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- Basic Facts
- Statutory Labor Requirements
- Employee Income Tax In Brazil
- Employee Social Security In Brazil
- Deductible Expenses In Brazil
- Immigration In Brazil
- Value Added Tax (VAT) In Brazil
- Withholding Tax In Brazil
- Terminating Employee In Brazil
- Statutory Employee Benefits In Brazil
- Payroll In Brazil
- Ease Of Doing Business In Brazil
- Business Opportunities In Brazil Section
- Why Use Global Expansion To Hire Your Employees In Brazil
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BASIC COUNTRY FACTS
Republic of Korea
Seoul Special City
- Korean
- English
- Chinese
- Japanese
51.64 million
South Korean won
.kr
+82
South Korean won
STATUTORY LABOR REQUIREMENTS
Probation Period
- The LSA and other labor laws do not limit the duration of a probationary period.
- However, most Korean companies set a probationary period of between three and six months.
Annual Leave
- Companies with full-time salaried employees are legally required to provide 15 days of paid annual leave after one year of service with the company.
- An additional vacation day is paid for each two years of service thereafter.
- The statutory vacation days earned per year are capped at 25 days.
Public Holidays
- New Year's Day (1st January)
- Seotdal Geumeum (24th January)
- Korean New Year
- Independence Day (1st March)
- March 1st Movement Day (2nd March)
- Buddha's Birthday (30th April)
- Children's Day (5th May)
- Memorial Day (6th June)
- National Liberation Day of Korea (15th August)
- Chuseok (30th September to 2nd October)
- National Foundation Day (3rd October)
- Hangul Day (9th October)
- Christmas Day (25th December)
Maternity Leave
- Female employees are entitled to 90 days of maternity leave.
- The start date can be agreed to by the employer and the employee, however 45 consecutive days of leave must be taken after the birth.
- The company or Employment Insurance pays for the leave, depending on the size of the company.
Parental Leave
- Parents who have worked for an employer for more than one year may be eligible for parental leave.
-
- Such leave applies to parents whose children are under six years’ old
- Each parent is eligible for up to one year of leave
- Parents cannot take leave at the same time
- The parent is entitled to 40% of his/her monthly income from Employment Insurance
Sick Leave
- There is no legal requirement for employers to provide leave to employees for non-work related illnesses or injuries.
- It is not uncommon, however, for companies to provide paid sick leave whether or not an injury or illness is work related.
- Employers are required under the Labor Standards Act to provide paid leave for work-related illnesses or injuries.
- Sick pay paid to an employee cannot be recovered from the state
Work Hours
- South Korea has lowered its maximum working hours from 68 hours a week to 52 hours.
- Employers must allow employees a minimum of one paid day off per week under the Korean labor law
- Sunday is generally designated as the paid weekly day off.
- Many professional employees work a half-day on Saturday.
Overtime
- Employees are allowed to work a maximum of 12 hours of overtime
- The employer shall pay 1.5 times or more of the ordinary wage for regular overtime work.
Notice Period
- An employer must provide employees with at least 30-days’ notice or they can pay the employee 30 days of salary in lieu of the notice as a dismissal notice allowance.
- Employment contracts often provide for longer notice.
- As a contractual matter, an employee may be entitled to reasonable notice of termination (which can be as much as 12 months) in particular circumstances.
Severance
- A full-time employee is entitled to receive severance pay equal to one month’s salary for each year of employment if they have worked for at least one year and they have worked for more than 15 hours per week or more than 60 hours per month.
- Severance pay is to be paid within two weeks of termination.
13th Month Salary in Brazil
- No
- There is no statutory requirement to pay the 13th or the 14th month salary.
- There is no evidence that bonuses are customary.
INCOME TAX
- Residents are subject to income tax on worldwide income.
- Nonresidents are subject to income tax on Korean source income only.
- A resident is a person who maintains a domicile or residence in Korea for 183 days or longer.
- A foreign national who is a tax resident in Korea and who has resided in Korea for 5 years or less during the preceding 10 years as of the end of the tax year is regarded as a nonpermanent resident and only taxed on Korean-source income unless any of the foreign-source income is paid in Korea or remitted into Korea
- Personal income is divided into the following categories:
-
- Composite Income, which includes employment income (wages, salaries and similar income), interest income, dividends, business income (including rental income), pension income and other income
- Severance income
- Capital gains
|
Annual taxable income (KRW thousands) |
Tax rate |
||
|
Over (column 1) |
Less than |
Tax on column 1 (KRW) |
Marginal tax rate (%) |
|
0 |
12,000 |
0 |
6 |
|
12,000 |
46,000 |
720 |
15 |
|
46,000 |
88,000 |
5,820 |
24 |
|
88,000 |
150,000 |
15,900 |
35 |
|
150,000 |
300,000 |
37,600 |
38 |
|
300,000 |
500,000 |
94,600 |
40 |
|
500,000 |
174,600 |
42 |
|
DEDUCTIBLE EXPENSES
Employment Income Deduction
- The following amount shall be deducted (up to KRW 20 million) from the amount of gross income in the current year to work out the adjusted gross income for salary or wage earners.
