income tax korea

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<ul><li><p> 2010 (2009 ) </p><p>Individual Income Tax and Benefit Guidefor Foreigners 2010</p><p>(For use in preparing 2009 returns)</p></li><li><p> 2010(2009 ) </p><p>2010. 5</p><p>National Tax Service</p></li><li><p>Individual Income Tax and Benefit Guidefor Foreigners 2010</p><p>(For use in preparing 2009 returns)</p><p>May, 2010</p><p>National Tax Service</p></li><li><p> . </p><p> , . </p><p> , , , , .</p><p> 2010 , . </p><p> 2010 , . </p><p>2010 5 </p></li><li><p>PREFACE</p><p>The National Tax Service of Korea would like to express our deep appreciation </p><p>for your faithful tax compliance and the contribution you made to the </p><p>development of the Korean economy.</p><p>As Korea's economy widely opens its door to foreigners, the number of foreigners </p><p>working or operating business in Korea has reached over a million.</p><p>In endeavoring to provide them more friendly tax services, the NTS has </p><p>implemented various customized services for foreign taxpayers such as Help-line </p><p>for Foreigners, Foreign Taxpayer Service Desk in district tax offices, our </p><p>English web-site, and Foreign Taxpayers' Guide to Korean Taxes which helps </p><p>foreign taxpayers understand their tax filing and payment obligations. </p><p>This year's guide offers a wide range of information including explanation of </p><p>major changes in the Korean tax law in both Korean and English languages so </p><p>that it can be of use to foreign taxpayers as well as Koreans.</p><p>We sincerely hope that this Guide will be of interest and benefit to all foreign </p><p>taxpayers for their 2010 Individual Income Tax filing. The NTS will continue </p><p>seeking ways to better serve our valuable customers by creating a business- </p><p>friendly tax administrative environment.</p><p>May, 2010</p><p>Yun Jun ParkAssistant Commissioner for International Taxation</p><p>National Tax Service</p></li><li><p> 2010 </p><p>2009 / 801. 802. 82</p><p>2009 / 841. ? 842. 2009 ? 863. ? 884. ? 905. ? 926. ? 927. ? 948. 969. 98</p><p> / 1081. 1082. 108</p><p> / 1101. 1102. 1183. 122</p><p> / 1261. 1262. 1303. 152</p></li><li><p>CONTENTS</p><p> What are Major Changes for 2010 ?</p><p>Part Introduction</p><p>Tax Base and Calculation Flow for 2009 Global income tax / 811. Tax Base and Calculation Flow for Residents 812. Individual Income Taxation on the Income of Non-residents 83</p><p>General Information / 851. Do you have to file a return ? 852. What date is your return for 2009 due ? 873. What do you include with your return and what records do you keep ? 894. Where do you have to file and pay ? 915. What penalties do we charge ? 936. When can you expect your refund ? 937. Do you report foreign income and other amounts ? 958. Double Entry Bookkeeping and Simplified Bookkeeping 979. What is the "Enforcement of StandardSimplified Expense</p><p>Rate System" 99</p><p>Part Outline of Individual Income Tax System</p><p>Taxpayer / 1091. Resident 1092. Non-Resident 109</p><p>Income / 1111. Taxable Income 1112. Non-taxable Income 1193. Tax-exempt Income 123</p><p>Tax Base and Deductions / 1271. Basic Rules for Calculating the Tax Base 1272. Calculation of Tax Base(Taxable Income) 1313. Deduction For Global Income 153</p></li><li><p> / 1581. 1582. 158</p><p> / 1641. 1642. 166</p><p> / 1721. 1722. 1723. 1744. 174</p><p> / 1761. 1762. 1763. 1764. 176</p><p> / 1781. 1782. 178</p><p> / 1821. 1822. 1823. 1824. 1845. 1846. 184</p><p> / 1861. 1862. 186</p><p> / 1901. 1902. 1903. 1984. 