Year-end tax filing begins for 600,000 foreign workers in Korea

Tax paid by foreign wage-earners declined in 2023, despite rising worker numbers

(123rf)

Foreign workers employed by companies in Korea need to settle year-end taxes in February just like Korean workers, the National Tax Service said Monday, pointing out that a deadline to register for a simplified process was just nine days away.

All foreign employees in Korea, excluding daily workers, should file their year-end taxes for last year's wages and salaries before the day they receive their February pay packet. Those not receiving pay in February have until the end of the month to complete the filing.

But workers wishing to settle through the "one-stop service," a simplified document submission service, must consent to information provision on Hometax by Jan. 15.

In principle, the tax settlement process mirrors that of Korean employees, including timelines, deduction items and calculation methods.

However, some distinct provisions exist, including a 19 percent special flat tax rate that benefits high earners. Foreign workers can choose this rate instead of the basic rate, for up to 20 years from the start of their employment in Korea.

There are other benefits exclusive to some foreign taxpayers, including a 10-year tax deduction of 50 percent for foreign engineers and exemptions for teachers and professors who are citizens of jurisdictions with tax treaties with Korea.

But foreign nationals are ineligible for home-purchase savings deductions, even if they are registered as residents, as they cannot be recognized as "heads of household" under the Resident Registration Act.

For more details, foreigners can access the NTS' English website to download the "Easy Guide" English guidebook, as well as manuals available in English, Chinese and Vietnamese. An English hotline is available at 1588-0560.

Meanwhile, the number of taxpaying foreign workers in Korea recorded 611,000 in 2023, surging 12.3 percent on-year and reaching a five-year high. This also marked the first year of recovery to pre-pandemic levels, after a drop from 586,000 in 2019 to 505,000 in 2021, followed by a rebound to 544,000 in 2022.

By nationality, Chinese workers made up the largest share at 21.1 percent, followed by Vietnamese at 8.5 percent and Nepalese at 7.4 percent.

However, the total taxes reported by foreign employees decreased to 1.16 trillion won ($788.7 million) in 2023 from 1.19 trillion won in 2022, marking the first decline in five years. Based on the settlement, the average annual salary for foreign workers in 2023 was 32.78 million won.