Individual Income Tax Return Filing Requirement (due May 31, 2017)

All individuals in Korea are classified as either resident or non-resident for income tax purposes.  A resident is a person having a domicile or residence in Korea for 183 days or more, or an individual having an occupation that would customarily require him to reside in Korea for 183 days or more, or an individual whose family accompanies him or her to Korea and who retains substantial assets in Korea. 

  

Generally, residency is determined on a "facts and circumstances" test which should be evaluated on an individual basis.  A non-resident is an individual who is not deemed to be a resident.

  

Residents, regardless of their nationalities, are subject to Korean income tax based on worldwide income including global income (employment income, business profits, dividend, pension, interest, rental, and other income), severance pay and capital gains.  However, under the revised Individual Income Tax Law, in the case where the period that a foreigner, who is a tax resident of Korea, has his address or abode in Korea does not exceed 5 years in aggregate during the past 10 years from the end of the concerned tax year, his/her foreign source income earned from January 1, 2009 shall be taxed in Korea only if such income is paid in Korea or such income is remitted into Korea.

  

A tax resident who has global income (including employment income, interest, dividend, and pension income), severance pay, or capital gains within a tax year is generally required to file an annual individual income tax return and pay taxes due on such income by May 31of the following year, or prior to permanently leaving Korea.  An expatriate who is deemed to be a nonresident is taxed only on Korean source income.  A non-resident is not allowed to use all of the personal deductions granted to residents except for the basic deduction for him/herself.  Domestic employers are required to withhold individual income taxes on the regular payments of wages and salaries to their employees.

  

The following tax table summarizes the individual income tax rates (progressive rate scheme):

 

Taxable income	Tax rates
Up to W 12 million	6.6%
Over W 12 million and up to W 46 billion	16.5%
Over W 46 million and up to W 88 million	26.4%
Over W 88 million and up to W 150 million	38.5%
Over W 150 million and up to W 500 million	41.8%
Over W 500 million (effective from FY2017)	44.0%

 

  

In addition to these tax rates, a local (provincial) income tax is levied at 10% on income tax liability.