202</p></li><li><p>Tax Rates and Tax Credits / 1591. Tax Rates Structure 1592. Tax Credits 159</p><p>Return and Payment / 1651. Tax Return 1652. Tax Payments 167</p><p>Global Income Tax of Compliant SMEs / 1731. Application of Simplified Method for Tax Calculation 1732. Eligibility of Compliant SMEs 1733. Special Tax Treatment in Calculating Tax Base 1754. Special Tax Treatment for Tax Credits 175</p><p>Assessment and Collection / 1771. Determination and Correction of Tax Base and Tax Amount 1772. Notice on Tax Base and Tax Payable 1773. Collection of Tax 1774. Minimum Taxable Floor 177</p><p>Tax Withholding / 1791. Obligation of Tax Withholding 1792. Rates of Withholding 179</p><p>Tax Penalties / 1831. Penalty on Failure to File Returns 1832. Penalty on Non-payment or Underpayment of Tax 1833. Penalty Tax on Failures to Withhold Tax 1834. Penalty Tax on Failures to Report Withholding Payment Records 1855. Penalty Tax on Failures to Maintain Adequate Books and Records 1856. Penalty Tax on Failure to use Business Purpose Bank Account 185</p><p>Bookkeeping and Submitting payment records / 1871. Bookkeeping 1872. Submitting payment records 187</p><p>Part Individual Income Tax System for Non-resident</p><p>Taxation on Non-resident / 1911. General 1912. Income from Domestic Sources 1913. Domestic Business Place 1994. Tax Withholding on Non-resident 203</p></li><li><p> / 2041. 2042. 2043. 2064. 208</p><p> / 2121. ( ) 212</p><p> / 230</p><p> 40 (1) / 236 40 (4) / 290</p><p> 1. 3002. 3023. 3084. 3105. 3126. . 312</p></li><li><p>Taxation on Wage &amp; Salary Income of Non-resident / 2051. Non-resident with Class A Wage &amp; Salary Income Only 2052. Non-resident with Class B Wage &amp; Salary Income Only 2053. Non-resident with Class A and Class B Wage &amp; Salary Income 2074. Taxation on Wage &amp; Salary Income Flow of Non-resident 209</p><p>Part Practice &amp; FAQ</p><p>Practice in Calculating / 2131. Example : Lecturer (Wage &amp; Salary Income + Other Income) 213</p><p>Frequently Asked Question / 231</p><p>Part Forms</p><p>Individual Income Tax Return From 40-1 / 237</p><p>Individual Income Tax Return From 40-4 / 291</p><p>Part Appendix1. Income Tax Calculation Chart for Resident ESL Teachers 3012. Tax Office in Major Cities 3033. Taxpayers Association 3094. Treaties with foreign countries 3115. Contact Us 3136. Your Opinion Matter 313</p></li><li><p>14 2010 </p><p> 2010 2009 .</p><p> 1. ( 47 50 55)</p><p>1. </p><p>2. </p><p> 081,200 8%4,600 17%8,800 26%8,800 35%</p><p> 2%p</p><p> 09 101,200 6% 6%4,600 16% 15%8,800 25% 24%8,800 35% 33%</p><p> - 1 100 </p><p> - 1 150 </p><p> - 500 : 100% - 5001500 : 50% - 1,5003,000 : 15% - 3,0004,500 : 10% - 4,500 : 5%</p><p> - 500 : 80% - 5001500 : 50% - 1,5003,000 : 15% - 3,0004,500 : 10% - 4,500 : 5%</p><p>3. 2009.1.1. </p></li><li><p>What are Major Changes for 2010? 15</p><p> What are major changes for 2010 ? This section summarizes important tax changes that took effect in 2009.</p><p> 1. Modification of the Global Income Tax Rate and Deductions</p><p>(Article 47 Article 50 Article 55 of the Income Tax Act)1. Purpose of Revision To stimulate the economy and encourage consumption through </p><p>reducing the burden of tax liabilities on people in the middle and lower income bracket</p><p> Advantageous taxation structure for taxpayers who have more dependants</p><p>2. ChangesBefore Now</p><p> Tax Rate</p><p>Tax Base RateUp to 12 million won 8%Up to 46 million won 17%Up to 88 million won 26%Over 88 million won 35%</p><p> Basic Deduction - 1mio KRW per year per person qualifying </p><p>for basic deduction Deduction for Wage and Salary Income - 5 million won or less : 100% - More than 5 million won but not more </p><p>than 15 million won : 50% - More than 15 million won but not more </p><p>than 30 million won : 15% - More than 30 million won but not more </p><p>than 45 million won : 10% - More than 45 million won : 5%</p><p> Down 2% for each income bracket</p><p>Tax Base 09 10Up to 12 million won 6% 6%Up to 46 million won 16% 15%Up to 88 million won 25% 24%Over 88 million won 35% 33%</p><p> Basic Deduction - 1.5mio KRW per year per person qualifying </p><p>for basic deduction Deduction for Wage and Salary Income - 5 million won or less : 80% - More than 5 million won but not more than </p><p>15 million won : 50% - More than 15 million won but not more </p><p>than 30 million won : 15% - More than 30 million won but not more </p><p>than 45 million won : 10% - More than 45 million won : 5%</p><p>3. Date of Enforcement Effective for income incurred on and after Jan. 1, 2009</p></li><li><p>16 2010 </p><p> 2. </p><p>( 51)</p><p>1. 