Tax rebates grow with rising expat communityMore foreigners are enjoying tax deductions in Korea as the number of expat workers in the country continued its upward trajectory this year, even though the benefits remain on par with 2010 on a per capita basis.
But as expat workers are eligible for the same basic deductions as Korean citizens, the National Tax Service (NTS) is pushing to raise awareness of the convoluted process of year-end tax settlements among the foreign community and employers.
Preparing to file tax returns is an annual rite at this time of year as these are due at workers’ places of employment between Jan. 25 and Feb. 20.
Because income taxes are charged up-front and then partially reimbursed after a yearly reckoning of deductibles, knowing the ins and outs of the tax settlement process can mean the difference between receiving one’s dues and missing out.
And expat workers are no exception. According to the NTS, the number of foreign workers who qualify for year-end tax settlements and deductions jumped to 403,000 in 2010, up from 365,000 in 2009 and 344,000 in 2008.
Expat workers that have a residential address in Korea and hold jobs that require them to live in the country for a year or more can qualify for deductions for annuity insurance payments, medical and educational expenses, and other basic tax deductions that also apply to Korean nationals.
Expat workers who are in the country for a shorter duration are not eligible for deductions linked to their medical and educational expenses.
A number of tax advantages exist purely for expats. For example, they can choose whether to apply a 15 percent flat tax rate on their income or a progressive tax rate, which applies different rates depending on the size of their income. Expat teachers, professors and engineers are also eligible for tax exemptions, with the exception of Canadians due to bilateral tax treaties.
The NTS has a downloadable “Easy Guide” booklet explaining tax rebates in English and Korean as well as an online automatic calculation service and a hot line. Interested parties can visit www.nts.go.kr/eng or call 1588-0560 for more details.
By Lee Jung-yoon [email@example.com]
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