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  • 2010 (2009 )

    Individual Income Tax and Benefit Guidefor Foreigners 2010

    (For use in preparing 2009 returns)

  • 2010(2009 )

    2010. 5

    National Tax Service

  • Individual Income Tax and Benefit Guidefor Foreigners 2010

    (For use in preparing 2009 returns)

    May, 2010

    National Tax Service

  • .

    , .

    , , , , .

    2010 , .

    2010 , .

    2010 5

  • PREFACE

    The National Tax Service of Korea would like to express our deep appreciation

    for your faithful tax compliance and the contribution you made to the

    development of the Korean economy.

    As Korea's economy widely opens its door to foreigners, the number of foreigners

    working or operating business in Korea has reached over a million.

    In endeavoring to provide them more friendly tax services, the NTS has

    implemented various customized services for foreign taxpayers such as Help-line

    for Foreigners, Foreign Taxpayer Service Desk in district tax offices, our

    English web-site, and Foreign Taxpayers' Guide to Korean Taxes which helps

    foreign taxpayers understand their tax filing and payment obligations.

    This year's guide offers a wide range of information including explanation of

    major changes in the Korean tax law in both Korean and English languages so

    that it can be of use to foreign taxpayers as well as Koreans.

    We sincerely hope that this Guide will be of interest and benefit to all foreign

    taxpayers for their 2010 Individual Income Tax filing. The NTS will continue

    seeking ways to better serve our valuable customers by creating a business-

    friendly tax administrative environment.

    May, 2010

    Yun Jun ParkAssistant Commissioner for International Taxation

    National Tax Service

  • 2010

    2009 / 801. 802. 82

    2009 / 841. ? 842. 2009 ? 863. ? 884. ? 905. ? 926. ? 927. ? 948. 969. 98

    / 1081. 1082. 108

    / 1101. 1102. 1183. 122

    / 1261. 1262. 1303. 152

  • CONTENTS

    What are Major Changes for 2010 ?

    Part Introduction

    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

    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

    Rate System" 99

    Part Outline of Individual Income Tax System

    Taxpayer / 1091. Resident 1092. Non-Resident 109

    Income / 1111. Taxable Income 1112. Non-taxable Income 1193. Tax-exempt Income 123

    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

  • / 1581. 1582. 158

    / 1641. 1642. 166

    / 1721. 1722. 1723. 1744. 174

    / 1761. 1762. 1763. 1764. 176

    / 1781. 1782. 178

    / 1821. 1822. 1823. 1824. 1845. 1846. 184

    / 1861. 1862. 186

    / 1901. 1902. 1903. 1984. 202

  • Tax Rates and Tax Credits / 1591. Tax Rates Structure 1592. Tax Credits 159

    Return and Payment / 1651. Tax Return 1652. Tax Payments 167

    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

    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

    Tax Withholding / 1791. Obligation of Tax Withholding 1792. Rates of Withholding 179

    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

    Bookkeeping and Submitting payment records / 1871. Bookkeeping 1872. Submitting payment records 187

    Part Individual Income Tax System for Non-resident

    Taxation on Non-resident / 1911. General 1912. Income from Domestic Sources 1913. Domestic Business Place 1994. Tax Withholding on Non-resident 203

  • / 2041. 2042. 2043. 2064. 208

    / 2121. ( ) 212

    / 230

    40 (1) / 236 40 (4) / 290

    1. 3002. 3023. 3084. 3105. 3126. . 312

  • Taxation on Wage & Salary Income of Non-resident / 2051. Non-resident with Class A Wage & Salary Income Only 2052. Non-resident with Class B Wage & Salary Income Only 2053. Non-resident with Class A and Class B Wage & Salary Income 2074. Taxation on Wage & Salary Income Flow of Non-resident 209

    Part Practice & FAQ

    Practice in Calculating / 2131. Example : Lecturer (Wage & Salary Income + Other Income) 213

    Frequently Asked Question / 231

    Part Forms

    Individual Income Tax Return From 40-1 / 237

    Individual Income Tax Return From 40-4 / 291

    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

  • 14 2010

    2010 2009 .

    1. ( 47 50 55)

    1.

    2.

    081,200 8%4,600 17%8,800 26%8,800 35%

    2%p

    09 101,200 6% 6%4,600 16% 15%8,800 25% 24%8,800 35% 33%

    - 1 100

    - 1 150

    - 500 : 100% - 5001500 : 50% - 1,5003,000 : 15% - 3,0004,500 : 10% - 4,500 : 5%

    - 500 : 80% - 5001500 : 50% - 1,5003,000 : 15% - 3,0004,500 : 10% - 4,500 : 5%

    3. 2009.1.1.

  • What are Major Changes for 2010? 15

    What are major changes for 2010 ? This section summarizes important tax changes that took effect in 2009.

    1. Modification of the Global Income Tax Rate and Deductions

    (Article 47 Article 50 Article 55 of the Income Tax Act)1. Purpose of Revision To stimulate the economy and encourage consumption through

    reducing the burden of tax liabilities on people in the middle and lower income bracket

    Advantageous taxation structure for taxpayers who have more dependants

    2. ChangesBefore Now

    Tax Rate

    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%

    Basic Deduction - 1mio KRW per year per person qualifying

    for basic deduction Deduction for Wage and Salary Income - 5 million won or less : 100% - More than 5 million won but not more

    than 15 million won : 50% - More than 15 million won but not more

    than 30 million won : 15% - More than 30 million won but not more

    than 45 million won : 10% - More than 45 million won : 5%

    Down 2% for each income bracket

    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%

    Basic Deduction - 1.5mio KRW per year per person qualifying

    for basic deduction Deduction for Wage and Salary Income - 5 million won or less : 80% - More than 5 million won but not more than

    15 million won : 50% - More than 15 million won but not more

    than 30 million won : 15% - More than 30 million won but not more

    than 45 million won : 10% - More than 45 million won : 5%

    3. Date of Enforcement Effective for income incurred on and after Jan. 1, 2009

  • 16 2010

    2.

    ( 51)

    1. 60

    08 65

    2.

    ( 100 )

    - 60( 55) - 20 60 - 20

    - 60

    - 6569 : 100

    - 70 : 150

    - 6569 :

    - 70 : 100

    3. 2009.1.1.

  • What are Major Changes for 2010? 17

    2. Adjustment in Personal Deductions

    (Article 51 of the Income Tax Act)

    1. Purpose of Revision Age of ascendants eligible for the basic deduction is 60 years old or

    more for both men and women

    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.

    2. Changes Before Now

    Dependent family members (with an annual

    income of 1 million KRW or less) eligible for basic deductions :

    - Linear ascendant aged 60 (or 55 for women) or over

    - Siblings aged 20 or under, or 60 or over - Linear descendant and adopted child aged

    20 or under

    Additional deductions for the aged - When dependents qualifying for basic

    deductions are aged 65~69 : Additional deduction of 1 million KRW per year

    - When dependents qualifying for basic deductions are aged 70 or