South Korea: Living There - Tax Issues
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Living there
INDIVIDUAL TAXATION
Residents are liable to pay tax on their worldwide income.
INCOME TAX
Income in South Korea is subject to schedular or global taxation. Global taxation is applicable to interest and dividends, real estate rental income, business income, wages and salaries, temporary property income, pension income, and other income.
Taxable income is computed as gross income less all allowable deductions and allowances. Income is then aggregated and taxed at progressive rates.
INCOME TAX RATES |
|
| TAXABLE INCOME , KRW (US$) | MARGINAL TAX RATE |
| Up to 10 million (US$10,562) | 9% |
| 10 million - 40 million (US$42,248) | 18% on band over US$10,562 |
| 40 million - 80 million (US$84,497) | 27% on band over US$42,248 |
| Over 80 million (US$84,497) | 36% on all income over US$84,497 |
| Source: Global Property Guide | |
Under schedular taxation, income such as capital gains, retirement income, and timber income are taxed separately at varying particular rates.
Deductions
Residents are entitled to deduct KRW1 million (US$947) multiplied by the number of persons in the taxpayer’s family. Qualified family members are as follows:
- The resident taxpayer himself
- A spouse earning less than KRW1 million (US$947) per year
- A lineal ascendant dependant over 60 years old for males and over 55 years old for females
- A lineal descendant up to 20 years old
- A handicapped lineal descendant
- A sibling less than 20 years old or over 60 years old
- Other members of the household supported by the taxpayer
Additional deductions are given for the following special cases. The following deductions are given wherein the taxpayer, his spouse, or one of his dependents are:
- Over 65 years old: KRW1 million (US$1,056)
- Over 70 years old: KRW1.5 million (US$1,584)
- Handicapped: KRW2 million (US$2,112)
- Married woman having her spouse: KRW500,000 (US$499)
- Head of the family with dependents but without a spouse: KRW500,000 (US$528)
- For every lineal descendant under 6 years old: KRW1 million (US$1,056)
A taxpayer can avail of the standard deduction of KRW800,000 (US$845) instead of claiming the deductions enumerated above.
Capital Gains Tax
Capital gains realized from selling a resident’s primary residence are not taxed. To qualify for this exemption, the property must be held by the owner for at least three years and must not be luxurious or not more than KRW600 million won (US$598,743).
This exemption is extended to a second house in cases where the taxpayer acquires a rural house located in areas other than Seoul and Kyunggi-do by inheritance or for the purpose of returning to a farming lifestyle.
PROPERTY TAX
Property Tax
Annual property taxes are 0.3%-0.7%, depending on location, type of building, etc. To counter speculation, the government proposes to raise sharply the property tax base of apartments in designated speculation areas.
South Korea - more data and information
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