Increase in dispatched workers’ withholding tax rate and expansion of scope of withholding agents

Article 156-7 (1) of the Income Tax Act, Article 207-10 (1) of the Enforcement Decree of the Act

□In order to tighten control on the tax source from foreign dispatched workers, the following revisions will be made:

○Expansion of scope of withholding agents:

-Current: A domestic company whose total payment in return for labor provided paid to a foreign company exceeds 3 billion won per year

-Revised: A domestic company whose total payment in return for labor provided paid to a foreign company exceeds 2 billion won per year

○ Expansion of scope of businesses subject to withholding

– Current: Air transportation, construction and professional, science and technology services

– Revised: Vessel construction and finance businesses added to the list

○ Increase in withholding rate: 17% (current) → 19% (revised)

(Reason for revision) To strengthen management of tax source from foreign employees dispatched to Korea

(Application) Applied to payment for labor provided paid on or after Jul. 1, 2018

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