In the case of Class A income, it is subject to withholding tax by the employer. However, as the employer paying Class B income does not reside in Korea, the employee him/herself is responsible for his/her personal income tax. A Class B income earner may either join a Taxpayer Association to pay monthly taxes, thereby enjoying 10% tax credit, or may wait and file an annual tax return by the end of May of the following year with no benefit of credit. If an employee has only Class B income, and has paid his/her taxes through a Taxpayer Association, or if he/she has both Class A income and Class B income on which income tax is withheld monthly through Taxpayers Association, he/she is not required to file an annual tax return.
However, if a Class B income earner choose separate taxation with 17% flat rate under Article 18-2 ② under the Restriction of Special Taxation Act, this tax credit will be applied.
For the Class B Taxpayer Association, please refer to the list of the Class B Taxpayer Association presented on Additional Tax Info of our website.
