Income tax in South Korea
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Income tax is another common cause of complaint. Most foreign employees are required to pay Korean income tax, which is generally withheld from an employee's salary and paid by the employer. The Korean income-tax rate is 5 to 10 percent.
Article 20 of the Korean Tax Code states: "An individual who is a resident of a contracting State and who, at the invitation of any university, college, or other recognized educational institution, visits the other contracting State for a period not exceeding two years solely for the purpose of teaching, or research or both at such educational institution shall be taxable only in the first mentioned State on his remuneration for such teaching or research."
The Korean Tax Office in Seoul maintains a list of institutes where foreign teachers are tax-exempt. In principle, Article 20 applies only to teachers employed at universities, research centres or university-operated institutes. Teachers at hakwons and at private companies may have to pay tax. The general affairs section of the university or research centre can apply for the exemption. If the institute withholds income tax without reason, it is required to pay a refund.
For guidance on taxation matters contact the Korean Tax Office in Seoul, which has been helpful in arranging compliance with Article 20. The Office also publishes an English-language income tax guide for foreigners in April of each year; this is available free at any tax office.
The Korean tax year runs from June 1 to the following May 31. Usually employers file the appropriate tax forms but if they do not do so, individual employees may be penalized for failing to file. If you believe that your employer is not complying with the Korean tax laws and is illegally withholding income tax from your salary, your first step should be to discuss the matter with your employer. If that does not settle the matter, you should contact the International Taxation Division of the Korean Tax Office in Seoul at 82 (2) 720-4793 or 720-4222, or the nearest tax office. If the problem is still unresolved, you may wish to consider contacting an attorney.
Depending on the length of your stay in Korea, you may or may not be liable for payment of Canadian income tax on your income earned in Korea. Before your departure from Canada, it is advisable to contact the nearest Canada Customs and Revenue Agency office in order to determine your residency status with regard to Canadian income tax.
Daniel 19 May 2007, 05:35 - Report