Global income is taxed according to a progressive scale in South Korea and the level of taxation is considered moderate to high. Income is normally classified as global income, retirement income or capital gains, all taxed at different rates.
Global income includes revenue from interest, dividends, property rental, business or professional income, employment income, and more. Taxable income is computed as gross income after allowable deductions and exemptions have been taken into account. Personal income is taxed as per the following list:
Up to US$10,435 - 6%Up to US$40,000 - 15%
Up to US$76,522 - 24%
Over US$76,522 - 35%
Korea has a self-assessment tax system under which each taxpayer is required to file a tax return and pay the proper amount of tax by the due date. Tax returns including personal exemptions and deductions must include supporting documents. Individuals are required to pay a 10% surcharge on their income tax, which is called the inhabitant tax. This tax is calculated according to the individual’s income tax liability.
Individuals, including personal companies earning capital gains when selling properties, are subject to capital gains tax at progressive rates. Annual property taxes are imposed at between 0.07% and 4%, depending on location, type of building and so on. Property owners whose properties exceed a certain threshold amount are liable to pay the comprehensive real estate holding tax. This tax comes to between 0.5% and 2% for residential houses that exceed KRW600 million (US$521,739). Comprehensive real estate holding tax is levied between 0.75% and 2% for land whose value exceeds KRW500 million (US$434,783).
Sales tax (VAT) is 10% in South Korea.
Update 17/05/2010
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