l At hire/initial payroll setup
When the flat 19% tax rate is applied, provisions concerning income taxation, such as tax exemption (non-taxable income), deduction, reduction or exemption, and tax credit allowed under the IITL as well as this STTCL shall not be applicable to the foreigners concerned. At the year-end settlement in February after each calendar year-end, annual settlement calculations under both the 19% flat rate and the progressive tax rate scheme will be simulated, and more favorable scheme based on the comparison will be applied for the foreign employees.
The employer (withholding agent) should submit the flat tax rate application form to the competent tax office by the 10th day of the following month.
l Statutory social insurance participation obligation by visa type
Statutory social insurance participation obligation may vary depending on the visa type, which can be summarized by most common visa types of foreigners in Korea as below:
Visa type |
Medical insurance |
National pension |
Unemployment insurance |
Industrial accident compensation insurance |
|
D-2 |
Student 유학 |
statutorily required |
NOT statutorily required |
NOT statutorily required |
statutorily required |
D-7 |
Expatriate주재원 |
statutorily required |
may elect to participate in the insurance at their discretion. |
||
D-8 |
Investment기업투자 |
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F-4 |
Overseas Korean 재외동포 |
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D-10 |
Employment 구직 |
NOT statutorily required |
Unless the foreign (non-Korean) employee concerned is eligible for waiver of statutory social insurances and submits waiver applications with proper supporting documents thereof required by the Korean social insurance agencies, the foreign employee shall be subject to participation in the statutory social insurance programs in Korea mandatorily.
l At permanent departure from Korea: Korean national pension refunds (lump-sum refunds)
Obligation to participate in the statutory national pension scheme in Korea and the possibility of withdrawal/refunds of contribution made into statutory national pension scheme in Korea upon permanent departure of an employee will vary depending on the employee’s nationality and the social security agreements entered into between the countries. Refunds of contribution made to statutory national pension in Korea is generally based on the “principle of reciprocity”.