The employer as a tax withholding agent must perform the year-end settlement of exact payroll withholding taxes for and on behalf of its employees in February of following year after each year end mandatorily as required by the IITL of Korea.
In this connection, the employer should reflect the results of year-end settlement in the February payroll of the following year accordingly. Any overpayment resulting from year-end settlement is used to offset the payroll taxes due in February of the following year and onward until fully utilized. For any underpayment resulting from the year-end settlement, the employer should withhold additionally from the February payroll and remit to the tax office as scheduled by March 10 of the following year.
For the year-end settlement processing, the employees should gather and submit supporting documents to claim tax deductions.
After the year-end settlement, employees having more than one source of income are required to file separately an annual income tax return for the year and pay taxes due on such income on or before May 31 of the following year (i.e. by May 31, 2017 for 2016 income).