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Korea, Republic of Individual - Other taxes

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Social security contributions

There are four types of social security contributions in Korea, namely: National Pension (NP), National Health Insurance (NHI), Employment Insurance (EI), and Worker’s Compensation Insurance (WCI).

National Pension (NP)

Under the NP scheme, employers are required to contribute an amount equal to 4.5% of salaries to the national pension fund. Employees are also required to contribute an amount equal to 4.5% of their salaries. As such, the total contribution rate is 9% of salaries per annum with both the employer and the employee splitting the 9% contribution equally. The employee contributions to the NP scheme are deductible in calculating taxable income.

Starting 1 July 2017, national pension contribution is capped at a monthly salary of KRW 4,490,000 and the maximum monthly pension contribution to be paid by an employee is KRW 202,050.

Foreigners working in Korea are required to contribute to the NP scheme unless there is a social security agreement between Korea and their home country and the individual remains under the home country social security scheme (see Social security agreements under the Foreign tax relief and Tax treaties section for more information).

Foreign participants (with few exceptions) withdrawing from the NP scheme due to a permanent departure cannot get a refund unless their home country has a social security agreement with Korea, or applies the same treatment to Koreans on a reciprocity rule in the absence of a social security agreement. Generally, social security contributions paid to a foreign country are not deductible against Korean income under the Korean income tax law.

National Health Insurance (NHI)

In general, foreigners working in Korea are required to subscribe to the NHI program, which is mandatory for all foreign expatriates and employees who earn Class A income in Korea. As of 1 January 2017, the applicable premium rate, including long-term care insurance, is 6.52% of the monthly wages (capped at a monthly salary of KRW 78,100,000); split equally between employers and employees at 3.26% each. The employee contributions to the NHI program are deductible in calculating taxable income. 

By submitting relevant documents, certain foreigners can exempt themselves from the mandatory NHI scheme if they are already covered by insurance from their home country, foreign insurance company, or an employer that provides them with the equal level of medical coverage as prescribed in the Korean NHI Law.

Employment Insurance (EI) 

The obligation to contribute EI differs depending on the taxpayer's nationality and visa type. In general, a foreigner who holds a D-7, D-8, and D-9 (trade management) visa is required to participate in EI. Foreigners from certain countries are exempt from the EI obligation under a reciprocity principle, if the foreigner's home country does not require mandatory participation by Korean nationals' in the country's equivalent social security contribution.

Currently, the employee contribution rate for EI is 0.65%, but the EI rate for employers varies starting from 0.9% to 1.5% depending on the number of employees and type of industry. In other words, in addition to the 0.65% contributions to EI, employers are required to make 0.25%~0.85% contributions to employment stabilisation insurance and occupational competency development insurance. 

Worker’s Accident Compensation Insurance (WCI) 

WCI is a state-run social security program for workers with work-related injuries, disease or disability, or any circumstance exposed to danger that can result in death while at work. Making contributions to WCI is compulsory only for employers. The contribution rate is imposed by the social security office considering working environments (from 0.7% to 34% of total wages and payroll, depending on the type of industry). 


There is also a severance pay system that requires no employee contribution. Severance pay, or retirement income, is taxed separately from global income.

Consumption taxes

Value-added tax (VAT)

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 is actually borne by the final consumers, because the taxpayer pays VAT on its purchases (input tax) but charges VAT on its sales (output tax). The tax to be paid to the authorities is the difference between the taxpayer’s output tax and input tax for a tax period.

Net wealth/worth taxes

No net wealth/worth taxes exist in Korea at this time.

Inheritance, estate, and gift taxes

The Inheritance Tax Law covers both gift tax and inheritance tax. Inheritance tax is imposed on the transfer of property without consideration as a result of death or if an individual is missing. Gift tax is imposed as a result of giving property with a donatives’ intent and without receiving any consideration. The tax rates range from 10% to 50% on the taxable income excluding local income tax.

Gift tax is considered a supplement to inheritance tax. Thus gift tax is not imposed when inheritance tax has been imposed. If gift tax has already been imposed and inheritance tax is to be imposed on property including the gift property, the gift tax previously imposed is deducted from the inheritance tax.

No estate tax separate from inheritance tax exists in Korea at this time.

Property tax

An annual tax ranging from 0.07% to 5% is charged on the statutory value of land, buildings, houses, vessels and aircraft. Five times the property tax rate is applied to property that is newly constructed or expanded in the Seoul metropolitan area within five years after the relevant registration date.

Acquisition tax

Acquisition tax is charged on the price of real estate, motor vehicles, construction equipment, golf membership, vessels, etc., of which acquisition cost exceeds KRW 500,000. The minimum rate is 1% effective for acquisition on or after 28 August 2013. A weighted rate is charged on acquisitions in the Seoul metropolitan area or on acquisition of luxury items, such as villas, golf courses, and yachts.

Luxury and consumption taxes

The individual consumption tax (ICT) is assessed on certain goods and activities as enumerated in the ICT Law. The ICT only applies to those individuals, entities, and businesses described in the ICT Law; all other goods and services are not subject to the ICT.

In principle, the ICT applies to a person who manufactures and distributes taxable goods; a person who sells taxable goods, except for the customer who may occasionally sell a taxable good; a person who moves imported goods out of a bonded area; operators of taxable places such as a race course, Turkish bath, golf course, casino, etc.; operators of taxable entertainment establishments such as a cabaret, night club, saloon, etc.

Last Reviewed - 02 January 2018

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