Flat Tax Rate Benefit available to Foreigner (non-Korean) Expatriate Employees and its Time Limit

Flat Tax Rate Benefit available to Foreigner (non-Korean) Expatriate Employees and its Time Limit

Under the Individual Income Tax Law of Korea, the individual income tax liabilities of foreign workers on earned income from the rendering of his/her services to companies in Korea including foreign invested companies can be finalized by applying the 20.9% flat tax rate (including 1.9% of local income tax) on gross earned income for the first five (5) year period notwithstanding Article 55 (1) of the Individual Income Tax Law (IITL) of Korea (Article 18-2, Special Tax Treatment Control Law of Korea; STTCL). Foreigners who have already been working in Korea as at Jan 1, 2014 will be eligible for the 20.9% flat tax rate limited to the taxable year ending December 31, 2018.

As such, depending on the employee’s first start date of work in Korea, the foreign employee shall be eligible for flat rate application with limited time period as explained below.

Depending on the first start date of work in Korea:	Time limit of flat tax rate application will be determined as below:
If a foreigner(non-Korean) employee was working in Korea as at Jan 1, 2014 (regardless of whether the employee was applied the flat tax rate before or after Jan 1, 2014)	Eligible to be applied the flat tax rate only up to Dec 31, 2018.
If the employee started working in Korea after Jan 1, 2014	Eligible to be applied the flat tax rate for 5 years counting from the start year of work in Korea.