In Korea, there are strict regulations regarding the payment of severance pay when an employee leaves after a certain period of employment. Severance pay is generally calculated as 30 days of average wages for employees who have worked for one year or more. While this concept is familiar to most employees in Korea, foreign companies […]
When processing employee termination in Korea, there are several essential steps that need to be confirmed and followed. Sometimes, there are processes specific to Korea that may be unfamiliar to foreigners or foreign companies. Please note the following: Notice Period: Verify the notice period required for employee termination according to the Employment Contract (“EC”). This […]
VAT Korea Refund In the global economy, international trade in goods & services have expanded to become essential to daily life. It has become common to make purchases and use popular global apps in South Korea. However, such goods or services from overseas suppliers do not include VAT, which creates an unequal playing field for […]
A tax is imposed on net taxable income in Korea by the district tax office, and cities (or “gu” for large cities). In Korea, a tax payable to the district tax office is called “income” tax (소득세). A tax payable to cities is called “resident” tax (지방세). For most of cases, 10% resident tax will […]
South Korea’s payroll system When an employee is hired, he/she will receive monthly salary payments that will have taxes deducted from. Employees must pay income/resident taxes from their salary along with mandatory social insurance programs that employees need to be enrolled into immediately upon being hired. Withholding Income & Resident Taxes Plus Benefit Deductions Income/resident […]
There’re 4 major social insurances in Korea for all employees to be enrolled: 1) national pension, 2) national health insurance and long-term care insurance, 3) employment insurance and 4) workers’ compensation insurance. Each year, some of the insurance rates are increased or adjusted. Following rates are applicable for 2023. Item Employee Employer TOTAL RATE Expected […]
Business in Korea | Company types Foreign investments are categorized by type for doing business in Korea. Mostly, foreigners can start Korean business by acquiring new or existing stocks, or by establishing a Korean branch or liaison office in Korea. Governing laws are different for the cases. Foreign Direct Invested (FDI) companies are domestic corporations […]
Can foreigners hire Korean employees remotely? Yes, any foreigners or foreign companies can hire Korean national employees from overseas. Many foreigners or foreign companies I’ve met are worried about the Korean labor environment and hesitate to set up a company in Korea. For certain cases, Koreans can be directly employed by any foreigners and work […]
In South Korea, Foreign Direct Investment (FDI) requires an investment by non-Koreans of at least KRW 100 million. Types of FDI include the acquisition of stocks of domestic companies, long-term loans (minimum of five years) from parent companies outside of South Korea, and investments in non-profit corporations in the fields of science & technology. And […]
The Korean VAT Laws specify certain purchases are not deducible (10% VAT not refundable) for the companies. For example, VAT payments on following purchases are not refundable: Books, medical expenses, fuels, parking, car maintenance fees, leisure expense such as golf, etc., luxury item purchases, public transportation expenses, tickets (i.e., movies), beauty shops, etc. References: […]
South Korea has four major social security schemes: 1) national pension; 2) national health insurance & long-term care insurance; 3) employment insurance; and 4) workers’ compensation insurance. The insurance rates are increased or adjusted annually, with those shown below the latest updates from 2022. Item Employee Employer TOTAL RATE Expected Monthly Contribution (TTL) Note Case […]
Sometimes we are asked for financial review services Korea. Unlike audits, financial reviews require much simpler procedures and can take less time than audits. A review includes primarily applying analytical procedures to management’s financial data. You may expect that a CPA review will address if the financial data are free from any material misstatements. Key […]
Korean tax authorities have been raising income tax rates for individual taxpayers in recent years. It is a common practice for high income earners setting up an entity in Korea to reduce taxes. There will be many things to consider before setting up an entity in Korea, but only comparing tax rates, it will be […]
In Korea, companies (whether a stock company and/or a LLC) with certain size or transaction volumes are subject to external audit. External audit can only be performed by public accounting firms in Korea. The scale of business for external audit is fully described in the law of ENFORCEMENT DECREE OF THE ACT ON EXTERNAL AUDIT […]
There’re 4 major social securities in Korea: 1) national pension, 2) national health insurance and long-term care insurance, 3) employment insurance and 4) workers’ compensation insurance. Each year, some of the insurance rates are increased or adjusted. Especially, rates for national health insurance and long-term care insurance are increased every year. During covid-19 season in […]