Korean Job Discussion Forums

[OculisOrbis]

Deductions/Exclusions:
- Foreign employees are currently taxed on only 70% of their income. Note: This exclusion is not available to those who have opted for the flat tax (the 18.7% flat tax is assessed on 100% of the foreign employee�s gross income). As of 1 January 2010, this is expected to change and the 30% exclusion will no longer apply. As of that date, the tax rate will be reduced to 15% and will apply to all foreign employees. Together with the 10% Resident Surtax, the tax rate for foreign workers in Korea will be 16.5%. If the monthly deductions do not reflect this change, the adjustment will be made when the foreign worker files her/his income tax report in May 2010.

http://www.korea4expats.com/article-income-taxes.html

[tzechuk]

This doesn't seem right - my tax is not 70% of the 17% they say it should be now. It's way lower.

[OculisOrbis]

The two current options for foreigners were the regular tax rate with a 30% reduction on taxable income OR 17% flat rate tax with no deductions.

In 2010, our choices will likely be 15% flat rate plus resident tax OR the regular tax rate without the 30% reduction.

Basically, it means that we will be paying the same tax rate as a korean - not that our taxes will increase to 15% plus the resident tax. We'll still get most of our taxes back through deductions at settlement time, but employers will no longer be able to reduce our pension contributions with shady calculations the are only supposed to apply when we calculate our tax settlement anymore.

[bassexpander]

Ok, now i'm confused?

Are you talking about income tax? Tax on pension?

So our tax is going up from 3.3 to 16.5 percent??

[cubanlord]

Yes, something doesn't seem right. We get taxed, our income, 3.3%. It can't be an increase to 16. No way.

[OculisOrbis]

Many employers are currently scamming their foreign teacher from some of their pension by taking their salary, reducing it by 30%, and then calculating the contributions based on only 70% of the gross salary. It's technically illegal, but the tax office has been supporting them. It saves employers a little and we get robbed a little.

The new tax law would remove the 30% reduction from our taxable income - which never was meant to apply in calculating our pension contributions - and now our taxes will be based on whatever we earn without any reduction. This means employers will have to use our gross salary for pension calculations, instead of cheating employees out of a portion of their benefits by applying reductions that never meant to be used for anything other than income tax.

****This does not mean you will be taxed at 16.5%. It means you pay the regular tax rate of about 2% (depending on your income and the sliding scale) OR if you make a retarded amount of money, you can choose the flat rate tax (15% plus resident tax) if it would benefit you more)*********

your regular rate tax withholding can be calculate here and there's also an excel table so you can see the sliding scale:

http://www.nts.go.kr/eng/help/help_52.asp?top_code=H001&sub_code=HS05&ssub_code=HSE2

So, once again, you can use the method from the link to determine your withholding OR you can choose the flat rate method. It's YOUR CHOICE.

[Draz]

My tax is going to double?

[OculisOrbis]

forget about it, i'm not explaining anymore. read carefully or just fly into an irrational panic if you'd prefer.

it's not even a done deal yet - it's LIKELY going to implemented on Jan.1/2010 and it will have a negligible impact on your life.

[TheUrbanMyth]

I think that website is talking about foreigners who come here to invest, NOT teachers.

Read it carefully. That is for expats who are sent here by their company.

Then the parts about the flat tax amount and the resident amount make sense.

[OculisOrbis]

it's for all foreigners. we're all under the same tax system.

[TheUrbanMyth]

[OculisOrbis]

it's not 10% of your income. the resident surtax is 10% of your calculated income tax - and you do pay it if you pay taxes.

the potential change that I posted will affect EPIK teachers. the special provisions you are referring to is the 2 year tax-free provision.

[TheUrbanMyth]

[OculisOrbis]

What exactly are you trying to defend here? The tax free provision applies to more than americans and not everyone is protected under that provision if they've used their two years. canadians are the exception and not covered at all under the tax free provision, but other e-2 holders are covered.

The pension calculation was the focus of my post and everyone should be paying into pension regardless of their temporary tax free status or employer. The proposed change will prevent employers from falsely reducing people's taxable income in order to lessen their costs, but will result in slightly higher taxes for foreign employees if they no longer are fall under the 2 year tax free provision. That's all.

[Triban]

MY TAXES ARE GOING TO QUADRUPLE WHAAAAAAAAAAA