As the number of foreign workers working in Korea increases, interest in wage and tax issues is also increasing.
In particular, Korean tax law allows foreign workers to choose between special provisions (single tax rate) and general taxation (progressive tax rate), so understanding this accurately is key to tax savings.
Do foreign workers also have to pay taxes?
Foreigners who work and receive wages in Korea are, in principle, required to pay income tax under Korean tax law, regardless of nationality or length of stay. However, to attract talented foreign workers, the Korean government has established "special provisions" that apply only to foreigners.
This post provides clear information on tax-saving strategies for foreign workers to minimize their tax burden and the criteria for determining residency.
Resident vs. Non-Resident Distinction
Before calculating your taxes, the first thing to check is your residency status . This is determined by your "duration of stay" and "place of residence," not your visa type.
- Resident: An individual who has an address in the country or has resided in the country for 183 days or more .
- Benefits: You are eligible for most income deductions and tax credits (e.g., medical expenses, education expenses), just like other Korean workers. (However, some items, such as the housing fund deduction, may be excluded.)
- Non-resident: An individual who is not a resident.
- Restrictions: Only very limited deductions are permitted, including the basic deduction (KRW 1.5 million) and pension insurance premium deductions. Special deductions, such as medical expenses or education expenses, are not permitted.
Choosing a Tax Method: Choose the One That's Right for You
Foreign workers can file their year-end tax settlement by choosing the method with the lower tax amount among the following two methods.
A. General taxation (progressive tax rates applied)
- Method: Calculated in the same way as for Korean workers.
- Tax rate: Progressive tax rate of 6% to 45% applied depending on tax base bracket.
- Features: It is advantageous when there are many dependents or when there are many items to deduct due to high medical expenses/education expenses/donation expenses.
B. Single tax rate special provision for foreign workers (19%)
- Method: Calculate tax by multiplying your annual gross salary, including non-taxable income, by a single tax rate of 19%.
- Deduction: No income deduction or tax credit provisions apply. (0 won)
- Period of application: Applicable for 20 years from the date of first employment in the country.
- Features: Beneficial for single foreigners with very high annual salaries that put them in the highest tax bracket (45%) or with few dependents and deductions.
If you choose a single tax rate (19%), please note that non-taxable income (meal expenses, car allowances, etc.) is also included in the calculation of taxable income.
Year-end tax settlement schedule and procedures
The year-end tax settlement schedule for foreign workers is the same as for domestic workers.
- Data verification (mid-January): Check income and tax deduction proof documents on the National Tax Service's Hometax 'Year-End Settlement Simplification Service'.
- Submission of documents (by the end of February): Submit the income tax deduction report and supporting documents to the company (withholding agent).
- If you wish to apply for a single tax rate: You must also submit the ‘Application for Single Tax Rate for Foreign Workers’.
- Tax Confirmation and Refund/Collection (March): After the final tax amount is confirmed by the company, it is reflected in your salary and you can receive a refund or make additional payments.
Jobploy's proposal
Calculating taxes for foreign workers is a battle between "How many deductions do I have?" and "How much is my annual salary?"
- What if you have a high salary and live alone? 👉 Try calculating the 19% single tax rate.
- If you live with family and spend a lot on medical and education expenses, the general progressive tax rate is likely to be more advantageous.
Attached related materials
💾Download the application form for the single tax rate for foreign workers
💾 Year-end tax settlement information for foreign workers based on 25 years
Jobploy will continue to provide useful information to all workers, both domestically and internationally, to ensure they can exercise their rights and engage in rational economic activities.
If you have any questions about taxes, please feel free to contact us anytime!