Korean Job Discussion Forums

[Iago]

Hi

All the contracts i am being offered give the 3.3% tax rate (suggesting an affiliation with independent contractors).

All my recruiters say its normal and correct

What i find on daves suggests being an independent contracter is illigal cos it violates visa. Even tho they will include health and pension.

Can someone tell me, with certainty, whether or not it is legal?

Is there any other employment type, other than being a salaried employee, that is legal with an E2 visa?

I am confused because ALL the contracts i have seen have the 3.3% tax rate (and i have looked at a few now)

Either it is somehow legit, or every single institute and recruiters are liers. Surly I am not the only one who is encountering this? I have been activly seeking for almost 2 months and i have kept an eye on Korea for about a year.

I cant find the answers

please help
Cheers

[huffdaddy]

[Tommy]

Just because tax rates in a contract state 3.3%, it doesn't imply that the position is as an independent contractor. Unless the actual words 'independent contractor' are in the contract, you will not be agreeing to work as one.

There's quite a lot of info on this subject on the old EFL-Law board, now the Koreabridge Job Advice Forums. If you can't find it, let me know and I'll try to dig it up.

[garykasparov]

www.pusanweb.com

1) click on Job Advice Forums

2) click on Taxes, Pension, Medical, Severance
- click on "Freelance & taxes"
- click on "3.3% or not - what's the deal??"
- click on "3.3% tax rate "for foreign teachers"??

[Iago]

Thanks guys

I am starting to piece this together. I have been wondering why not many other employment seekers have been encountering this issue. Now I see that most dont realise until they have been signed for a few months. I guess that is why contracts get away with stating tax of 3.3% and not stating the eployment type (contractor or employee).

I finaly got a response from the tax department, here it is:

"The monthly withholding tax rate and method of tax return filing of foreign English teachers working for language institute are different depending on the employment status. Types of teachers are broken into employee and independent contractor.

If you are an independent contractor, your employer will withhold tax at a rate of 3.3% on your salary every month. In this case, you are responsible for filing global income tax return on your income by May the following year.

However, if you are an employee, the tax amount to be withheld is calculated by using the simplified Tax Withholding Table (as you calculated your tax at a rate of about 1.72%) on our website. In this case, your income tax liability for the year is settled and finalized in January the following year through 뱘ear-end tax settlement?by your employer. If you have only wage & salary income, you don뭪 have to file additional income tax return with the district tax office. And you can get non-taxable income deduction at a rate of 30%.

Regardless of whether it is a global income tax return or a year-end tax settlement, the basic tax rate is the same at from 8 to 35%.

For your reference, your status is determined by the specific conditions of your contract between you and your boss. You may consult with your recruiter about this issue.

Please visit our Q&A or FTAS webpage again or call 82- 2-397-1440 for further questions."

END

I guess one just has to be sure the contract states the employment type and if paying the rate of 3.3% (as a contractor) you just claim back any extra u end up paying??

This indicates that being an independent contractor is legit. I am sure the tax department are aware that i would be on an E2.

Tho so many people are suggesting otherwise. It is confusing, thats for sure.

Any thoughts?

I am starting to think i am researching this too much haha.

Cheers

[reactionary]

i've talked about this on this board. i would generally avoid a job that specifically tries to refer to you as an independent contractor - my job listed me as a "full time employee" in the contract saying i couldn't work privates, but then my boss said "oh, you're an independent contractor...so no pension for you"

the tax is not a big deal. it might be a difference between 3.3% and 2.5%. the health insurance and pension is what you should worry about. it's a BS tactic a lot of schools are trying recently.

think about it - back home an "independent contractor" usually comes and goes as he wishes, like a temp worker. no benefits. want to risk pension and possibly severance?

at the very least, voice these concerns to your recruiter. good luck.

[Young FRANKenstein]

[Tommy]

Reactionary, like I said before - you are only considered an independent contractor if it's clearly noted in your contract and you sign it. If one day, your employer makes this decision for you, it's null.
In your case, or anyone else for that matter, you would simply take a trip to your local pension office with contract in hand as proof that you're classified as an E2 visa holder, and as such are entitled to all benefits.

