Writer 관리자 Date 2011-07-27

6.1 Employment Insurance
Employment insurance is a social security program which was adopted in July 1995 as a means to enhance competitiveness by supporting unemployed workers, preventing unemployment resulting from industrial restructuring, and promoting reemployment as well as instituting various support programs for employers.
Any business employing one or more workers is obligated to purchase employment insurance (agricultural, forestry, fishery and hunting industries employing four full-time workers or less and construction sites where the total contract price is less than the amount announced by the MOL each year are exempt but may purchase the coverage of their own volition). The employer is required to file an Insurance Coverage Notice with the regional headquarters of the KLWC and an Insurance Eligibility Notice with the Employment Stabilization Centre at the local labour office within 14 days. The employer must also notify the regional headquarters and branch office of the KLWC of the estimated premium and pay it to any financial institution entrusted to transfer payments to the treasury within 70 days of the day on which the insurance is applicable.
The amounts of the annual insurance premiums are shown below and payment may be made in a lump sum (with a 5% discount) or four instalments.

6.2 Employment Permit System
The Employment Permit System permits employers who have failed to hire native workers, to legally employ certain number of foreign workers. Under the System, the Government assumes the responsibility for attracting and managing foreign workers. With an introduction of the Employment Permit System, small and medium businesses are able to minimize labour shortages and foreign workers will enjoy basic rights under labour relations laws fully applied to them.

6.3 Payroll Taxes on Non-Residents

6.3.1 Wage and Salary Income in Korea Tax
Class A
· Wage, salary, remuneration, allowance, bonus, and any other allowance of a
similar nature received in return for services
· Income, other than retirement income, received due to retirement
Class B
· Wage and salaries received from a foreign agency or from the U.N. Forces in
Korea (excluding the U.S. Armed Forces)
· Wage and salaries received from a foreigner of foreign corporation outside
Korea, excluding those claimed as a deductible expense for a Korean place of
business of a non-resident of a foreign corporation.

6.3.2 Non-Resident who has Class A Wage & Salary Income only
Class A Wage & Salary Income means salary, remuneration, annual allowance, allowance, bonus and any other allowances of a similar nature received in return for services as mentioned before. Taxation methods applied for non-residents who have Class A wage & salary Income only are same as in the case of a resident. That is to say, a person(employer whose role is a withholding tax agent) who pays monthly wage income to his/her employees shall withhold a tax amount monthly based on the Simplified Tax Table issued by the National Tax Service, the total of which amount is regarded as a credit taken off for their ultimate tax responsibilities. When the employer pays wage next January of the taxable year, he/she shall calculate the gross tax liabilities of his/her employees on behalf of them, from which the withheld amount shall be deducted to bring forth the final tax amount to be
paid. This is called the ‘Year-end Settlement’.

6.3.3 Non-Resident who has Class B Wage & Salary Income only
A non-resident who has Class B Wage & Salary Income may organize or join a taxpayer association and make his/her tax liability settled. In this case, the association withholds income tax amount monthly on the Class B Wage & Salary Income of its association members and pays the amount to the tax authority concerned by the 10th next month. Like Class A Wage & Salary Income, the Class B Income is subject to the Year-end Settlement and eligible for Taxpayer Association Tax Deduction but, as stated above. The basic deduction, additional deduction and special deduction are not generally allowed.

Prepared by: Mr. Doo-Yeol Lee
Woori Accounting Corporation
Amended: November 2010
For further information on the services available from the DFK International Member firm in South Korea please contact:
Mr. Doo-Yeol Lee
Woori Accounting Corporation
Tel: +82 2 565 7083
Email: LDY1613@unitel.co.kr
Web: www.ventureplaza.co.kr/english