Korea - 2023 Tax Update

As of 1 January 2023, Korean tax law has been revised to allow foreign workers who start work in the country before 31 December 2023, to elect to apply the 19% rate (20.9 percent including local income tax) on their personal income tax for a period of twenty years.

Before this tax update, foreign nationals were limited to a period of five consecutive years from the date they first started work in Korea.

A recent established tax ruling defined ‘the date the foreigner first provides labour in Korea’ as

· For those who provided labour in Korea but left prior to 1 January 2014, then re-entered the country after 1 January 2014 to provide labour - the date is after 1 January 2014.

· For those providing labour in Korea at 1 January 2014, ‘the date the foreigner first provides labour in Korea’ is 1 January 2014. E.g. they are eligible to have the flat tax rate apply up to 2033 for employment income earned from 1 January 2023.