Individual Income Tax Law – Amendment(recalculation of 2014 year-end settlement)

An amended Individual Income Tax Law (IITL) was finally approved by the National Assembly on May 12, 2015 to be applied retroactively for earned income derived in 2014 in an effort to reduce tax burdens of employee taxpayers in Korea. With the passing of this bill, the National Tax Service issued a guideline on May 13 stating that the employer should perform recalculation of 2014 year-end settlement and pay any overpayment resulting from this recalculation to its employees first through the May payroll processing and report the recalculation results by June 10, 2015. Employers may then apply for refunds to the tax office or offset the overpayment against withholding taxes due for May 2015 when filing the report).

In consideration of the reporting due date of recalculation results of 2014 year-end settlement being June 10, 2015, the filing deadline of global income tax return for the taxpayers who have earned income other than salaries and wages in 2014 has also been extended from May 30, 2015 to June 30, 2015.