The administration of payroll and tax is often overlooked, but is an important aspect of doing business in any country. Correct administration allows for your employees to be paid on time with all the necessary contributions and taxes being made. A local partner in South Korea, such as INS Global, is able to assist your company with payroll administration, allowing you to focus on growing your business.
In South Korea, income taxes are deducted by the employer and paid directly to the government. The amount deducted is determined by the National Tax Service (NTS). Employers are also responsible for the calculation, deduction and contribution of the mandatory benefit funds (social security), which include:
The contributions made by the employer and employee may vary according to different factors, and range between 6% and 40%. The amount deducted from the employee is then combined with the employer’s contribution and the payment is made by the company.
An employer is required to report the information of any newly hired employee within 14 days from the date that employee starts. The employer must place on record the employee’s gross salary in order for deductions to be processed.
An individual who is deemed to be a tax resident will be taxed on their worldwide income, whereas a non-tax resident will only be taxed on income earned in South Korea.
A person will be considered a tax resident in South Korea if:
A person will be considered a non-tax resident in South Korea if:
South Korea has its own regulations concerning payroll and tax, and it is important for companies to remain complaint with them. There are various advantages of outsourcing this function, with the main benefits being:
In order to set up a payroll system, it is important to establish some sort of legal entity or alternative, through which your business can operate. There are various ways through which this can be carried out, either by setting up a company, operating through a PEO or an alternative entity. Once the entity has been set up, your company will be required to register the employees for payroll.
Focusing on the core business of your company can be challenging when you have to deal with all the administrative tasks as well. Payroll and Tax administration does not have to be a cumbersome task, leading to late or incorrect payments. INS Global is able to administer your payroll and ensure payments are made timeously and in accordance with local regulation.