Korean Job Discussion Forums

[Bryan Fox]

A friend working at a university just scared the heck out of me today - she said her school informed its professors that the 'tax exempt' status of teachers would be abolished in 2010. She told me that this meant that we would now be responsible for the 30% (??) tax that Koreans have to pay. Is there truth to this for E-1 and E-2 visa holders, or is this just some clever accounting by her school? My own school hasn't said anything about this, and when I asked the boss, she didn't know - but I'm an E-2.

What's the deal?

[tired of LA]

Koreans don't pay a 30% tax. I think what her school meant was the 30% tax exemption foreigners get that Koreans don't. When foreigners file their tax return, their taxable income is reduced by 30%, whereas Koreans, don't receive this reduction, ie. if you made $10,000, you're only taxed on $7,000. Starting in 2010, I've heard that this exemption for foreigners is being eliminated. I don't think it will affect your monthly paycheck, just your tax return will be smaller than previous years.

[bish]

What is the normal tax rate then?

[Goon-Yang]

about 3.3% on 2.2 mil. I think it's somewhere around there. I don't really know (it's been ages since I made that much )

[sugarkane59]

Brits pay tax here

[yingwenlaoshi]

I just had them not deduct taxes with my current job. Makes things easier. Hardly anyone's paying them anyway.

[nizpaz]

[sojukettle]

from the 'Korea4Expats' site:
http://www.korea4expats.com/article-income-taxes.html
..................
Individual Income Tax Regime:
- Korea has a progressive tax rate, which in 2008 was as follows:
o Earnings up to W12million Tax Rate is 8%
o Earnings from W12 million to W46 million Tax Rate is 17%
o Earnings from W46 million to W88 million Tax Rate is 26%
o Earnings over W88 million Tax Rate is 35%
- All residents (Korean and Foreign) pay a resident surtax, which is 10% of their taxable income.
- Foreign employees can opt for a flat tax of 18.7% (17% flat tax on income + 10% resident surtax).
Starting in 2009, the flat rate will be 15%. With the addition of the 10% resident surtax, the tax rate will be 16.5%.

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.
.............

[Horangi Munshin]

Interesting!

I won't have to tell my school accounts office to pay into pension properly for me. They did then took 30% of my pension contributions this year (mine and the schools).

[Netz]

I've been wondering what the effect of this would be when it finally hit.

It makes me wonder just how (much more) dodgy Korean employers are going to get when it come to paying employees taxes? I myself have had a few headaches over the years getting pay from different sources reported "correctly", and that was BEFORE any of these changes.

That 2+ million salary that some people get just got a whole lot worse, and it will be fun to see how recruiters/employers "sell" this, that is if they mention it at all.

Fun times ahead

[ontheway]

[naturegirl321]

I really hope taxes don't go up THAT much.

[DosEquisXX]

Definitely gonna wait to see how this develops. Was going to take a break and possibly come back, but if the taxes go up that much I'll go to another country.

[bassexpander]

I may have to quit uni work and go entirely freelance.

This will burn a lot of teachers.... badly.

[naturegirl321]