Korean Job Discussion Forums

[morrisfletcher]

Here's my situation:
My employer deducted tax on my first pay at the 3.3% rate. I gather he was intending on treating me as an 'independent contractor'. So, I asked some questions about pension and medical.......first he tried to tell me the benefits (tax wise) of not getting medical and pension. I ended that line of thinking and said that I wanted both (obviously). Then he said that he could not make the deductions anyway as I didn't have my ARC card yet, this didn't seem entirely crazy. On my second pay the health and pension deductions were made, as well as income tax............now should I have had further deductions to 'back pay' for the health & pension that were not deducted from my first pay? I want those pension contributions (small amount but it is money)
Also should I be worried as far as severance goes about being taxed at the independent contractor rate for my first month? In other words, will it look as though I worked as an 'employee' for 11 months instead of the required 12?

[jrwhite82]

To my knowledge you can not enroll in Health Care or Pension without your ARC. So I don't think you'll have to back pay.

Severance is different than pension. You will probably wind up collecting 11 months worth of your pension. (Because the first month you and your employer aren't paying in because you don't have an ARC). Your severance will still be a full months worth of pay because you completed your 12 month contract.

At least, that's how I think it operates.

[OculisOrbis]

[ontheway]

Pension is charged by calendar month. You have to pay the full amount for each calendar month during which you are empolyed - even if you only work for one day. This could result in paying for 13 months in a 12 month year, so, usually, pension is payable beginning from your second month.

The pension amount is not exactly 4.5% either. It is based on brackets, so the amount you pay can be more or less than 4.5%. In subsequent years at the same job, the pension office will calculate your pension amount on other pay and benefit factors and the amount will no longer be 4.5% of your monthly pay, but possibly quite a bit higher or lower.

Health insurance is just under 2.9% at present, again not exactly, and is generally payable from the first month of empolyment, based on calendar months.

Income tax, although it has been increased for foreign workers due to the elimination of the 30% exclusion, should still be withheld according to the NTS withholding tax table, according to the tax office.

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

3.3% is the independent contractor rate, although, since the income tax is progressive, you could hit 3.3% or higher on the tax withholding table as an employee. Check your withholding at the NTS link above.

The habitation tax or local tax is 10% of the income tax amount.

Foreigners are still exempt from the unemployment tax according to my wonjangnim. We have received no notice of any change, and checked at the local tax office recently.