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Various taxes in Korea include real estate acquisition tax, registration tax, resident's tax, vehicle tax, education tax, and property tax. Please contact the tax office for more details.
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.
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 taxed progressively. Interest and dividends were taxed globally until 1997, after which they were temporarily excluded from global taxation. A combined income of dividend and interest exceeding 40 million won earned by a married couple is subject to global taxation. Currently, interest 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.
Companies that are subject to corporate 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 income derived from Korea.
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 pay value-added tax. Taxpayers including individuals, corporations, national and local governments, associations of local authorities, any bodies of persons and unincorporated foundations of any other organizations are generally subject to the value added tax (VAT). 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 inclusive price 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.
Any person who falls under one of the categories below is liable to pay special excise tax.
Customs duties are levied on items that are shipped to other countries or imported.
Local taxes are levied on local residents or business establishments to meet financial requirements of local self-governing bodies.
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.
This tax is levied on buildings, vessels, aircraft and heavy equipment. Tax rates differ according to the type of property
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.
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 the registration tax.
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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