60 </p><p> 08 65 </p><p>2. </p><p> ( 100 ) </p><p> - 60( 55) - 20 60 - 20 </p><p> - 60 </p><p> - 6569 : 100 </p><p> - 70 : 150 </p><p> - 6569 : </p><p> - 70 : 100 </p><p>3. 2009.1.1. </p></li><li><p>What are Major Changes for 2010? 17</p><p> 2. Adjustment in Personal Deductions</p><p>(Article 51 of the Income Tax Act)</p><p>1. Purpose of Revision Age of ascendants eligible for the basic deduction is 60 years old or </p><p>more for both men and women</p><p> A person whose age is 65 years old or more is eligible for the Basic Old Age Pesion from 2008. Regarding this, Additional deduction for Aged is reduced. </p><p>2. Changes Before Now</p><p> Dependent family members (with an annual</p><p>income of 1 million KRW or less) eligible for basic deductions :</p><p> - Linear ascendant aged 60 (or 55 for women) or over</p><p> - Siblings aged 20 or under, or 60 or over - Linear descendant and adopted child aged </p><p>20 or under </p><p> Additional deductions for the aged - When dependents qualifying for basic </p><p>deductions are aged 65~69 : Additional deduction of 1 million KRW per year </p><p> - When dependents qualifying for basic deductions are aged 70 or over : Additional deduction of 1.5 million KRW per year </p><p> Adjustment to age qualifications of dependent family member </p><p> - Linear ascendant aged 60 or over for both men and women</p><p> - (Same as before) - (Same as before)</p><p> Reduction in additional deduction for the aged - When dependents qualifying for basic </p><p>deductions are aged 65~69 : No additional deductions are granted</p><p> - When dependents qualifying for basic deductions are aged 70 or over : Additional deduction of 1 million KRW per year </p><p>3. Date of Enforcement Effective for income incurred on and after Jan. 1, 2009</p></li><li><p>18 2010 </p><p> 3. </p><p>( 52 9)</p><p>1. </p><p> 16 </p><p> 2,500 </p><p>2. </p><p> 2,500 </p><p> 100 </p><p> - ( ) </p><p> - ( )</p><p>&lt; &gt;</p><p>3. 2009.1.1. </p></li><li><p>What are Major Changes for 2010? 19</p><p>3. Abolition of Special Deduction for Marriage, Funeral, Relocation Expenses (Article 52(9) of the Income Tax Act)</p><p>1. Purpose of Revision In order to secure tax base based on the "broader tax resources and </p><p>lower tax rate" principle, the previous 16 kinds of special deductions were simplified.</p><p> The eligibility for deduction was limited to wage and salary earners with a total wage and salary income of 25 million KRW or less. However, such income cap was not effective for taxpayers below tax threshold, only to make deductions complicated.</p><p>2. Changes Before Now</p><p> Wage and salary earners with a total </p><p>wage and salary income of 25 million KRW or less are given a special deduction of 1 million KRW per each instance outlined below : </p><p> - Marriage/funeral of person eligible for basic deductions (no age cap) </p><p> - Relocation of filer (applicable only when the entire family relocates)</p><p>&lt; Abolished &gt;</p><p>3. Date of Enforcement Effective for income incurred on and after Jan. 1, 2009</p></li><li><p>20 2010 </p><p>4. </p><p>( 52 1)</p><p>1. </p><p> * </p><p> * 2008 , , 200 </p><p>2. </p><p> - : </p><p> - : 500 </p><p> - ( )</p><p> - : 700 </p><p> - : 1 200</p><p> - : 1 700</p><p> () </p><p> - : 1 300</p><p> - : 1 900</p><p> ( )</p><p>3. 2009.1.1. </p></li><li><p>What are Major Changes for 2010? 21</p><p>4. Upward Adjustment of Maximum Income Deductibility for Medical and Educational Expenses (Article 52(1) of the Income Tax Act)</p><p>1. Purpose of Revision The maximum income deductibility is adjusted upward so as to </p><p>allow a broader deduction for medical expenses of dependent family members.