Korean Job Discussion Forums

oldfatfarang · Joined: 19 May 2005 Location: On the road to somewhere.

My School is "thinking about not paying any tax this year."

(1) If my school doesn't pay my income tax to the KNTS will there be problems for me if I stay or, eventually, leave Korea. (I'd hate to get stopped at the airport).
I don't have payslips showing my tax deductions. However, my contracts state 4.5 % income tax and my bankbook shows contracted salary deposits minus 4.5 % tax deductions.
Are my bank book deposits sufficient proof to show that I've been paying income tax?

(I'm not paying any Pension or medical insurance - just 4.5 % income tax).

(2) Or does my school have to give me a Tax Certificate showing my tax contributions for the last year?
If so, what month do they have to give me this certificate??

This is important as I want to claim back my overpaid tax.
I paid 4.5 % tax in 1st contract and still pay 4.5 % in my new contract.
If my school won't refund my overpaid tax then I will have to claim it back from KNTS.

(3) Anyone know what date the income tax rate dropped during 2005??
Or should I have been paying 1.5 % all through 2005????

(4) What month do I have to file my Tax Return in Korea??
(5) What is the name of the form for requesting a refund of overpaid tax??
(6) What would happen if the school refunded my overpaid tax - and then they didn't send my contributions to KNTS?? (see (1) above).
Thanks for any help you can give.

mindmetoo · Joined: 02 Feb 2004

You should be paying 3.3% tax and 4.5% national pension (refundable at the end of your contract).

Wrench · Joined: 07 Apr 2005

mindmetoo · Joined: 02 Feb 2004

ontheway · Posted: Sat Mar 11, 2006 7:23 am Post subject:

Income Tax Rates:

The Income tax rate is NOT 3%, 3.3%, 4.5% or anything else posted here. It is a progressive percentage rate that is imposed after allowing for certain deductions. You didn't tell us how much you make or about your personal situation, so we can't really tell you your rate. You can go to the NTS website and use the calculator there to estimate your tax.

There are two ways to calculate on the NTS website. The monthly withholding calculator gives an estimate of what your monthly withholding should be. This is not the same as your actual tax liablilty. For that you have to fill out a full years' tax form. This is also available on the website. Divide by twelve to get your monthly tax. Divide by your monthly pay to get the percentage.

The NTS website monthly withholding calculator will show that on 2 million won per month you should pay about 1.5%. On 3 million won you'll be up to about 5%. Many hogwan workers have significant overtime and the year end bonus of one month's pay to make their rate higher than 1.5%.

However, if you are "typical" and make 2.0 million or so, you are single and have some overtime, but not too much, then you should be under 3.5%.

Big Mac · Joined: 17 Sep 2005

I was only paying 1.6 per cent tax on two million won. I think you've overpaid, but I can guarantee you that you won't get a refund from the government on that. That's because I'll bet it's not going to the government at all, but in your boss's pocket. Ask him for a refund.

I would call the tax office and ask them for a statement outlining what your payments have been.

You have to pay into pension and medical insurance. It's law. 4.5 per cent for pension, which is matched by your employer. I think the amount is 2.4 per cent for medical insurance, which is also matched by your employer.

The income tax rate never dropped in 2005...at least it didn't for me. Maybe your boss felt guilty about pocketing your money, so he dropped it.

As far as I know, you don't file a tax return in Korea...it's all your boss's responsibility. And again, I highly doubt you overpaid in tax...the money is in your boss's pocket.

I think you need to call the tax office, and also call the labour board for advice on the pension and medical insurance. Just on the pension alone, your boss is screwing you out of a huge amount of money...as you get it all back when you leave Korea.

oldfatfarang · Joined: 19 May 2005 Location: On the road to somewhere.

Sorry I wasn't explicit enough.
My nationality doesn't get it's pension contributions back so I'm in no hurry to pay into a Korean Pension scheme I'll never collect from.

I make 2 mil, NEVER do overtime (I asked for that in my contract), am single, with no dependents.

What I really need to know is if my Boss doesn't pay my tax contributions to the KNTS - will I GET IN TROUBLE FOR THIS??? After all, I've paid my tax contributions (4.5%) each month through salary deductions.

Naturally, if I can find out what percentage of tax I SHOULD have paid in 2005 I'll be asking my boss for a refund (from him).

Any suggestions welcome.

Big Mac · Joined: 17 Sep 2005

You're right, I wouldn't be in a hurry to get pension either if I was in your situation.

I would assume that if you don't pay tax your boss will get in trouble for it before you will. But will they ever figure it out? Who knows.

That's why it's your responsibility to check with the tax office to make sure your boss is paying. If he isn't, he will get in trouble. And if he's been deducting money off your pay already for it, then there is no reason why you should be penalized for it. And if you are, then call the labour board.

jacl · Joined: 31 Oct 2005

If your boss doesn't want to pay tax anymore (doesn't want to deduct it from you) then go with that. Win-win. Get proof of the taxes that your school has deducted so far (if you're worried about taxes here or back in your home country). Write up pay sheets yourself, leave spaces for you and you boss to sign, and get the school stamp on it. Tell your boss right away that you don't want to pay taxes anymore either. You've already paid enough taxes. Forget about the pension since you don't get any benefits from it.

Grotto · Joined: 21 Mar 2004

Sounds like you've been paying 3x as much taxes as you should have. 4.5% What a crock of crap that is!

If you've been here 4 months you have already payed your taxes for the year!

jacl · Joined: 31 Oct 2005

LarrytheGiraffee · Joined: 12 Feb 2006

The form you need is a Certificate of Proof of payment of wage and salary withholding. The Korean tax year goes from May to May, so you can request the form in May and you employer is suppose to give it to you within 30 days. You can also request this form at the end of your contract and they again have 30 days to get the form to you. If you have problems getting the form from your boss, you can always get it from you area's Tax Office.

Since your boss is probably pocketing a good portion of the money he is deducting each month, you should try to get proof that he claims 4.5% of you pay is being deducted for taxes. You need to have this is writing on something other than your contract. If you have to sign something each month when you get paid, then copies of those forms would be the best solution.

This are the two things you would need if you had to take your case to the tax board. Since your boss wouldn't want the government to know he is cheating on his employee's taxes, this should also be sufficient enough to show you boss that refunding what he took from you is better than you going through the government.

Filing Korean taxes are as easy as filing American taxes and you can get all the forms in English. If your boss wants to stop paying taxes on your behalf, let him do it. You will pay less money in the end and you wont have to fight your boss for so much money.

jacl · Joined: 31 Oct 2005