Income tax in Korea can seem complex, especially for foreign workers who may be unfamiliar with the country’s taxation system. This blog post aims to provide an overview of the current income tax rates in Korea, with a particular focus on the unique tax rate applied to foreign workers.
General Income Tax Rates in Korea
Korea’s income tax system is progressive, meaning that the tax rate increases with higher income levels. The income tax rates for residents are as follows:
- Up to 12 million KRW: 6%
- Over 12 million KRW and up to 46 million KRW: 15%
- Over 46 million KRW and up to 88 million KRW: 24%
- Over 88 million KRW and up to 150 million KRW: 35%
- Over 150 million KRW and up to 300 million KRW: 38%
- Over 300 million KRW and up to 500 million KRW: 40%
- Over 500 million KRW and up to 1 billion KRW : 42%
- Over 1 billion KRW : 45%
Additionally, all income is subject to a local income tax of 10% of the national income tax, which must be paid separately.
Special Flat Tax Rate for Foreign Workers
Foreign workers in Korea have the option to be taxed at a flat rate of 19% on their gross income. This flat rate is an attractive option for many, as it simplifies the tax process and can potentially result in lower tax liability compared to the progressive tax rates.
It’s important to note that this 19% flat rate is also subject to the additional 10% local income tax. Therefore, the effective tax rate for foreign workers who opt for this flat rate becomes 20.9% when including the local tax.
Local Income Tax
As mentioned, Korea imposes a local income tax of 10% on the calculated national income tax. This applies universally, regardless of whether you are taxed under the progressive tax rates or the flat rate available to foreign workers.
Further Information
For the most up-to-date and detailed information on Korea’s income tax rates, including any changes or special provisions, please refer to the National Tax Service (NTS) website. The NTS provides comprehensive resources and guidelines to help both residents and foreign workers navigate the Korean tax system.
Visit the NTS for more information
Understanding the intricacies of the Korean tax system is crucial for compliance and financial planning. By staying informed about your tax obligations, you can ensure that you are meeting your responsibilities while also taking advantage of any beneficial provisions available to you.
