Tax Withholding on the Domestic Source Income
for a Non-Resident (Korea)

Aug. 10, 2015

I. Scope of Taxable Income for Non-residents

1.   Scope of Taxable Income

(1)  Resident

All incomes listed in the Income Tax Act in Korea (both domestic and foreign source income)

(2)  Non-resident

All domestic source incomes enumerated in Article 119 of Income Tax Act in Korea

2.   Scope of Taxable Income upon the Change of Tax Obligation Status

(1)  Resident → Non-resident

①  When a resident becomes a non-resident for the reason that the individual leaves Korea, the taxable income includes both domestic and foreign source income during the period from January 1^st to the day of departure.  The domestic source income which is enumerated in Article 119 of Income Tax Act in Korea is taxable effective the following day of the departure day.   

②  When the individual becomes a non-resident status, but the domestic source income is created after the day of the departure which requires the global taxation in Korea according to the Article 121-2 of Income Tax Act, it should be added to the total income which was created as a resident in Korea for the tax calculation.  This case, the tax amount paid as resident status should be deducted as “tax prepaid”.

(2)  Non-resident → Resident

①  The domestic source income which is enumerated in Article 119 of Income Tax Act in Korea till the previous day of the status change to a resident is taxable income.  From the day of the status change to a resident, both domestic and foreign source income become taxable income.   

②  Total income of domestic source income (for global taxation) from the beginning date of the year and till the closing date of the taxable period as a non-resident status and all income created as a resident status should be summed for the tax calculation.

II. The Place of Income Tax for Non-resident

1.   In Case of Non-resident with a Domestic Place of Business (enumerated in Article 120 of Income Tax Act)

Ÿ  Domestic business place

Ÿ  The major business place when it has 2 or more than 2 domestic business places

Ÿ  The place where a non-resident has filed when the major business place could not be verified

Ÿ  The place where the Commissioner of the National Tax Service or the commissioner of the competent regional tax office designates when a non-resident has not filed any place. 

2.   In Case of Non-resident without a Domestic Place of Business (enumerated in Article 120 of Income Tax Act)

Ÿ  The place where the domestic source income created

Ÿ  The place where a non-resident has filed among the places the domestics source income created when the real estate income, capital gains or forest income are created from 2 places or more than 2 places.

Ÿ  The place where the Commissioner of the National Tax Service or the commissioner of the competent regional tax office designates when a non-resident has not filed any place. 

3.   In Case of Tax Withholding

①   A resident as a withholding agent

Ÿ  The Major business place of a resident

Ÿ  The place where the tax is withheld, in case the place of withholding tax is not the major business place.

Ÿ  The domicile or residing place of resident, in case the business place is not available 

②  An non-resident as a withholding agent

Ÿ  The major business place in Korea of a non-resident

Ÿ  The place where the tax is withheld, in case the place of withholding tax is not the major business place in Korea.

Ÿ  The domicile or residing place of non-resident, in case the business place in Korea is not available 

③  A corporation as a withholding agent

Ÿ  The business place of the headquarter or man office of the cooperation

Ÿ  The place of cooperation branch or the other business place, in case it is being handled in own accounting process under the independent profit system (excluding when those places are located in overseas)

④  Capital gains from securities transfer

Ÿ  For the capital gains from securities transfer of the non-resident, the place of the domestic cooperation where the stock issued is a place of Income tax, in case the domestic business place is not available for withholding agent 

⑤  Tax association

Ÿ  The place of the tax association is a place for Income tax, in case the tax is imposed by association

...
...
...

Please refer the enclosed for more information.


This material is for your reference ONLY, and is NOT subject to release to the others at the cost of charge.
All copyrights on this material are reserved by Selim Tax-Account Firm.