Guide to the Year-end Tax Settlement 2012 for Foreigners

SEOUL--(Korea Newswire)--With the growing number of foreign workers in Korea, as many as 500,000 or more foreign workers are expected to file the Year-end Tax Settlement in Korea this year, recording the largest number.

  * The number of foreigners who filed the Year-End Tax Settlement: 365,000 (attributable to ‘09)→ 403,000 (attributable to ’10)→ 465,000 (attributable to '11)
  * A foreigner refers to a person who does not hold Korean nationality on the last date of the relevant tax year

The schedule of the Year-end Tax Settlement 2012 is the same for both Korean nationals and foreign workers, but foreign workers need to understand that some tax treatments are different from that of Korean nationals when preparing and filing their Year-end Tax Settlement.
 - Foreign workers are entitled to special taxation including a 15% flat tax rate and income tax exemption for foreign engineers, etc. while they are not qualified for some types of income deduction

※ Major schedule for Year-end Tax Settlement 2012
 ·Prepares supporting documents for income deductions (Employee)
  Jan. 15~Jan 25, 2013
 ·Submits the final return of deductions (Employee → Employer)
  Jan. 25~Feb. 10, 2013
 ·Issues a withholding tax receipt for Year-end Tax Settlement (Employer → Employee)
  By the end of Feb. 2013
 ·Receives a refund from Year-end Tax Settlement (Employee)
  By the end of Mar. 2013

The NTS is providing various taxpayer services to help foreign taxpayers who are not acquainted with Korean taxation and having a language barrier.

The services available include Easy Guide for Year-end Tax Settlement which is offered both in Korean and English, an English edition of automated calculation program for the Year-end Tax Settlement and an exclusive consultation service for foreign taxpayers at a district tax office.

□ Key Instructions for the Year-end Tax Settlement for Foreigners

The way of conducting the Year-end Tax Settlement is the same for Korean nationals and foreign residents with regard to general deduction items.

However, foreign residents are not entitled to deductions for housing fund, interest payment of loans for long-term housing mortgage, and home purchase savings.

For a non-resident foreign worker, the area of deduction is limited. For example, only personal deductions for the taxpayer himself/herself such as basic deduction, and deduction for pension contributions are allowed.

Special deductions for medical expenses, educational expenses, etc. and other most income deductions are not allowed for non-resident foreigners.
  * If a foreigner whose “domicile” is in Korea or whose occupation requires a “place of residence” in Korea of at least one year or more, he/she is deemed as a resident of Korea. Otherwise, a foreigner is deemed as a non-resident.

□ Special taxation for foreign workers

15% flat tax rate : A foreign worker can choose to apply a 15% flat tax rate for his/her gross wage/salary income (including non-taxable income).

Foreign teachers : If a foreigner whose country of residence has a tax exemption provision for teachers/professors in its tax treaty with Korea meets the requirement for tax exemption, his/her income paid for his/her teaching/research in the authorized school is exempt from tax for a certain period (usually not exceeding 2 years).

Foreign engineers : If a foreign engineer who meets one of the requirements such as working on a technology-transfer contract or serving as a research worker in a research institute provides his/her labour in Korea, the calculated tax amount of his/her wage/salary income incurred for 2 years is exempted 50%.

  * If a foreign engineer provides his/her first service in Korea, or provides labour under the technology-transfer contract on or before Dec. 31, 2009, the foreign engineer shall be fully exempt from taxation for five years.

□ Services for Foreign Workers' Year-end Tax Settlement

The NTS is providing various services for foreign taxpayers so that they may better understand the Year-end Tax Settlement.

Easy Guide 2012 is revised and expanded, offered in Korean and English so that both foreign workers and their withholding agents may fully benefit from the book.
  * www.nts.go.kr/eng ≫Resources》Publication》Easy Guide for Foreigners' year-end tax settlement 2012

The NTS offers the Automatic Calculation Service for the Year-end Tax Settlement at its English website.
  * www.nts.go.kr/eng 》Help Desk》Quick Viewer Service》Automatic Calculation Service for Year-end Tax settlement

New English menu services are newly installed at the Simplified Year-end Tax Settlement website (www.yesone.go.kr) to help foreign workers conduct this service conveniently.

For foreigners with a language barrier, the NTS offers an exclusive consultation service for them to understand the Year-end Tax Settlement service.
  · Internet consultation : www.nts.go.kr/eng 》Help desk》Q&A
  · Tele-consultation service for foreigners at the NTS Customer Satisfaction Center : ☎ 1588-0560

Website: http://www.nts.go.kr

This is a news release distributed by Korea Newswire on behalf of this company.