Submission frequency shortened for simplified withholding tax statement for salary income and other income related to temporary personal services starting from January 2024

l Submission frequency shortened for simplified withholding tax statement for salary income and other income related to temporary personal services starting from January 2024

Previously all companies (withholding agents) who pay salary and wage income were required to submit the simplified withholding tax statement for salary and wage income (상용근로소득 간이지급명세서) to the governing district tax office on a semi-annual basis in January and July of every year.

However, under the amended Individual Income Tax Law (IITL) of Korea, such simplified withholding tax statements for wage and salary income shall be filed with the governing district tax office on a monthly basis by the end of the following month starting with the income paid on or after January 1, 2024. In addition, a simplified withholding tax statement for other income related to temporary personal services (인적용역관련 기타소득 간이지급명세서) must also be submitted on a monthly basis by the end of the following month starting with the income paid on or after January 1, 2024.

For non-filing or false filing, there will be 0.25% penalties on non-reported or falsely reported income amount. If the company submits simplified withholding tax statement within one month from the original due date, a reduced penalty at 0.125% shall be imposed for late filing.

In this connection, however, as this submission frequency change from bi-annual to monthly under the amended IITL is expected to result in significant administrative burden to companies as withholding agents, there is a tax reform bill proposed by the members of the National Assembly which aims to maintain the existing bi-annual submission frequency for the simplified WHT statement for salary and wage income. Therefore, it is necessary to monitor further development of this proposed tax reform bill in the coming months.