harmful could happen to me while I'm here and, therefore, I need to be financially covered.

My post was just a euphoric response to having won a small battle in a potentially ongoing war. If you do not share my delight, fine, that's your deal, but don't slam me as being the ruin of all foreign teachers in Korea.

[dee]

Oh, and yes, I apologised - but my apology went like this - 'I'm sorry if you felt I offended you' - so, even if they don't understand the difference between that and actually being sorry for raising the issue in the first place, I don't care, I know it in my own mind and I feel good about that. I think I'd rather try to keep them sweet and thinking that I'm on their side than otherwise.

[ontheway]

Here's the real reason they don't want to pay pension, insurance and taxes on your pay: the owners of your hogwan are keeping most of their receipts in the underground economy.

In Korea, most small businesses keep a large percentage of their receipts off the books. Since Korea is largely a cash based society, and people here are generally less trusting of government in general than in most other countries, this kind of tax evasion is considered normal.

The problem comes for those Koreans who attempt to run a hogwan with a foreign teacher on the staff. If they report a high salary for the foreign teacher to the government, then the government can extrapolate from that a good estimate of the gross receipts needed to support a business with such a high paid teacher. To hide the salary of the foreign teacher, the owner must not pay the taxes, pension and insurance which are based on the teacher's salary OR they must underreport the salary level. It may not be that they want to cheat the teacher. In fact, they probably based your salary level on the idea that these items would go unpaid. It's just standard practice to fiddle with taxes in this way. They think they are being fair and honest with you.

In Korea, tax accountants and lawyers also understand that this is standard procedure. In fact, if you set up a business and go to an accountant, they will set up your accounting system to facilitate hiding a significant protion of your receipts. They will advise you how to do it. And they will be very surprised if you try to do things legally. In fact, they will actively discourage you from being 100% legal.

The government tax officials know that this is the standard procedure, and they do not try to stop it. They do try to keep the amounts down, and to catch the big fish, but they ignore most of the small businesses' tax fiddling.

I'm not saying it's 100% of small businesses, accountants or tax officials, but it is the norm.

This then is the impass. You want your insurance and most of us feel it is risky to be uninsured. You want that extra income that your employer will contribute to the pension.

Your employer might be willing to pay the pension money to you, in cash. He might be willing to pay his share of the insurance. What he doesn't want is for the light of day to fall on the total size of his business. Most of his iceberg is floating below the surface. If it comes into the daylight, it could melt.

The final problem for any small business here in Korea is this. Since it is assumed that you are hiding a good chunk of your receipts and income, IF you do report everything and go totally legit, the Government will assume that you are still cheating and that you are actually much bigger than you are. They will assume that you are really a big fish and come after you. Thus, there is a huge penalty for being honest.

The best way for a teacher to avoid this problem is to be sure that the school you are going to pays these items BEFORE YOU SIGN THE CONTRACT. Trying to get someone to change this business practice has little to do with the small amounts of money you think you are losing. You are trying to expose the whole business and change an entire culture. That is why these issues become such a big battle for teachers who try to get pension and insurance from schools that have never previously paid them.

[semphoon]

Good job on your tax victory.

What website did you use? I though 3.3% was right.

[Adventurer]

I thought the tax rate is 3.3% as well. Anyway, the pension is mandatory and so is the health insurance, but they tell that to foreigners. They can't be ignorant of the tax rate. That is like expecting a businessman in Toronto or New York not to know anything about taxes. That doesn't compute.

They are acting as if they are ignorant. They are simply treating to cheat the Korean Government, and the Korean Government doesn't really do much to really investigate unless foreigners complain. One person I spoke to when she complained about the pension, the Korean workers hated her for that, because they were breaking the law as well. In some companies, it is normal. It is very wide-spread in Korean society. My company pays my pension, my health insurance, and so do many hagwons, but many also break the law. Your boss is not ignorant over these matters.

We just find it hard to believe, sometimes, that someone will just lie to us blatantly. This is the way it is.

As one poster said, they do sometimes underreport your income.
But not simply for the reasons he said. My income was underreported, so she wouldn't have to pay as much when matching contributions.
If she reported my income as 2.0 million instead of 2.1 million she saves a bit every month. Many of these kinds of hagwons eventually go bankrupt. People with bad business practices often do themselves in.
Foreigners don't want to put up with such blatantly illegal behaviour.
Some that do get deported unlike Koreans who are citizens.

Pardon the cynicism you have seen. However, some of us have purple hearts so to speak dealing with certain kinds of hagwon owners, and we don't buy for a moment that they are ignorant of the law. It is good you are dealing with your boss. More power to you. We wish you the best, we also hope you will save as much as you can of your income in case your boss turns out to be crooked, which is often the case.

[JeJuJitsu]

[LL Moonmanhead]

[wylies99]

OP- they KNOW they are cheating you.
Try worrying less about their feelings and more about your money. I'm not encouraging you to throw papers and flip desks ( ) but you gotta get serious about YOUR money.

I'm not going to flame you because I know it's hard to stand up to hogwan owners, but you can't let them get away with robbery. This is from someone who has done it and understands.

[plokiju]