Korean Job Discussion Forums

[mediano tzu]

So we know that the tax rate your supposed to pay is about 1.5%. Knowing this, it's amazing to me that so many places in Korea want to withhold 3-5%. I don't know what this is called in Korea, but I'm pretty sure I grew up with the understanding that this sort of thing should be considered theft.

I'm sure that many on this board have withholdings that are more than what they're supposed to be. Is this sort of thing generally indicative of a corrupt hakwon owner, or is it just so standard a practice that it means even (relatively) honest directors will withhold a flat amount that is greater than the correct amount?

Also, have any of you ever brought it up after you realized you were being screwed out of a portion of your paycheck? If so, what happened?[/i]

[jellobean]

If you are considered a contract employee (rather than salaried), which many English teachers are, you're rate is 3.3% Anything higher than that is suspect. Demand a tax receipt and go down to the tax office and make sure your employer is actually giving your taxes to the government.

[mediano tzu]

I see . . .salaried, eh? I guess this link doesn't work for that: http://nts.go.kr/front/service/refer_cal/gani/refer_gani_eng.asp

[thaitom]

[quote="jellobean"]If you are considered a contract employee (rather than salaried), which many English teachers are, you're rate is 3.3% quote]


Please,please show me where this is written, I have searched everywhere on NTs.go.kr

[dmbfan]

Better yet, if you are an American or Canadian, you are not required to pay income tax during your first two years.


cheers

dmbfan

[TheDude]

You are correct about American citizens but Canadian citizens do have to pay income tax in Korea as the Korea-Canada tax agreement does not exclude canadian teachers from taxes.

Therefore a canadian teacher pays local income tax but not canadian income tax while he or she works in Korea (unless of course his or her tax situation in Canada allows for Revenue Canada to tax him or her).

[dmbfan]

[semphoon]

I worked at a place last year that took 5% in tax from me. Do I have any comeback against the hagwon or is my hard earned money now safely in my won-jang-neem's pocket?

[thaitom]

I still want to know where this 3.3% flat rate comes from. The only thing I have found is that a independent contractor is charged at 3%. flat rate.
Are E-2 visa holders actually considered independent contractors? If so National Health and Pension are not mandatory,Right??

[dmbfan]

[alabamaman]

EFL LAW

http://www.efl-law.com/tax.php

The second issue we can state clearly here is the calculation of monthly Income tax deductions if you do not fall into (a) above, and thus Simplified Tax Withholding will apply to Hagwon teachers and teachers in private industry. The monthly Simplified Tax Withholding deductions can be viewed here. Your deductions, pursuant to taxation regulations, are that for salary earners. The Income Taxation Commissioner advises that some school owners incorrectly deduct Taxation based upon a belief the teacher employee comes within the Business Income taxation deduction, which is a flat 3%.

[thaitom]

What do you make of this, I have been deducted 1.6% on my salary every month for the last year ,I made my boss talk to the tax office in Seoul so we had it in put in my contract,yesterday I asked about when I would receive my withholding statement so I can file for my refund. Okay,this is where it gets weird my boss told me that he talked to the local office in our town and that he is supposed to deduct 3.3% from my pay so he has been paying the difference for the year without telling me for he knew it would upset me and since he signed my contract at 1.6% he didn't want to fight over it. He said he registered me as a daily worker just like his Korean workers so that way I would not have to pay Health or Pension ( When I signed on I told him I didn't want them) but he says I can't file for he will get in trouble for his creative financing. I may believe his story if and when he shows me a tax withholding certificate another than that I think he is full of it. What do you think?

[BigBuds]

As Alabamaman stated, it is a 3% flat rate for contracted workers but what is not mentioned, and you'll find this on the Korean tax website, is that you also have to pay residence tax which is 10% of your tax rate. So 10% of 3% is 0.3%, 3% + 0.3% = 3.3%, that is where the 3.3% tax rate comes from.

Now, before the 25th of September, 2005 the Korean tax office classified foreign teachers as contracted workers, that is why many hagwons still tax at a rate of 3.3% (they just don't know it has changed or are to lazy to check current tax info) but as of the 25th of September, 2005 the Korean tax office has reclassified foreign teachers as salaried workers to be on par with their Korean counter-parts. So now foreign teacher's tax rates should be around 1.6% to 3.12% depending on how much your monthly salary is which you can work out on the Korean tax website on the monthly witholding tax calculator. You still have to add to that the 10% residence tax to get your correct tax rate.

Here are the tax rates applicable to most teachers in Korea (these rates include the 10% residence tax):

Salary per Month / Tax Rate / Income Tax Payment per month
2,000,000 / 1.60% / 31,850

2,100,000 / 1.76% / 36,780

2,200,000 / 1.99% / 43,780

2,300,000 / 2.36% / 54,270

2,400,000 / 2.67% / 64,680

2,500,000 / 3.12% / 77,880

[thaitom]

Good information i'll bring that up tomorrow, is this info about Sept. 2005 on the NTS site?

[BigBuds]

I know it use to be but I have no idea if it is still there (haven't looked).

A lot of issues changed for foreigners in September, 2005. Visas (F series mainly, in a good way, but not so much for E-2s and the little it did was in a bad way, meaning more paperwork), tax (as I mentioned above) and pension (beginning of it being strictly enforced) all had major changes.

I was notified of the changes as I own businesses here and am on an F-2 visa.