Like Korean nationals, foreigners with earned income in Korea also must complete electronic year-end tax settlements by the end of next month.

The National Tax Service said on Tuesday that foreign workers with earned income in Korea last year must settle year-end taxes by February 28 regardless of their nationality and length of stay. Non-Korean workers, like Korean workers, should collect documentary evidence for income deduction and tax credit and submit them to their employers, who will then calculate tax payable for the year-end tax settlement and issue Receipt for Wage and Salary Income Tax Withholding. The period for tax settlement will begin on January 20.

Employers will have to submit Report on the Status of Withholding and Statement on Wage and Salary Payment to National Tax Service by March 11.

Foreign workers, meanwhile, will not be eligible to receive income deduction and tax credit in some areas depending on their residency status. Residents will not be allowed to claim deductions and tax credits for housing funds, home purchase savings, and tax credit for monthly rent. Non-residents will not be allowed to claim for most of the deductions but basic deductions for self only and pension contribution deductions.

Foreign employees will be subject to special taxation applied for taxable period ending within five years from the first day of providing work in Korea. The amount calculated by multiplying 19 percent to the relevant wage and salary income can be imposed as the tax amount, the NTS said. Foreign engineers that meet certain conditions will also be eligible for 50 percent tax exemption from income tax for a period of two years.

Starting this year, people in religious community will also be allowed to include income provided by religious groups in their year-end tax settlement report. Foreign residents in Korea engaged in religious work should file year-end tax settlements, like Korean residents. They should choose “other income” as to “wage and salary” if they wish to receive some deductions or tax credits.

Foreigners can find more information on the National Tax Service’s English website: www.nts.go.kr/eng/.

By Lee Yu-sup and Lee Eun-joo

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]