Deductions from Salary

deductions from salary

From your salary, you are going to get the deductions of Income Tax, Pension, Health Insurance and others.

Check out how much you are going to get deductions from your salary from this article.

1. Income Tax (3% ~ 5%)

  • All teachers working in Korea on an E-2 Visa pays Korean taxes. It is your employer’s responsibility to file your taxes on your behalf, and it will be automatically deducted from you monthly pay check. 
  • Current rate is 3% to 5% of your salary depending on how much you make each month.

  • Public school teachers are exempt from paying income taxes during their first 2 years of employment. In order to request the Income Tax Exemption teachers must submit a ‘Residency Certificate’ that was issued by the appropriate government office from their country of citizenship. Canadians and Irish are not eligible for the income tax exemption.
  • Teachers need to submit their Residency Certificate to their school’s administrative office at the beginning of the contract (before the first salary is paid). The worker in charge of taxation will then submit it to the appropriate governing tax office
  • Those that worked for their first year at a hagwon or private school and then transfer to a public school, will only be able to claim 1 year of tax exemption with a valid Residency Certificate. 
  • Unfortunately the benefit is only applicable to those who are public school teachers and therefore employed by the government. Those that work for private institutions and after-school programs are not eligible.

  • If you pay income tax deductions out of your salary every month, then there is a possibility that you’re eligible for tax return or refund.
  • Foreign residents just like Korean nationals, are required to submit their tax forms on a yearly basis between Jan. 25 and Feb. 10. The employer must calculate the tax amount for the year and collect or refund the balance between what was withheld and what is due.
  • The year-end tax settlement is March 10th for employees.
  • The National Tax Service (NTS) has an English website at www.nts.go.kr/eng. The website offers automatic tax calculation service and a comprehensive tax guide in English.
  • The National Tax Service (NTS) publishes ‘The Easy Guide for Foreigners’ Year-end Tax Settlement‘ each year. ‘The Easy Guide for Foreigners’ Year-end Tax Settlement’ is published in December of the tax year. You can find an online copy of the guide on the National Tax Service website.
  • For more information or to inquire about specific tax-related issues in English, call the Tax Service English Hotline at 1588-0560
  • For information about global income tax returns, contact International Tax Resource Management Office of the NTS at 02-397-1444

  • Even though you are paying Korean taxes, you are not exempt from filing taxes in your home country.
  • There are specific policies on foreign-earned income which will discern whether or not you are required to pay tax in your home country on the income you earn in Korea.
  • You’ll generally be exempt if you (1) spend a certain number of days in the year working abroad and (2) you are paying taxes in Korea (which you are). Each country uses different terminology, but the concept is more or less the same. Further information is available through the tax agency in your home country.

2. National Pension Scheme (4.5%)

  • Current rate is 9% (4.5% will be deducted from teachers salary and another 4.5% will be paid by employer).
  • Due to Social Security Treaty of America (effective, April 2001), Canada (effective, May 1999), American and Canadian citizens can get their pension upon returning home. You can ask for a refund from the National Pension Corporation at the end of contract for the first 2 years. If you don’t ask for such a refund, it will be added to your pension period.
  • South Africans have the right to opt out of the pension plan.
  • Although Korean schools are required to pay into the Korean National Pension scheme, many employers fail to do so because there is no government office in place to monitor or enforce the rule. Schools that don’t offer the pension plan tend to offer higher salaries to compensate for the difference. Additionally, just because a specific school doesn’t pay into the scheme does not mean the school itself is not credible or financially stable.

3. National Health Insurance (2.24%)

  • Current rate is 4.48% (2.24% will be deducted from teachers salary and another 2.24% will be paid by employer).
  • The insurance will cover most of basic medical and dental necessities and the medical coverage won’t start until you receive your Alien Registration Card, which usually takes 2-4 weeks after your arrival. It is advised that all teachers buy travel insurance with medical coverage for 30-45 days following arrival in Korea in case.

4. Housing Deposit

  • Generally between 400,000 KRW to 900,000 KRW depending on schools policy (usually deducted from first three months salaries but may be negotiable).
  • This deposit is to cover any unpaid monthly service, utility, telephone charges and etc. at the completion of contract and employer agrees that payment of remaining amounts of the deposit will be made to employee at the end of contract period after all outstanding monthly service, utility, and telephone charges have been paid.

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