New payroll income tax withholding procedure on salary and wage income from July 1, 2015

Under the new payroll income tax withholding procedure which became effective from July 1, 2015, employees may choose from one of the following three(3) different options in calculating the amount of their monthly income taxes to be withheld on salaries :

• (Option 1) An employee may choose 80% withholding ratio of the payroll income taxes calculated based on the Quick Tax Table of the National Tax Service (NTS). He/she will have to pay the shortfall (20%) underpaid during the year in February of the following year through the year-end payroll income tax settlement procedure.

• (Option 2) An employee may continue to be withheld at 100% withholding ratio the same as before.

• (Option 3) An employee may choose 120% withholding ratio of the payroll income taxes calculated based on the Quick Tax Table of the NTS. He/she will receive refunds of the overpayment (20%) in  February of the following year through the year-end payroll income tax settlement procedure.

To choose Option 1 or 3 above, employees should submit an application form to their companies.