S Korea Issues Guide For Foreign Taxpayers

South Korea’s National Tax Service has released guidance in English for foreign taxpayers to comply with their South Korean tax affairs.

Income tax returns must be filed by May 31, 2018.

The guidebook explains foreign persons’ personal income tax obligations and the differences in tax treatment between resident and non-resident taxpayers.

Foreign residents who have lived in Korea for less than five years are liable to pay tax on foreign-source income only if it is paid in or remitted to South Korea.

Resident taxpayers are those who have been resident or have had a place of residence for 183 days or more in a calendar year, while non-resident taxpayers are those who have not resided in Korea for more than 183 days but who have received Korean domestic-source income.

In the case of non-resident taxpayers, the guide explains that typically only domestic-source income is subject to tax and a flat rate of 19 percent applies.

Residents are subject to the standard personal income tax regime, which features rates ranging from six percent to 40 percent, but may access certain tax deductions.

Finally, the guidebook explains pertinent changes to Korea’s tax regime since last year’s guidebook that affect compliance obligations – first, relating to the change of a trade, for VAT-registered persons, and, second, a waiver from filing obligations for foreign, resident taxpayers who have made an investment in Korea but have been resident in Korea for not more than five years in the past 10.