Korea Payroll Compliance Map

Email: sel4ww@evershinecpa.com
or
Contact us by WeChat or Skype or WhatsApp in the day-work-time of China (GMT+8)
The Engaging Manager from Headquarter
Ms. Cindy Victoria Speaks English, and Chinese.
WhatsApp +886-989-808-249
wechatid: victoria141193

WWT – South Korea Payroll Income Tax Deduction

WWT-KR-01 WWT Tax Entity

Question from client:
Is the South Korea salary income tax levied in national or locals? Or both national and locals?
Are the national and local personal income tax that levied separately? Or levied together?
What is the standard withholding tax rate?

Answer from Evershine RD:
Salary tax is conducted at both national and local levels, although both categories of income taxes are assessed uniformly throughout the country by the national government.
For salary withholding tax rate, refer to Simplified Earned Income Tax Table (related to Article 189, Paragraph 1).
Personal income tax (PIT) rates:

Besides the above PIT, there is also a local income tax that is assessed at a rate of 10% of the PIT rates.
Local income tax rates:

WWT-KR-02 Registration

Question from client:
The South Korea salary income tax collection is under the jurisdiction of which government unit?
The registration of the South Korea salary income tax collection status, that is, the application procedure for the employer withholding certificate number, paper certificate number application, or online account application? Website? Employer withholding certificate
What is the advance certificate number of the number?
Do you need to use the industrial and commercial certificate e-card to apply?

Answer from Evershine RD:
Salary taxes are coordinated through South Korea’s National Tax Service, which is a division of the Ministry of Strategy and Finance.
PIT is paid to the National Tax Service (NTS).
Local income tax is paid to the city or the province that is the domicile of the taxpayer.
Employers and employees are required to register with the chief of their jurisdictional tax office, which is an extension of the National Tax Service.
Before the salary income tax is withheld, both the employer and the employee must apply for the employer certificate number and the personal income tax certificate number.

Employer Wage Withholding Tax ID Number (from National Tax Services) + each Employee Digital Certification of Identification (from Home Tax Services).
Employers must apply for an employer ID number at the National Tax Service where the company is located.
Each employee must apply for a “Digital Certification of Identification” number at Home Tax Service.
Employers must register their businesses with their local tax office using a business registration application (available at their tax office); a copy of their “business permit” or “certificate of business declaration;” a copy of their lease agreement; a partnership agreement (if jointly operated); documents certifying South Korean residency or non-residency and a copy of passport and visa documents.
No fee applies during this process.
Employees using the Home Tax Service online payment method must register on the service’s website by submitting an application and a “digital certification of identification.”

WWT-KR-03 WWT Order (OD)

Question from client:
What is the order of South Korea salary income tax withholding declaration (information flow determines tax base) and payment (fund flow)?
Pay first and then declare?
Report first and then pays?
At the same time as the declaration and payment?

Answer from Evershine RD:
Deposit First (DF): Make monthly payments then file the required forms.

WWT-KR-04 Mechanism of Filing (MOF)

Question from client:
South Korea’ salary income tax withholding declaration (information flow determines the tax base)
What is the method of account return?
Reporting cycle: every month? Every bimonthly? Every season? every half year? Per year?
Electronic filing? Manual filing? Electronic filing and manual filing coexist?
If electronic filing is possible: Web site URL?

Answer from Evershine RD:
Monthly returns are due by the 10th of the month following the month for which taxes are withheld.
After the taxable year, employees are required to file income taxes—the Year-End Tax Adjustment—to make necessary changes that might qualify them for a refund, such as tax deductions for childcare.
Taxes may be filed either using the postal system or electronically through the Home Tax Service, which is a South Korean-only website.
In addition, employers are required to declare the accumulated annual wages and accumulated tax withholding to the State Taxation Bureau by the end of February next year.

WWT-KR-05 Mechanism of Payment (MOP)

Question from client:
What is the funding method for the South Korea salary income tax withholding payment (funding flow)?
Payment cycle: M per month? B every bimonthly? Q every season? H every six months? A every year?
Automatically authorize deduction of ACH (that is, take the initiative of the recipient)?
Electronic remittance to EFT (that is, the payer takes the initiative)?
Bank counter payment OCT?
Or the above methods coexist?

Answer from Evershine RD:
Monthly payments are due by the 10th of the month following the month for which taxes are withheld.
Tax payments, if not withheld already, can be paid at post offices, banks, by phone banking, or online using the Home Tax Service.

BNF – Deduction of Employee Social Welfare

BNF-KR-01 BNF Entity Question from client:

Question from client:
South Korea’s social insurance, medical insurance, pensions, and other employees social welfare levy, is it national? Is it locals?
Or is there a national plus local? If there are national and locals, are they levied separately?
Or levied together? What is the withholding tax rate?

