Taxation

Korea, like most countries, has both national and local taxes. If you are living and working in Korea, you are subject to Korean income taxes. Most purchases are tax free or have no added tax, however, you will pay a value-added tax on processed food products, on luxury items, on restaurant bills over a certain value and/or in hotels. 

Groceries: If you look at the itemized receipt you’ll notice that there are two totals at the end. The subtotal for taxeable items (foods that have been processed in some way) usually appears first, followed by the 10% tax and then by the subtotal of non-taxeable items. 

Restaurants: You will usually not pay any tax at Korean food restaurants, unless they are high end expensive ones. Most foreign, especially Western ones (American, Italian, French cuisine, etc) are obligated to add 10% VAT to your bill. Some will also add a 3-5% service tax that ostensibly is given to staff. Hotel restaurants/bars charge what is called ‘plus plus’ referring to the 10% VAT and the 10% service tax. Since the latter is applied to the total charge plus VAT, the tax ends up being about 21% of the bill. 

Value Added Tax: Most businesses and service providers charge a 10% VAT on their products or services. Sometimes the tax is included in the price, but often it is not. Price quotes do not always clarify this. 

Air fare: When quoting air fares, travel agents generally say “X won + tax”. If you have for the tax amount, they will give you an approximate figure since the amount changes from week to week, and apparently from airline to airline. The sum includes a fuel surcharge and airport tax, so it can sometimes end up being almost a quarter of the air fare. 

Income tax: Everyone is supposed to pay income tax, including foreign workers and the appropriate deductions will be made from your paycheck. You may want to make sure you receive a print copy of your salary and tax payments and keep them in your records until you leave Korea.   

For details on income taxes for foreign employees, go to this link on our site: http://www.korea4expats.com/article-income-taxes.html

For more on Korea’s taxation system visit http://www.nta.go.kr.