Korean Job Discussion Forums

[frozenpeas]

I have one contract here that says I should pay 5% tax on 1.9mil won and one that says I should pay 3.5% tax on 2.0mil won.

Do different schools fit into different tax bands or do they just charge what they want?

[jacl]

The actual income tax is quite low.

Check out Korea's National Tax Service (TNS) website:

http://www.nts.go.kr/eng/default.html

click on "Check My Withholding Tax" then add 10% of that (residence tax).

Foreigners get a 30% reduction (only 70% of your salary is income taxed). I have information that employers can set the tax (although I debate this), but as long as you get pay statements then you can do a tax return. 3.5% isn't too bad as long as it's your contributions are being forwarded to the tax office. Often they are not. I'm paying 3.7% tax and informed my boss of what the actual taxes are. He puts off the issue telling me that his advisors say it's more than what I say. He's probably not paying. So, I just got him to sign pay statments. Often they won't give you those here. I insist on it. Gives me power. Again, I only pay 3.7% where it's actually something like 2%. This can vary though, so it's good to pay a little more. Housing allowances are taxable. Free rent where your apartment is under the employer's name is not taxable. I don't believe that free air fare is taxable (not 100% sure).

5% is way too much. Many employers view tax as money in their pockets. It's like you're supposed to accept it. I don't.

[frozenpeas]

Thanks that's really informative - I'll check back with the school to see what they are playing at.

[sheba]

From what Ive heard, only a very small portion of schools actually pay tax, so theyre probably just paying you less for no reason. I did some investigating and thats what I found.... Im getting my full pay now though. For 2mil, its approx 30,000 won.

[the eye]

[jacl]

[ontheway]

Jacl,

The Eye got it right. You should check the year end calculation on the NTS website that you provided. You will find that your pension and medical insurance premiums are deductions in calculating your ACTUAL taxes due at year end. The monthly calculator only gives an estimate. Also, you should understand that your Korean employer is also your sponsor here in Korea. Assuming that your employer is paying the tax in to the Korean NTS, he could be liable to pay any tax that you don't pay. It is in your employer's interest to set the withholding on the high side to cover any unpaid balance should you fail to file a return and pay any taxes due.

Also, Korean taxes are progressive. If you earn overtime or higher pay during later months then the earlier withholding or the flat rate percentage that employers use to keep things simple could turn out to be too low. Finally, the Korean tax is a global tax. That means that ALL of your income earned from any source and from anywhere in the world is taxable in Korea when you are a resident worker here (and if you have an E2, that's you). There are exemptions and deductions that apply to these global taxes, so probably most E2s have no extra earnings to report. But, if you worked in another country before coming here, that income could be taxable in Korea.

[jacl]

Global tax.

Quit trolling.

[ontheway]

Read the NTS website. It's there. It's perfectly legal. It's done by many countries all over the world. I didn't say it's fair or just. It just happens to be the law in Korea.

[jacl]

Deleted by poster

[ontheway]

You didn't look. It's a giant web site. It takes hours to read. Go to the part that talks about Korean Taxes. Then read. I don't do that Highlight and Quote thingy on the computer, so you'll have to look. I scrolled through all the table of contents. I read about the 9 kinds of taxes and 17 local taxes etc. Then, it's there.

It's done all over the world. US income taxes are global, too, in case you're interested. A US citizen who is a Korean resident is subject to taxation in both countries on earnings from anywhere in the whole world. The US exempts the first XX thousand dollars when you work overseas (I don't remember the exact number), but you're required to file a return. Likewise, the Korean tax has exemptions and deductions, (your earnings outside Korea are most likely below the limits), and you may not be required to file an income tax return if you owe no additional money beyond what was withheld. And since few teachers actually file their returns, employers over withhold to be safe, and other employers just keep the money.

The Eye wrote that participating in Pension and Health Insurance lowers your tax rate, because you can deduct them from your income before calculating your actual tax liability. That is why your withholding rate should be higher IF you do not participate in those programs.

Perhaps if you had taken an accounting class at your university you would have seen these global taxes. Few people in real life actually know about them or experience them. The percentage of people who have earnings outside their home country is small. The percentage who become legal residents in other countries subject to such obligations is even smaller. How many teachers in Korea actually file their tax returns. Most just come here, get paid and leave.

On the NTS site:

Go to: Korean Taxation

Part 1: Introduction

Chapter I: Tax System in Korea

1. Taxes in Korea

page 2

Read it. It's there. Korea has a global tax system on earnings from anywhere in the world. It applies to citizens and RESIDENTS.

[jacl]

[Mr. Pink]

If you have ever filled out your own tax refund forms, pension and health care DO effect the amount of tax you pay for the year. Your pension and health contributions lower the over all amount of income tax you pay for the year.

I bet most employers don't inform their employees about doing the tax return system.

Also you should note, the more money you make, the more tax you pay. Income tax (as well as pension deductions) are on a sliding scale that go with your pay.

Someone who makes 2mil/month is going to be deducted less than someone who makes 3mil/month. You are dreaming if you think it is some set rate of 3% or 2.5% or 5% etc. It is a sliding scale. You can most likely get that from the gov't website. I had them mail me the sliding scale a few years ago...trust me complaining about taxes can be a bad thing. I ended up making the school tax me more

[mindmetoo]

The US exempts the first $60k or $70K. An english teacher in Korea has nothing to worry about. Canada is far worse.

[sheba]

jacl

There is such thing as global tax. If you are a resident of this country then you are supposed to pay tax on ALL your income here regardless of where it comes from.

Its the same back home. Thats why I bacame a non-resident of my own country - so that I didnt have to pay tax on the money I take home from Korea. I earned it in Korea, and I pay taxes in Korea (assumably), but if I took it home without doing the required documents, then Id be paying taxes AGAIN because it is global income and is taxable.

This is from the NTS website

Q9. Do I have to report foreign income?
A9. If you are a Korean resident, you have to report your income from all sources, both inside and outside Korea. You also should report foreign income in Korean Won and use the exchange rate that was in effect on the day you received the income.
Generally, when you report such foreign income on your return, you can take either a deduction or a credit for income taxes imposed on the income by a foreign country. Tax treaties with other countries may affect whether you are eligible for this credit.

I was told you are exempt from paying tax IF the 2 countries have a double-tax agreement. If not then you are taxed on your global income.


Now who is trolling....??