Taxation of your income
Income tax and social contributions in Korea
This article provides information concerning income taxes, social security taxes and contribution to the national pension system in South Korea. Also, you will find info on self-employment.
Income tax
Personal income tax rates may range anywhere from 8% to 35%. There is also an overall state income tax rate of 10% for all wage earners and the local government has the power to adjust the tax rate down to 5% and up to 15%. Although personal income tax rates in Korea are high, corporate tax rates are relatively low. (These numbers were collected in 2007 and are subject to change).
Social security taxes
If you are hired as an employee in Korea, you and your employer pay Social Security taxes only to Korea and will be covered by Korean government. However, if you are sent from a company within your home country to work in Korea for less than five years, you will not be covered by Korea but are still covered by your home country.
Although you may be exempt from paying Social Security taxes to Korea, it is advised that you and your employer make separate arrangements for coverage in case of a work-related accident. To avoid paying social security taxes to more than one country at any time, make sure to obtain a Certificate of Coverage from the Korean National Pension Service or from your country of residence.
Pension contributions and eligibility
In order to offset Korea's budget deficits, the government has attempted to install a "pay more, receive less" program. Although many are fighting the increase in the national health insurance premiums, changes are more likely to happen than not. The premium is split equally between employee and employer so the changes affect both sides.
The current national pension contribution is at 5.5% of one's income and is expected to increase to 6.8% in 2008 and reach a high of 8.5% in 2018. Unlike social security taxes, payment to the national pension plan is not optional if you work in Korea and are between the ages of 18 and 60. (These numbers were collected in 2007 and are subject to change).
Self-employment
Those who are self-employed will normally be covered by the country in which they are residing. This means you would pay social security taxes and contribute to the pension plan in Korea.
Also in this section
- Jobs: Employment possibilities in South Korea
- Finding a Job: Where to look for Jobs in South Korea
- Working in South Korea: Work ethics, salaries and holidays
- Labor regulations & social security : Unemployment, illness, maternity etc.
- Taxation of your income: Income tax and social contributions in Korea
- Employment contracts: What you need to know
- Applying for a job: Cover letter, CV and job interviews