Young FRANKenstein, I would define the 'independent contractor' being used by hagwon owners as a sly loophole to cheat full time E2 visa holders out of their benefits and save the owners large amounts of money.
It's law that E2 holders are entitled to certain things such as health insurance and pension. Independent contracts are not granted these things. Therefore, being an independent contractor on an E2 visa completely contradict one another. However, in the eyes of immigration, the pension office, and NHI, you signed therefore you are. That's as far as they care.

As far as I know, nobody has challenged this matter, and none of the government bodies want to look into it further.

[Iago]

Great!

All my offers state a tax rate of 3.3% so are either plain trying to cheat me, or are independent contracts (and i have probable had at least 10 thrown at me).

I dont really care about pension but if they say they will enrol me into health and pension and give me al the reciepts and health insurence card, would that not be just as good as anything else?

Maybe i will have to go to Beijing instead

This process is realy starting to *beep* me off and i havnt even signed anything yet haha.

Thanks tho

[reactionary]

look, people will say otherwise, but i dont really give a crap about a 3.3% tax rate. whats that gonna be, 20,000 won a month more than 2.5%?

i'd really be more concerned about making damn sure they pay for your pension/health insurance. combined, on a typical salary, those should be worth ~120,000-150,000 a month of money they should be paying in your benefit.

[Iago]

Yeah i agree with that. I dont care about the amount of tax.

I am just woried about signing up with a screw job

I make sure the health/pension is included.

[Tommy]

Iago, 3.3% is a general number almost all schools use. You'll see a lot of "tax will be calculate according to Korean Tax laws, around 3.3%" for example.
I can't understand why you're assuming all schools stating 3.3% tax rate are independent contractor gigs, or are going to surprise you half-way through your contract saying, "Psych! You're an independent contractor!!! No pension for you," because they can't.

I'll say this one more time: Unless it is written in the contract that you're being hired as an independent contractor, and you sign said contract, the employer has no grounds to change your work status. In other words, if you don't want to work as an independent contractor, DO NOT SIGN A CONTRACT WITH THE WORDS "INDEPENDENT CONTRACTOR" IN IT. If there is no mention of the words "independent contractor" then things are A-OK. Capisce?

[Iago]

I know that if it does not say it does not nescarrily mean it indpndnt cntrct.

But i have had offers that dont say until i specifically ask them

Thats not the issue

The issue was whether or not it is legal.

And if they did say 3.3% and not indpndnt cntrct then it would not be ok, because it is not the correct tax rate, therefore some kind of deciet, therefore a *beepn* dodgy deal, therefore foolish to sign. Is this not true??

(i assume it could be an independent contractor gig when it says 3.3% because this tax rate is only legal for independent contractors, for salaried employes it should be less, significantly less.)

If the contract states it will pay into pension and health i am as happy with that as i am with anything in the contract (provided they supply the reciepts)

Maybe i am too retarded to teach, i cant seem to understand all this haha
Do i even make sense?!?!

I think i need to walk away and come back.

Cheers

[Tommy]

Iago, I'm kind of at a loss for words... do you have no experience with hagwon contracts at all?

I feel like I'm starting to sound like a broken record, so instead of repeating what I said in above posts, let me break it down for you.

A) 3.3% ≠ independent contractor.
B) The words "independent contractor" written in the contract = independent contractor.
C) When issues are brought before labour or the pension office regarding pension etc, they refer to the contract, not what your recruiter/employer says.

More on A: It is up to your employer to tax you on each paycheck, but they don't always know the correct amount. Being taxed 3.3% could mean a number of things: your employer is unknowingly taxing you too much, or your employer is knowing taxing you too much and pocketing the money.

More on C: Your employer can't prove you're an independent contractor by pointing out, "Look, his tax rate is 3.3% so he is an independent contractor". All that proves is that (s)he's taxing you too much. What the recruiter/employer say, and what is written in your contract (that you sign) are two different things. One will hold up in court, the other will not.

So.. if you want to know if the job is an independent contractor gig, simply look at the contract. If you want to avoid these types of gigs, then don't sign the contract. Simple.

One more time: being an independent contractor is not based on the amount your are taxed. It is based on you signing an "independent contractor" clause in your contract

[Young FRANKenstein]