Overview

Korea's tax system includes income tax, corporate tax, inheritance tax, gift tax, value-added tax, customs duty, residence tax, automobile tax, and others. As a foreign worker, your primary concern is income tax — specifically, year-end settlement and global income tax reporting.

Year-End Settlement (연말정산)

Year-end settlement determines your total income tax for the calendar year (January 1 to December 31). Your employer calculates your earned income, deducts eligible items (medical expenses, insurance premiums, educational expenses), and compares the result against the withholding taxes already collected each month.

• If you overpaid: you receive a tax refund through year-end settlement.
• If you underpaid: the difference is collected through year-end settlement.

What You Need to Do

In January of the following year, submit an income tax deduction application form and supporting receipts to your company. You can obtain deduction materials through the Year-end Settlement Simplification Service on the National Tax Service website (www.hometax.go.kr).

Global Income Tax (종합소득세)

You must file a global income tax report if you have income beyond your regular employment earnings — for example, appearance fees, freelance lecture fees, or business income from teaching at a private institute without an employment contract.

Filing period: May 1 to May 31 of the following year, at the National Tax Service District Office with jurisdiction over your address.

If your employer did not perform year-end settlement, or if you quit your job and missed deductions, you must also file a global income tax report. However, if year-end settlement was completed and you only have employment income, no additional filing is needed.

Tax Refund

If you overpaid after filing the global income tax report, the refund is deposited to your designated account around July 1 (national tax) and August 20 (local income tax).

Special 19% Flat Tax Rate for Foreign Workers

Under the Restriction of Special Taxation Act, foreign workers can apply for a flat tax rate of 19% on earned income instead of the progressive tax rate. This is done when making year-end settlement or reporting global income tax.

The trade-off: if you choose the 19% flat rate, you lose all non-taxation benefits, income tax deductions, and tax credits when calculating the tax base and amount. This option benefits high-income foreign workers whose progressive rate would exceed 19%.

Apply by submitting the request to your withholding agent (employer) or to the head of the tax office with jurisdiction over your address.

Tax Exemption for Native-Speaking Professors and Instructors

If your country has a tax treaty with Korea that includes a non-taxation provision for professors/instructors, you may qualify for earned income tax exemption.

Conditions

• You must be staying in Korea with an invitation not exceeding two years from a college, university, school, or government-accredited educational institution for lecturing or research.
• You must submit a certificate of residence issued by the taxation authority of your home country (e.g., IRS for the U.S., National Tax Agency for Japan) to your withholding agent (school).
• The school then applies for the exemption at the National Tax Service District Office.

Important Notes

• Without the certificate of residence or the application for exemption, the tax exemption will not be applied.
• If you submit the certificate later, you can receive a refund of previously withheld taxes.
• Conditions vary by country — check the treaty at www.nts.go.kr (Resources - Tax Law/Treaty - Tax Treaty).

Key Contacts

• National Tax Service: www.nts.go.kr, phone 126 (Korean), 1588-0560 (English)
• Seoul Metropolitan Government Tax Collection Division: etax.seoul.go.kr, Dasan Seoul Call Center 120 (Korean, English, Chinese, Japanese, Mongolian, Vietnamese)
• Year-end settlement consulting for foreigners: www.nts.go.kr - Help desk - Q&A