Last year, 540,000 foreign workers received year-end settlements, and the reported tax amount reached a record-breaking 1.2 trillion won (US$915.68 million).
The National Tax Service (NTS) announced that the number of foreign workers who filed tax reports was 544,000, and the reported tax amount reached 1.19 trillion won, based on the results of year-end settlements for the fiscal year 2022.
The reported population reached its peak at 586,000 individuals in 2019 but experienced a temporary decline to 545,000 individuals in 2020 and 505,000 individuals in 2021 due to factors such as the COVID-19 pandemic. With recent improvements in the COVID-19 situation, there has been a rebound in the reported population.
The reported tax amount has been on an increasing trend each year. After showing an upward trajectory in 2019 with 904.3 billion won and 2020 with 962 billion won, it surpassed the 1 trillion won mark in 2021 with 1.08 trillion won. Subsequently, it reached close to the 1.2 trillion won mark in 2022 with 1.19 trillion won.
Examining foreign workers who filed year-end tax settlements for the fiscal year 2022 by nationality in the top 5 countries, China had the highest percentage at 34.5 percent, accounting for 187,000 individuals. It was followed by Vietnam at 8.2 percent, with 44,000 individuals, Nepal at 6.2 percent, with 34,000 individuals, Indonesia at 5.1 percent, with 28,000 individuals, and the United States at 4.9 percent, with 26,000 individuals.
In the fiscal year 2022, the United States accounted for the highest reported tax amount in the year-end settlements of foreign workers, with 40 percent, or 477.1 billion won. Following closely, China held 13.6 percent or 162.8 billion won, Japan 6.0 percent or 72.2 billion won, Canada 5.8 percent or 69.8 billion won, and Australia 2.7 percent or 31.8 billion won.
In the year-end settlements of foreign workers for the fiscal year 2022, when examining the top 10 percent of income earners based on the reported population, China accounted for 34.4 percent with 19,000 individuals, and the United States for 16.3 percent with 9,000 individuals, making up 50.7 percent of the total. In terms of reported tax amounts, U.S. nationality workers held the largest share at 48.0 percent, equivalent to 471.4 billion won.
The NTS announced that foreign workers with income from domestic employment in 2023, excluding daily employed workers, must complete year-end tax settlements by the time they receive their February wages this year, regardless of nationality, period of stay in the country, or income level.
The year-end settlement schedule, deduction items, and tax calculation method for foreign workers are generally the same as for domestic workers. Foreign workers who wish to use the simplified year-end settlement data provision service should submit an application to their company and complete the confirmation, or agreement, process on the NTS website by the 19th of this month.
Foreign workers, excluding those employed by special relationship companies, can choose the special exemption with a flat tax rate of 19 percent for 20 years starting from the taxation year in which the first day of employment in the country falls. The application period has significantly increased from 5 years.
The NTS provides various guidance services to ensure that foreign workers can easily complete year-end settlements. It has published an Easy Guide brochure in English and year-end settlement manuals in English, Chinese, and Vietnamese on the NTS English website. Additionally, there is a dedicated English-language consultation hotline for foreigners at 1588-0560. This year, it has also produced a new year-end settlement guidance video in English for foreigners, available on the NTS’ YouTube channel.