Chapter Key Takeaways
| 19% Flat Tax Legal Basis | Restriction of Special Taxation Act (조세특례제한법) Article 18-2 |
|---|---|
| Flat Tax Rate | 19% single tax rate (+ 1.9% local tax = 20.9% total) on gross employment salary |
| Flat Tax Benefit Period | Up to 20 consecutive years from the first date of employment in Korea |
| Flat Tax Mechanism | No deductions or credits allowed (no basic deduction, insurance, medical, or education) |
| Foreign Engineer Exemption | 50% reduction in income tax for 3 years (up to 5 years for specialized R&D / materials) |
| Teaching / Professor Treaty | Exemption from income tax for 2 years under specific bilateral tax treaties (e.g., US, Australia) |
| Break-Even Threshold | Flat tax is usually advantageous when annual gross salary exceeds 80M ~ 100M KRW |
1. The 19% Flat Income Tax Rate (조특법 제18조의2)
Foreign employees working in Korea may elect to have their wage and salary income taxed at a flat rate of 19% (20.9% including local income tax) instead of the standard 8-tier progressive tax rates (6% to 45%).
• Eligibility: Foreign national employees (excluding daily laborers and controlling shareholders of Korean companies).
• Duration: Applicable for up to 20 consecutive years from the first date of rendering labor in Korea.
• Calculation Base: Applied directly to gross employment remuneration (including non-taxable allowances, bonuses, and housing subsidies).
• Deduction Forfeiture: If chosen, you cannot claim any income deductions (no basic deduction, health/pension insurance deductions) or tax credits (no education, medical, or child credits).
When does it make financial sense? For high-income executives and specialized engineers whose marginal progressive tax bracket would otherwise be 38%, 40%, 42%, or 45% (annual taxable income exceeding 100 million KRW), the flat 19% rate delivers massive tax savings.
2. Foreign Technology Engineers Tax Exemption (조특법 제18조)
To attract global high-tech talent, Korea offers a 50% reduction in income tax on wages earned by qualifying foreign engineers:
- Qualifying Profiles: Foreign engineers providing technology under a technology transfer agreement, or foreign researchers working in designated corporate R&D centers, materials/parts/equipment specialists, or national strategic technology industries.
- Exemption Period: 50% income tax reduction for 3 years (up to 5 years for strategic cutting-edge R&D centers) from the first date of domestic employment.
- Filing Requirement: An Application for Tax Exemption (외국인기술자 세액감면신청서) must be submitted through your employer to the competent tax office by the 10th day of the month following employment.
3. Tax Treaty Exemptions for Teachers, Professors & Researchers
Many bilateral tax treaties signed by Korea (including those with the United States, Australia, the UK, and South Africa) contain a Teachers and Researchers Article (교수·교원 조세면제 조항):
• Individual was a resident of the treaty partner country immediately before visiting Korea.
• Invited by an accredited Korean university, college, or recognized educational institution for advanced teaching or research.
• Term does not exceed 2 consecutive years.
• Remuneration earned for such educational services is 100% exempt from Korean income tax upon filing an Application for Tax Treaty Exemption (비과세·면제신청서).
Frequently Asked Questions
Official NTS Foreigner Tax Guide Series
Explore all 6 chapters compiled from the 2026 National Tax Service Individual Income Tax Guide for Foreigners:
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