|
Amount of gross income (KRW thousands) |
Deduction rate |
||
|
Over (column 1) |
Less than |
Deduction amount on column 1 |
Marginal deduction rate (% on excess) |
|
0 |
5000 |
0 |
70 |
|
5,000 |
15,000 |
3,500 |
40 |
|
15,000 |
45,000 |
7,500 |
15 |
|
45,000 |
100,000 |
12,000 |
5 |
|
100,000 |
14,750 |
2 |
|
Special Tax Credits/ Deductions
- The tax credits amount to KRW 150,000 per child aged 7 or older for up to two children and KRW 300,000 per child for the third and more.
- The tax credit rate is 15% for the donation amount up to KRW 10 million and 30% for the excess.
- The tax credit rate is 15% for education expenses with certain limits (KRW 9 million for each dependent attending university or college, KRW 3 million for each dependent attending preschool to high school, no limit for the taxpayer).
- The tax credit rate is 12% for qualified insurance premiums paid for the following types of insurance (beneficiary can be either the taxpayer or the dependents who have no income for the year): life insurance, life insurance for the handicapped, damage and accident insurance, fire and burglary insurance, and insurance similar thereto.
- The tax credit rate is 15% for medical expenses paid up to KRW 7 million, but only if they exceed 3% of total employment income. However, medical expenses paid for taxpayers aged 65 or older, or the handicapped, are not subject to the KRW 7 million limit for the tax credit.
- The tax credit rate is 12% for the pension premium paid up to KRW 7 million per annum. However, the tax credit rate becomes 15% for the taxpayer whose income is less than KRW 40 million per annum.
Personal Deductions
-
- For the taxpayer: KRW 1.5 million per year. Non-residents of Korea are allowed to claim only the personal deduction for themselves.
- For a spouse who lives with the taxpayer and has an adjusted gross income of less than KRW 1 million per annum: KRW 1.5 million per year.
- For each eligible dependent who lives with the taxpayer and has an adjusted gross income of less than KRW 1 million per annum: KRW 1.5 million per year.
- Handicapped person in the taxpayer's household: KRW 2 million for each handicapped person. The handicapped person may be the taxpayer, spouse, or other dependents.
- Person aged 70 or older: KRW 1 million for each taxpayer, spouse, or dependant aged 70 or older in the taxpayer’s household.
- Female taxpayer: KRW 500,000. To qualify for this additional deduction, the female taxpayer should be a head of household with dependents but no spouse or should be a married woman, and the qualifying female taxpayer should have an annual taxable income of KRW 30 million or less (approximately KRW 40 million in total annual compensation).
- Single parent: KRW 1 million. In case a single parent claims the female taxpayer deduction above, only the single parent deduction of KRW 1 million is allowed.
|
Deductible Expenses |
|
|
Special Tax Credits/ deductions |
|
|
Personal Deductions |
|
IMMIGRATION
Long term Visa (E7 Visa)
- E-7 visa is issued to foreigners participating in activities specially designated by the Ministry of Justice through a contract with public/ private organization in Korea.
- In short E-7 is a general work visa for foreigners in Korea. A foreigner who wishes to work during his or her stay in Korea should hold a sojourn status that allows employment.
- A foreigner who is neither an investor nor a dispatched professional but plan to work in Korea may apply for an E-7 visa.
C-4 Short Term work visa
-
- C-4 Visa is for Short term/Temporary employment.
- This visa is for individuals who are looking for temporary work, which lasts for less than 90 days.
|
Type of Visa/ permit |
Documentation |
Validity |
Eligibility |
|
E-7 Visa |
|
1 years |
Applicants must have: -
|
|
C-4 Visa |
|
90 days |
|
VALUE ADDED TAX
- All corporations and individuals that supply goods or services, regardless of whether for profit or not, are subject to 10% VAT.
- VAT is levied on supplies of goods and services, and on the import of goods into the country.
- Certain basic commodities such as farm products, health services, government transactions and other specified transactions are exempt from VAT.
