Filing your Taxes in Korea for Foreigners – A Complete Guide

Whether you are starting a company in Korea, teaching in Korea, or working as a freelancer, filing your taxes in Korea for foreigners can be complicated, especially if you can’t speak Korean. I have over 20 years of Korean tax accounting and management experience. In addition, I have worked closely with Seoul Global Center doing monthly tax seminars for foreigners in Korea through the Overall-Assistance-for-Startup-Immigration-System program (OASIS). My clients not only include some of the biggest multinational companies in Korea, but also SMEs and startups, digital nomads, freelancers, foreign English teachers, and influencers. I am passionate about helping foreigners navigate the Korean tax system.

I have helped many foreigners in Korea with their taxes, accounting, and finance. Through working with government startup associations, I was able to help many foreign workers to extend their visas through my tax return service because, as you would already know, tax documents are critical when extending a visa. Currently, I lead the International Taxation Team at Hana Tax Management Corporation, which is one of the largest tax and accounting firms in Korea. In addition, I manage taxinkorea.com, which is a website dedicated to providing Korean tax information in English. The biggest issue most foreigners have is finding the right tax accountant who is not only fluent in English but can also deliver English resources for efficient tax filing.

Over 20 years of experience in:

• Tax Management
• Tax Planning and Strategy
• Business Setup
• Accounting
• Filing & Reporting
• Preparing monthly financial reports (with the template provided by the client)
• International Tax Advisory
• Bookkeeping using international software programs (ERP)
• Payroll Administration & Korean social insurance management
• Consulting on tax-related labor laws (e.g. overtime pay/severance pay)
• Performing treasury work for the client company
• Reconciling bank transactions
• Assisting in the year-end audit process

5 Tips for Filing Your Taxes in Korea for Foreigners

1. Find out whether you even have to file your taxes in Korea.

If you are a full-time employee for a company in Korea, your company will most likely file taxes on your behalf. Therefore, you need to find out if you are a full-time worker or a freelancer (independent contractor). There have been many cases where English teachers thought they were salary employees but were actually independent contractors. (As they had a set working time, and the class schedules are controlled by the manager, it is very likely that they considered themselves as employees.) After two years, the Korean government contacted them with a huge bill for unfiled and unpaid taxes. Therefore, it is important to find out if you are an independent contractor as the tax office can impose up to five years of past taxes. Here are some clues that you are an independent contractor in Korea: 

Clues you are an independent contractor in Korea

1. You are paying only 3.3% in taxes.
2. Don’t have health insurance coverage.
3. You don’t get severance pay.

If you want to know for sure, please send me an email and I will help you with this process.

2. Collect all your payslips.

Now that you know your employment status, the next step is to collect all your payslips. If you didn’t, don’t worry too much because Korea has a tax platform called HomeTax. There, you will find a section called MyNTS, which will have all your payslips. If you are an English teacher in Korea, ask your school to give you a Wage Earner Income Statement (근로소득원천징수영수증). This is your end-of-year pay stub that will show your gross income and withheld taxes. This document will also show how much money was deducted for pension and health insurance. You can also go to a local tax office and request a Certificate of Income (소득금액증명원).

3. Did you make under 20 million won last year?

If you made less than twenty million won a year, the tax process is quite simple because you don’t need to claim expenses to reduce payable taxes; it is likely that you will get a full tax refund.

If you made above twenty million won, check out the next steps below.

4. Did you make over 20 million won last year?

For those that made over twenty million won, it is important to ask, do I have any deductibles? What qualifies as deductibles? Are you single? Do you have dependents? All these will factor into how much taxes you will end up paying. It is up to the employee to provide their own deductions to maximize their refund. Hometax offers a tax refund calculator that shows you how much you will get back on your tax return.

Deductibles could include:

• Travel expenses
• vehicle maintenance and fuel cost
• Work Supplies
• Political donations
• Meals and beverages

3.3% is taken from your gross income. However, in around 70% of the cases, based on a person’s deductibles, they will get some money back from the tax office. Most English teachers in Korea get money back from the tax office.

5. Do you want to hire a tax accountant or file your own taxes in Korea?

If you want to hire a tax accountant in Korea, do your research. Find a tax accountant that will handle the paperwork for you. Then, all you need to do is provide the documents and information, and the tax accountant will take care of the rest. Prices can vary, but if they are asking for over one million won for filing your single income tax in Korea, you are paying too much.

Special Package for Korean Startups! 300,000 won per month

Small Companies: Companies with under 50 million won in annual sales can buy this package. I take care of the startup’s quarterly VAT filings, yearly income tax returns, and payrolls, and provide up to two hours of consultation per month. This is the perfect package for a Korean startup with a solo founder or a small team. 

Medium Companies: For larger businesses and enterprises, please check out our site for a detailed description here. 

Large Companies: For companies, SMEs, and startups in Korea, the tax process works much the same way as small or medium companies. However, companies in Korea are required to do four VAT returns per year, a monthly payroll return, and an Annual Corporation Income Tax Return.

Doing your Taxes in Korea – Frequently Asked Questions

Can you do your taxes yourself?

Yes! The South Korean National Tax Service offers you to file your tax return online. You will be able to download documents and forms, along with detailed instructions. You can also call them and they will have an English speaker to help you. 

What is the special tax rate for foreign employees working in Korea?

The FLAT TAX rate is 19%. 

If you are a foreign employee, you have an option for a progressive tax rate (6-45%) or a flat tax rate (19%) if you started working before Dec. 31, 2023.

This is applicable when you are a foreign employee, and this treatment is only allowed for 5 years. For example, a foreign worker who started working in South Korea starting from January 1, 2016, has to change to a progressive tax rate after January 1, 2021.

A 19% Flat tax rate is favorable when your yearly salary is over KRW 130,000,000 (Around $106,000 USD).

When is the last day you can file your taxes without getting a penalty?

May 31st. This does not include salary employees, since the company will take care of your yearly salary income tax settlement. However, if you had salaries from more than two companies (e.g. you moved from one to another), or if you had freelancer income besides your regular salary, then you need to file May’s tax return. 

It is likely that the tax payment will be due by Aug. 31st since there is a three-month extension due to the pandemic. However, this has not been publicly announced yet.

Do you need to know how to speak Korean when visiting the National Tax Service office in Korea?

From May 8 to May 31, each tax office has a help desk to assist taxpayers to file their own tax returns. You may bring your ARC card to any tax office in Korea, and they will guide you through your tax process via their stationed computer. However, the public tax official does not factor in your business expenses (deductibles), which can reduce your taxes. If you have business expenses to claim or wish to find the most tax-efficient manner to file the return, it is best to get advice from tax experts.

Who needs to do February’s tax return and who needs to do May’s tax return [Global Tax Report:종합소득세신고]?

For employees, February’s tax return (연말정산 handled by the company) is crucial. If you are employed by a company or school, the yearly tax reconciliation is done in February. After the year-end (February), 12-month employee’s taxes are re-calculated based on his/her expenses, such as credit cards, medical expenses, insurance payments, donations, tuition fees, etc. In case you had salary income from two sources, or if you had freelancer income (independent contractor income) on top of your regular salary, you need to file a Global Tax report in May. Also, if you run a sole-proprietorship company and have business income, then you also need to file taxes in May.