What You Need to Know About Taxes as a Foreign Employee in Korea
If youโre a foreigner working in South Korea, you are legally required to pay taxes, just like Korean citizens. However, there are specific rules, exemptions, and reporting procedures that apply to foreign workers. This guide outlines the essential tax information for foreigners in Korea.
1. Resident vs. Non-Resident Status
Resident:
- Foreigners who have a Korean address or reside in Korea for 183 days or more are considered tax residents.
- They must report worldwide income.
- If youโve lived in Korea for less than 5 years, youโre only taxed on Korean income and foreign income thatโs sent to Korea.
Non-Resident:
- Those staying less than 183 days are non-residents.
- Only Korean-sourced income is taxed.
2. Income Tax Filing and Reporting
Foreign workers with Korean income must file taxes through either year-end tax adjustment (employer) or a comprehensive income tax return.
- Use the Hometax website: https://www.hometax.go.kr
- Local tax offices offer in-person support for foreigners
3. Tax Rates & Special Exemptions for Foreigners
Flat Tax Rate of 19%
- Flat 19% tax for up to 20 years from first workday in Korea
- Often beneficial for high earners
Tax Reductions for Skilled Professionals
- Foreign engineers: 50% tax reduction for 10 years
- Strategic fields: 70% for 3 years, then 50% for 2 years
Other Exemptions
- Applies to sailors, overseas workers, and R&D staff in special zones
4. Filing Tips & Precautions
- Submit your Alien Registration Card (ARC) or proof of residence
- Double-check foreign income reporting requirements
- Late filing can affect visa renewals or PR applications
- Need help? Call 1588-0560 (Foreigner Tax Help Line)
5. Types of Taxable Income
Foreigners must report the following types of income in Korea:
- Employment income
- Business income
- Interest and dividends
- Pensions and retirement pay
- Miscellaneous income (honorariums, prizes, etc.)
Summary
If you’re working in Korea as a foreigner, it’s important to understand your tax residency status, take advantage of flat tax options or exemptions, and meet your filing obligations on time.
Always refer to official guidelines from the Korean National Tax Service, and consult a tax expert if needed, as policies can change.