- Exported goods are zero-rated, i.e. no VAT is applied on the final sale.
|
VAT |
|
|
Standard Rate |
10% |
|
Exempt |
0% |
WITHHOLDING TAX
Dividends
- No withholding tax is levied on dividends paid to a domestic company
- Dividends paid to a resident individual are subject to a 14% withholding tax (15.4% including the local surtax)
- Dividends paid to a nonresident company or individual are subject to a 20% withholding tax (22% including the local surtax)
- The rate for nonresidents may be reduced under a tax treaty
Interest
- Interest on a regular loan paid to a resident or nonresident company or individual is subject to a 20 % withholding tax (22% including the local surtax)
- Interest on bonds is subject to a 14% withholding tax (15.5% including the local surtax)
- The rate for nonresident may be reduced under a tax treaty
Royalties
- No withholding tax is levied on royalties paid to a domestic company
- The domestic individual tax law does not specifically cover the treatment of income from royalties, so royalties paid to resident individuals are subject to withholding tax at various rates, depending on the nature of the income
- Royalties paid to a nonresident company or individual re subject to a 20% withholding tax (22% including the local surtax)
- The rate for nonresidents may be reduced under a tax treaty
Fees for technical services
- No withholding tax is levied on fees for technical services paid to a domestic company
- The domestic individual income tax law does not specifically cover the treatment of income from fees for technical services, so fees paid to resident individuals are subject to withholding tax at various rates depending on the nature of the income
- Services rendered by a nonresident company or individual in Korea generally are classified as personal services income and subject to a 20% withholding tax (22% including the local surtax)
|
Type of Payment |
Residents |
Nonresidents |
||
|
Company |
Individual |
Company |
Individual |
|
|
Dividends |
0% |
14% |
20% |
20% |
|
Interest |
14%/ 20% |
14%/ 20% |
14%/ 20% |
14%/ 20% |
|
Royalties |
0% |
Varies depending on nature of income |
20% |
20% |
|
Technical Service Fee |
0% |
0% |
20% |
20% |
TERMINATION
- The Korean Labor Standards Act mandates that employees under “contract” or “regular employees” may only be terminated for “justifiable reason attributable” to the employee or “urgent managerial necessity” after the completion of the employee’s probationary period.
- The Korean Labor Standards Act places the burden on the employer to prove a “justifiable reason to terminate.”
- According to the Korean Supreme Court, the reason must be “directly attributable to the employee.”
- Stealing, missing an excessive number of days of work, and violating laws related to the job, have all been deemed sufficient to terminate.
- Prior to termination, an attorney should be contacted to allow your company not to terminate an employee in violation of law.
- An employer must provide employees with at least 30-days’ notice or they can pay the employee 30 days of salary in lieu of the notice as a dismissal notice allowance.
- Employment contracts often provide for longer notice.
- As a contractual matter, an employee may be entitled to reasonable notice of termination (which can be as much as 12 months) in particular circumstances.
- A full-time employee is entitled to receive severance pay equal to one month’s salary for each year of employment if they have worked for at least one year and they have worked for more than 15 hours per week or more than 60 hours per month.
- Severance pay is to be paid within two weeks of termination.
STATUTORY BENEFITS
- These are mandatory benefits as postulated by law
- These include annual leave, public holidays, sick leave, maternity leave, parental leave, overtime pay, notice period, and severance pay.
- Statutory benefits also include social security benefits
|
Statutory Benefits |
|
Annual Leave |
|
Public Holidays |
|
Maternity Leave |
|
Parental Leave |
|
Sick Leave (for work related illnesses/injury) |
|
Overtime Pay |
|
Notice Period |
|
Severance Pay |
|
Social Security Benefits |
PAYMENTS AND INVOICING
- PIT will be assessed for one year from 1 January to 31 December.
- If a resident should move out of the country, relocating the domicile or residence, the PIT shall be imposed for the period from 1 January to the date of departure from the country.
- A resident with global income, retirement income and capital gains is required to file a return on the relevant tax base for the tax year.
- The return is required to be submitted even if there is taxable income but no tax base or a deficit in the particular year.
- An individual income tax return is to be filed and the income tax paid during the period from 1 May to 31 May of the year following the tax year concerned except for certain specified cases.
- If a taxpayer fails to fulfil these obligations, a penalty tax shall be imposed.
- A taxpayer who receives only Class A employment income and/or Class A retirement income is generally not required to file an annual individual income tax return.
- Employers are required to withhold income taxes at source on a monthly basis, finalize their employees' tax liability, and file the final tax settlement receipt with the tax authorities no later than 10th of March of the following year.
- On the other hand, the employers are not required to withhold Korean taxes at the time of payment of Class B income; however, the individual is required to declare this income annually and pay income taxes thereon on a voluntary basis.
- Alternatively, the individual may elect to pay Class B income taxes through a licensed taxpayers’ association, which collects and remits such taxes on a monthly basis.
- Taxpayers who join such an association are eligible to receive a 5% credit of income tax payable.
- In case where an annual tax return is required, the relevant taxes shall be paid with the return due by 31 May of the following year.
EASE OF DOING BUSINESS
- The ease of doing business index is an index created by Simeon Djankov, an economist at the Central and Eastern Europe sector of the World Bank Group.
- Higher rankings (a low numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights.
- According to the World Bank South Korea ranked 5th in the World in 2019 in terms of ease of doing business.
