From 1 January 2017, eligible foreigners claiming the flat tax rate will be subject to 20.9% tax (i.e. 19% income tax and 1.9% local income tax) on their employment income sourced in Korea. The rate is an increase from 18.7% (17% income tax and 1.7% local income tax) which was effective until 31 December 2016.Eligible foreigners working in Korea can choose between the progressive rates ranging from 6.6% to 46.2% after deductions and credits, or the flat rate at 20.9% without any deductions or credits (all rates inclusive of local income tax). Based on these available options, the maximum effective tax rate on Korean-sourced employment income for eligible foreigners will be 20.9%.

A withholding agent (an employer of the foreign employee) may withhold with the flat tax rate of 20.9% during the year. In this case, a flat tax rate application form shall be filed to the district tax office.