NTS releases guide to help foreigners file taxesThe National Tax Service released a guideline to help foreigners in Korea complete their year-end tax settlement.
The guideline released Thursday explained that foreigners should settle their year-end taxes by the end of February.
“Regardless of nationality, length of stay and income volume, foreigners shall settle year-end taxes in Korea as same as Korean employees,” explained the guideline. “A foreign employee can choose to apply a 19 percent flat tax rate for his or her gross wage or salary income of five-year period starting from the first day of his or her work.”
Foreign engineers qualify for a 50 percent tax relief on the income they have earned in the past two years, “providing [their] labor in Korea meets relevant requirements for a tax exemption.” Qualifications noted by the tax agency include “working on a technology-transfer contract or serving as a researcher in a foreign research and development facility,” the agency explained.
For foreign teachers, their income for a certain period can be waived if their country “has a tax exception provision for teachers or professors in its tax treaty with Korea meets the requirement for tax exemption.”
The guideline recommends that all foreigners that need to settle their taxes should prepare supporting documents for income deduction and submit the final return by the end of next month. They also must get withholding tax receipts issued by their employers before the end of the month. Finally, foreigners should submit the report on the status of withholding and the statement on wage and salary payments by March 12, the guideline indicated.
While the tax settlement method for foreigners in Korea is the same as Koreans in terms of items and schedule, they will not be eligible for deduction credit on housing funds, savings accounts for home purchases and monthly rent, the guide further explained.
The number of foreigners that must settle their taxes has been on the rise in recent years, according to data by the tax agency. In 2013, 480,000 foreigners out of 1.6 million qualified for year-end tax settlements. This number steadily increased to 508,000 in 2014 and 563,000 in 2016, accounting for about 40 percent of the foreigner population in Korea. The agency estimates that there were about two million foreigners residing in Korea in 2016.
The guide is available on the tax agency’s website at www.nts.go.kr/eng. It includes a program that will automatically calculate a tax refund estimate.
BY CHOI HYUNG-JO [email@example.com]