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Direct Taxes |
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Income tax |
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 A person who has a domicile or has resided in Korea
for one year or longer is subject to income tax on all income derived from
sources both within and outside Korea. Korean public officials, directors
and personnel engaged in overseas service on behalf of an employer who is
a Korean resident, or a domestic company are deemed to be residents of Korea.
A person who is not a resident of Korea is deemed a non-resident and is
subject to income tax only on income derived from sources within Korea. |
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.Global and scheduler income
taxation
Income derived by residents and nonresidents is subject to global and scheduler
taxation.
Under global taxation, real estate rental income, business income, wages
and salaries, temporary property income, pension income, and “other income”are
aggregated and taxedp rogressively.
Interest and dividends were taxed globally until 1997, after which they
were temporarily excludedfrom global taxation. A combined income of dividend
and interest exceeding 40 million won earned by a married couple is subject
to global taxation. Currently, interests and dividends are subject to a
withholding tax of 15 percent.
A resident who has global income, retirement income, capital gains, or timber
income during the applicable taxable period is required to file a return
on the respective tax base between May 1 and May 31 of the following year.
.Corporate income
Companies that are subject to corporation tax in Korea can be classified
into two types: domestic or foreign and for profit or non-profit. For taxation
purposes, a company with its head or main office in Korea is deemed to be
a domestic company and is liable to tax on its worldwide income. Otherwise,
it is considered to be a foreign company, and the tax liability of foreign
companies is limited to Korean-source income. |
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Indirect Taxes |
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Value-added tax |
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A person who engages in the supply
of goods or services independently in the course of business, whether or
not for profit, is liable to value-added tax.
Taxpayers include individuals, corporations, national and local governments,
associations of local authorities, any bodiesof persons, and unincorporated
foundations of any other organizations are generally subject to valueadded
tax.
The current rate of value-added tax is 10 percent. Where the tax rate is
applicable on the VAT exclusive price, a 10 percent rate is applied.
However, in the case of application on the VAT inclusiveprice of the retailers,
the tax rate becomes 10/110.
Where VAT is not separately collected at the time of transaction, the tax
rate of 10/110 is applicable on the VAT inclusive price. |
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Any person who falls under one of the categories
below is liable to pay special excise tax.
- A person who manufactures or imports taxable goods (for example, air
conditioners, slot machines, luxury furniture/carpet, or oil products)
- A person who sells Class 4 taxable goods (for example, jewelry - excluding
diamonds for industrial use, unprocessed original stones - pearl, tortoise-shell,
coral, amber and their products)
- Operators of such taxable places as horse race courses, bicycle race
courses, slot machine parlors, golf courses, casinos, nightclubs, etc.
As for tax rates, 20 percent shall be levied on
such items as jewelry, precious metal products, expensive fur products,
luxury cameras and golf products and yachts; 15 percent on electric refrigerators,
electric washing machines, color TVs and coffee; and 10 percent on drinks
and “health products.” |
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Customs duties |
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Customs duties are levied on items
that are shipped to other countries or imported. |
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Local taxes |
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Local taxes are levied on local
residents or business establishments to meet financial requirements of local
self-governing bodies. |
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Acquisition tax |
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This tax is levied on persons acquiring real estate, motor vehicles, heavy equipment, trees, boats, aircraft, golf memberships, time-sharing memberships, and health club memberships through purchase or inheritance.
As for tax rates, 2 percent of the value of the acquired property is imposed, but 10 percent is imposed in the case of acquiring a villa, golf course, high-end house, luxury entertainment place or luxury boat.
Any person acquiring these items is required to notify the local government within 30 days after acquisition and pay taxes on a voluntary basis. Otherwise, a surcharge of 20 percent will be imposed. Anyone who resells such items without paying tax, will be subject to a heavier taxation of 80 percent. |
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Property tax |
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This tax is levied on buildings,
vessels, aircraft and heavy equipment. Tax rates differ according to the
type of property. |
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Inhabitant tax |
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There are two types of inhabitant
tax; for individuals with their own domicile and for corporations with their
offices in a city or county (including individuals having an office or a
place of business larger than a specific size, i.e., whose gross receipts
are 48 million won or more in the immediately preceding calendar year).
Individuals are required to pay 1,000 won to 4,500 won a year, depending
on where they reside.
For example, persons living in a city with more than 5 million people shall
pay the highest amount of 4,500 won. Corporations shall pay 5,000~500,000
won.
Corporations with capital of more than 10 billion won and employing over
100 people shall pay 500,000 won.
The following are exempt from per capita inhabitant tax:
State and local autonomous bodies, foreign government agencies and international
organizations, and foreign personnel working in foreign government agencies
or international organizations based on reciprocity.
The collectible minimum for inhabitant tax is 2,000 won. |
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Registration tax |
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Persons who register particulars
concerning acquisition, creation, transfer, alteration, or lapse of property
rights, or other titles in the official book are liable to pay registration
tax. |
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Automobile tax |
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The automobile tax differs based
on the vehicle’s type, size and usage.
For more information, access the homepage of the National Tax Service
< www.nts.go.kr > |
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