</p><p> The maximum income deductibility is revised upward for educational expenses, in consideration that high school fees* and tuition fees of private universities often exceed the maximum income deductibility. </p><p> * In 2008, after-school fees, costs of textbook purchase and school meals, etc. became deductible for education expenses. As a result, some high school fees exceeded 2 million KRW per year.</p><p>2. ChangesBefore Now</p><p> Maximum income deductibility for medical expenses</p><p> - Oneself, senior citizen, persons with physical disabilities : No maximum limit </p><p> - Dependent family member : Capped at 5 million KRW per year</p><p> Maximum income deductibility for educational expenses </p><p> - Pre-school/elementary/secondary school/high school students : 2 million KRW per year per person</p><p> - College/university students : 7 million KRW per year per person</p><p> There is no maximum limit for the filer's own educational expenses (including graduate-level studies) </p><p> Maximum income deductibility for medical expenses</p><p> - (Same as before)</p><p> - Dependent family member : Capped at7 million KRW per year </p><p> Maximum income deductibility for educational expenses</p><p> - Pre-school/elementary/secondary school/ high school students : 3 million KRW per year per person</p><p> - College/university students : 9 million KRW per year per person</p><p> (Same as before)</p><p>3. Date of Enforcement Effective for expenses paid on and after Jan. 1, 2009</p></li><li><p>22 2010 </p><p>5. </p><p>( 50)</p><p>1. </p><p> - </p><p>2. </p><p> ( 100) </p><p> - 60( 55) </p><p> - 20 , 60 </p><p> - 20 </p><p> &lt; &gt;</p><p> - 6 *</p><p> * 18 </p><p>3. 2009.1.1. </p></li><li><p>What are Major Changes for 2010? 23</p><p>5. Addition of Foster Child as Dependent Eligible for Basic Deduction (Article 50 of the Income Tax Act)</p><p>1. Purpose of Revision Providing tax support to encouraging foster care at private homes</p><p> - Since foster homes protect and care for children just as their own children, the foster children need to be treated similarly as their own dependent child for tax purposes.</p><p> If a foster child is included as dependent eligible for basic deduction, the child is also eligible for deductions for insurance, medical, and educational expenses.</p><p>2. ChangesBefore Now</p><p>&lt; New &gt;</p><p> Addition of dependent eligible for basic deductions </p><p> - Child in foster care* of the filer for a period of six months or more during the current tax year</p><p> * Children to be placed with foster families are determined, among children under the age of 18 who require care, by the Heads of administrative districts of "City", "Gun", </p><p>and "Gu." </p><p>3. Date of Enforcement Effective for income incurred on and after Jan. 1, 2009</p></li><li><p>24 2010 </p><p>6. </p><p>( 186)</p><p>1. </p><p>2. </p><p> - 10 </p><p> - 20 </p><p>3. 2009.1.1. </p></li><li><p>What are Major Changes for 2010? 25</p><p>6. Broadened Eligibility for Simplified Payment of Withholding Taxes </p><p>(Article 186 of the Enforcement Decree of the Income Tax Act)</p><p>1. Purpose of Revision Broadening the eligibility for half-yearly payment of withholding </p><p>taxes so as to help small-scale corporate taxpayers conveniently pay their taxes </p><p>2. Changes Before Now</p><p> Eligibility for half-yearly payment of </p><p>withheld taxes </p><p> - Withholding agents whose number of immediately preceding year's full time employees is 10 or less. </p><p> Broadened eligibility</p><p> - Withholding agents whose number of immediately preceding year's full-time employees is 20 or less. </p><p>3. Date of Enforcement Effective for approved half-yearly payment on and after Jan. 1, 2009</p></li><li><p>26 2010 </p><p>7. ( 3)</p><p>1. </p><p> - 1 </p><p> - 5 </p><p>2. </p><p> ( ) 1 </p><p> () 10 5 </p><p> () , </p><p>3. 2009.1.1. </p></li><li><p>What are Major Changes for 2010? 27</p><p>7. Reduced Scope of Ta...</p></li></ul>