Guide to the Year-end Tax Settlement 2013 for Foreigners

SEOUL--(Korea Newswire)--The process for settling Year-end Taxes is largely the same for Korean nationals and foreign employees, with slight differences as follows: (1) Only foreign employees are entitled to an application of 17% (previously 15%) flat tax rate, income tax relief for foreign engineers, and income tax exemption for foreign teachers.

(2) Foreign employees are unable to claim deductions for housing fund, interest payment of loans for long-term housing mortgage, monthly rent and home purchase savings.

With the goal of offering “customized services to individual citizens” under Government 3.0, the NTS is providing the following services to foreign employees in English: Automatic calculation program for Year-end Tax Settlement; Simplified Year-end Tax Settlement website; Easy Guide for Foreigners' Year-end Tax Settlement 2013; and exclusive consultation service for foreign taxpayers.

Overview

As the filing season of the Year-end Tax Settlement 2013 is approaching, there is a growing concern from foreign employees for how to conduct Year-end Tax Settlement.
* The number of foreigners who filed Year-End Tax Settlement: 403,000 (attributable to ‘10) → 465,000 (’11) → 474,000 ('12)
* 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 2013 is the same for both Korean nationals and foreign employees, but foreign employees need to understand that some tax treatments are different from that of Korean nationals when preparing and filing their Year-end Tax Settlement.

Foreign employees are entitled to special taxation including a 17% flat tax rate and income tax exemption for foreign engineers, etc. while they are not qualified for some types of income deduction.

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

The services available include Easy Guide for Foreigners' Year-end Tax Settlement 2013 which is published both in Korean and English, an English edition of automatic calculation program for Year-end Tax Settlement and exclusive consultation service for foreign taxpayers.

With the goal of providing “customized services to individual citizens” under Government 3.0, the NTS will do its utmost to help foreign employees file their Year-end Tax Settlement with convenience.

Key Instructions

The way of conducting 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, monthly rent and home purchase savings.

For a non-resident foreign employee, 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 employees

17% flat tax rate : A foreign employee can choose to apply a 17% flat tax rate for his/her gross wage/salary income (including non-taxable income). Please take note that the tax rate has changed from 15% to 17%.

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 researcher in an 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 a technology-transfer contract on or before Dec. 31, 2009, the foreign engineer shall be fully exempt from taxation for five years.

Services for Foreign Employees' Convenience

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

Easy Guide 2013 is revised and expanded, offered in Korean and English so that both foreign employees and their employers may fully benefit from the book.
* www.nts.go.kr/eng》 Resources》 Publication》 Easy Guide for Foreigners' Year-end Tax Settlement 2013

The NTS offers an Automatic Calculation Service for 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

The NTS provides Easy Guide to‘Simplified Year-end Tax Settlement Service’for foreign employees.
* www.yesone.go.kr》 Taxpayer》 Notice》 Easy Guide to ‘Simplified Year-end Tax Settlement Service’

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.