Korean Job Discussion Forums

[Norith]

I'm just over a month into my first contract in Korea (first anywhere, really), and I got paid for the first time about a week ago. I was being taxed at 3.3%, and my pension was 3.5% (not a typo) of my salary....national healthcare also seemed to be a bit on the low side. So I asked my boss about it, and he said that he asked the agency that does the taxes for the hogwan I work at....and they agreed that the tax wasn't being done right.

They said they'd tax on the sliding scale that they're supposed to, but after another call from the tax agency I got some unsettling news. Apparently, the tax agency said that 30% of my income was tax-free (as some sort of foreign-worker incentive). I did 2 months of research before coming here, and I've never heard of a 30% tax-free incentive. My boss also tells me that the tax agent called the pension office and health care office, and the tax agent said that the 30% break on my salary also applied to pension and healthcare. (I have not spoken to the tax agent; I don't speak korean, it seems doubtful that they'd speak english)

Has anyone heard of this before? It seems more than bizarre...

Also, I'm very far from Seoul, and not in a big city; is it likely that someone at the tax office and pension office will speak English if I try to call them about it? I've posted the question on the National Tax Services website...but I'd like to know what you guys think.

[Rumple]

Yes, that's correct. Foreigners have 30% of their income tax-free.

You can check it out here.

[yingwenlaoshi]

[georgewallas]

In any other country, I would suggest that you believe your employer, but this is Korea, and you are a foreigner.

Your employer may be mistaken regards the NPS/NHIC deductions [pension and health]. I strongly suggest that you call or visit both respective offices in your home town, where, by providing your ARC, find out if they are recieving their proper dues. If he's on the up and up, you're golden, but the previous poster was correct regards the contribution rate of 4.5% and 2.98% respectively.

The tax office web site [again, look for the related sticky], has both a simplified witholding calculator for month by month calculations, as well as publishes an online [pdf] guide in engllsh for filing taxes.

In theory, your respective employer needs to file taxes for you. For reasons that are not relevant, I will be doing my own filling, and I am certain that after some marginal face pulling, they'll accept your own fillings, too.

A lot of foriegners do not file taxes, which is plain stupid, because the standard witholding is 3.3%-5%, but the actual liability is far lower, and you can get a refund for most of that money at the end of the year.

The foreigner deduction is 30%, regardless of profession. The previous poster is not correct.

Once you've made that deduction. You have a wages&salary deduction. which is 5M+50% of the remainder, as well as pension and health contribution deductions, and a plethora of other deductions.
What's left of all these deductions is your taxable income, at 8%.

To give you an idea of why I am filing taxes, and my actual tax liability after deductions is 0.7% and I will be getting most of my witholdings back.

I really don't think you should make waves at work, just smile and wait for May 1st when you file your own taxes.

[Norith]

Thank you guys for your swift replies.

I'm glad to hear that I'm not having a fast one pulled on me. I can understand and appreciate the 30% exemption for taxes....but, have you ever heard of it extending to pension? I was fairly certain that it was a straight 4.5% (matched) of your salary. My boss is saying that it will be 4.5% (matched) of 30% less than my salary.

It's not a ton of money, but if it's $700 that I'm liable to have....I want it. I'm an american, so I get my pension back when I leave.

Thanks again.

I've got 11 months to go, but with everything I've heard about and experienced so far in hogwon life, I certainly plan on filing taxes myself....as hard or as easy as it may be.

[yingwenlaoshi]

[Norith]

yingwenlaoshi,

I think we may be talking about different things. I know that I'm eligible for all sorts of tax deductions....what I'm referring to is tax-exemption.

So let's say that, with all my deductions, my salary is taxed at 8%. 8% of 2.1M is 168K. My boss is saying that I only have to pay taxes on 70% of my income....so 70% of 2.1M is 1.47M....8% of 1.47M is 117,600. A difference of about 50k.

He's also saying that 30% of my salary is exempt from pension and medical costs.

While I can understand the government giving foreigners an exemption from paying taxes on their full salary....I can't understand them giving us that exemption on taxes, but then screwing us on pension. Unless its a law meant for 3-D workers, but that is written openly, "for foreigners."


I really thought that, like you said, the withholding should just be the amount on the NTS calculator. I was sort of expecting a resounding "WTF" from posters here, so I'm shocked that people have even heard of the 30% exemption....again, unless it is only for 3-D's.



You guys think the local pension office will have an english-speaker? I'm in an area with a population of 200-300k.

[yingwenlaoshi]

Pension: 02-2240-1083~5

Health: (02)3270-9836~9

You're getting screwed big time.

Forget about the 30%. It's not up to your boss to have anything to do with tax-free, non-taxable, or wage and salary deductible amounts. He's only supposed to tax you at a reasonable rate. It's his job to file taxes for you (for some stupid reason), but that's neither here nor there and it's not a situation that you can trust.

The tax office has advised employers and teachers when enquiring in the past that you should follow the withholding tax calculator. Your boss may never pay taxes, but you can make sure he pays health and pension. Correctly. Just a simple phone call with your ARC number and you can check your pension account. When you call the health office, they might ask you what your salary is. If your boss is paying into then ask them how much the payments are. They'll take down your number and call you back. Don't tell the operator (if they ask) what your salary is because they'll just calculate on the spot what it should be withouth checking what you pay. I have my doubts with the health office. You have to take the operator's word that payments have been made since the date you started paying. It seems they don't have that info readily available (because of having to call me back). I'd like to take a trip to the health office one day and to get printed proof of all the payments that have been made.

Korea is a strange animal. We really should be getting account statements from these office, but many of us have the hagwon as the address or they are only sent to our bosses. I suppose one could request they be sent to your address. But just as long as you know what's being paid is correct and that you have health insurance, everything's ok. Taxes are another story. Get the smallest amount you can deducted from your salary and leave it at that. You might ruffle too many feathers if you go to the tax office. Instead, use that as a weapon (because you know he's not paying them) if a situation arises where he's screwing you on something. Keep it in your back pocket.

I guarantee you that if you check with the pension office at the above number for the first time in a few months from now, there will be nothing in your account. And if you say nothing, you'll never receive your health booklet. All the money he's deducting is going in his pocket.

They do this until their backs are against the wall.

Pension is 4.5% and health is 2.385% of your contracted gross salary.

[Norith]

Thank you ying. I'll wait a couple weeks, since I was just paid for the first time very recently....or maybe see if the other foreign teacher at my school, who has been there considerably longer (but doesn't know too much about korean law) wants to call and check his account status with the pension office.


I'm not looking to start any trouble at my job; but if someone is taking money out of my pockets...well, I'll just have to look them in the eyes, reach into their pockets, and take what they owe me. I'm sure, as with all things, it's easier said than done.

[Norith]

Well, I read the guides for foreign taxpayers on the NTS website. It appears as though there definitely is a 30% tax exemption for foreigners...who are not residents. In the guide for residents, it makes absolutely no mention of a 30% exemption.

Aren't E-2's considered residents though? The guide says that if your job requires you to be here for one year or more, you are a resident. My contract is for one year...I have to be here for the contracted period. I'm a resident, no?

[yingwenlaoshi]

[Norith]

I'm pretty sure ARC is actually Alien Registration Card. Yet I'm certain that you're right about us being residents.

Thanks again.

[yingwenlaoshi]

[georgewallas]

[yingwenlaoshi]