Answer from Evershine RD:
South Korea Social Insurance is levied at national level.
Employers must remit all social insurance taxes and applicable fees to the National Health Insurance Service (NHIS).

BNF-KR-02 Registration

Question from client:
Social Security Certificate Number? What is the name of the government agency in charge of social insurance?
Medical insurance certificate number? What is the name of the government agency in charge of medical insurance?
Pension certificate number? The name of the government agency in charge of pensions?
How to apply for the social welfare certificate number for employees in the country? Paper certificate number application? Or online account application? Website? Need to use the industrial and commercial certificate electronic card to apply?
Are the above three certificate numbers unified or separate?

Answer from Evershine RD:

Employees have the sole responsibility to apply for the National Pension program.
Workers must submit a “business place declaration form” and a “business place admission applicant qualification acquisition declaration form” no later than the 15th day following the month in which program eligibility occurs (the date of full employment).

Employees solely apply for National Health Insurance by submitting a “business place application notice” and “company applicant qualification acquisition declaration form” no later than 14 days following new employment.
NHI cards must be applied for by employees through the NHI central office using Annexed Document Form No. 27.

For Employment Insurance and Industrial Accident Compensation Insurance, employees must present their employer with their insurance application forms and their insured qualification acquisition forms, which the employer then submits to those programs on behalf of those employees.
These mandatory programs must be applied for no later than 14 days following eligibility under the new employer.

BNF-KR-03 BNF Order (OD) 

Question from client:
What is the order of the withholding declaration of social welfare for South Korean employees (information flow determines the tax base) and payment (fund flow)?
Pay first and then declare? Report first and then pays? At the same time as the declaration and payment?

Answer from Evershine RD:

Same Period: Report and pay at the same time.

BNF-KR-04 Mechanism of Filing (MOF)

Question from client:
What is the method of reporting for withholding of social benefits for South Korean employees (information flow determines the tax base)?
Reporting cycle: every month? Every bimonthly? Every season? Every half year? Per year?
Electronic filing? Manual filing? Electronic filing and manual filing coexist?
If electronic filing is possible: Web site URL?

Answer from Evershine RD:
Among the health insurance, national pension, employment insurance, and industrial accident insurance tasks that were separately performed by the three social insurance corporations (National Health Insurance Corporation, National Pension Service, and Labor Welfare Corporation), the National Health Insurance Corporation is responsible for the collection of similar and highly redundant premiums. It is an integrated system.

The National Pension Insurance premiums received by the National Health Insurance Corporation are stored in the National Pension Fund for pension beneficiaries and are managed separately as at present.
Employers must remit all social insurance taxes and applicable fees to the National Health Insurance Service (NHIS).
Employers must remit to the NHIS during each pay period for employees.
Monthly filings are due by the 10th of the month following the month for which social insurances withheld.

BNF-KR-05 Mechanism of Payment (MOP)

Question from client:
What is the funding method for South Korean employee social welfare withholding contributions (funds flow)?
Payment cycle: M per month? B every bimonthly? Q every season? H every six months? A every year?
Automatically authorize deduction of ACH (that is, take the initiative of the recipient)?
Electronic remittance to EFT (that is, the payer takes the initiative)?
Bank counter payment OCT?
Or the above methods coexist?

Answer from Evershine RD:
The payment deadline for pension insurance premiums is the 10th of the month following the month.
Employers must remit all social insurance taxes and applicable fees to the National Health Insurance Service (NHIS).
Employers must remit to the NHIS during each pay period for employees.
Monthly payments are due by the 10th of the month following the month for which social insurances withheld.

Payment method:

1. Direct debit – Visit/ wireline all domestic banks, post offices. Withdrawal on the 25^th.
2. Pay at the counter by bill – Shinhan Bank, Woori Bank, or 24-hour convenience stores (CU, GS25, etc.) using the 2D code printed on the bill
3. Payment of virtual account number – deposit-only account: Printed on the monthly bill
4. ATMs of financial institutions
5. Internet payment at Giro website (www.giro.or.kr)
6. Internet banking- sign up for internet banking membership at a financial institution, pay insurance premiums on the website (Utilities – National Pension (Return Payment/ Additional Insurance Premium))
7. Credit card payment

Please be aware of below Warning:
The above contents are digested by Evershine R&D and Education Center in October 2021.
Regulations might be changed as time goes forward and different scenarios will adopt different options.
Before choosing options, please contact us or consult with your trusted professionals in this area.

Contact Us

Seoul Evershine BPO Service Limited Corp.
E-mail: sel4ww@evershinecpa.com
or
Contact us by Skype or WhatsApp in the day-work-time of China  (GMT+8)
The Engaging Manager from Headquarter
Project Manager Cindy Victoria Speak in Bahasa, English, and Chinese.
Whats App +886-989-808-249
wechatid: victoria141193

Additional Information

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(version: 2024/07)
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