Daegu

๐Ÿ’ฐ

Taxation

Details on understanding and managing local taxes and filing requirements as a resident of Daegu.

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Overview of Taxation in South Korea

South Korea has a centralized tax system, meaning taxes are primarily administered at the national level by the National Tax Service (NTS). However, local governments, including Daegu, collect certain taxes such as property tax and local income tax. As a resident or expatriate in Daegu, you will need to comply with both national and local tax obligations.

Types of Taxes in Daegu, South Korea

1. Income Tax

  • Who Pays?
    • Residents: South Korean residents are taxed on their worldwide income.
    • Non-residents: Non-residents are taxed only on income earned within South Korea.
  • Tax Rates (2023)
    • South Korea uses a progressive income tax system. The rates are as follows:
      • Up to KRW 14 million: 6%
      • KRW 14 million โ€“ KRW 50 million: 15%
      • KRW 50 million โ€“ KRW 88 million: 24%
      • KRW 88 million โ€“ KRW 150 million: 35%
      • KRW 150 million โ€“ KRW 300 million: 38%
      • KRW 300 million โ€“ KRW 500 million: 40%
      • Over KRW 500 million: 45%
  • Local Income Tax
    • In addition to national income tax, a local income tax of 10% of the national income tax amount is levied. This is collected by the Daegu Metropolitan Government.
  • Deductions and Credits
    • South Korea offers various deductions for residents, such as for medical expenses, education, and charitable donations. Expatriates may also qualify for certain deductions depending on their visa type and residency status.

2. Property Tax

  • Who Pays?
    • Property owners in Daegu are required to pay property tax on real estate, including land and buildings.
  • Tax Rates
    • Property tax rates vary depending on the type and value of the property:
      • Residential property: 0.1%โ€“0.4%
      • Commercial property: 0.5%โ€“0.7%
  • Payment
    • Property tax is assessed annually and is typically paid in July and September.

3. Value-Added Tax (VAT)

  • Who Pays?
    • Businesses operating in Daegu are required to collect VAT on goods and services.
  • Tax Rate
    • The standard VAT rate in South Korea is 10%.
  • Exemptions
    • Certain goods and services, such as basic food items and medical services, are exempt from VAT.

4. Capital Gains Tax

  • Who Pays?
    • Individuals who sell real estate or other capital assets in Daegu may be subject to capital gains tax.
  • Tax Rates
    • Rates vary depending on the type of asset and the holding period. For real estate, rates range from 6% to 45% for residents and 20% to 45% for non-residents.

5. Inheritance and Gift Tax

  • Who Pays?
    • Individuals receiving an inheritance or gift in Daegu are subject to this tax.
  • Tax Rates
    • Rates range from 10% to 50%, depending on the value of the inheritance or gift.

6. Other Local Taxes

  • Automobile Tax: Paid annually by vehicle owners in Daegu.
  • Acquisition Tax: Levied on the purchase of real estate or vehicles.

Tax Payment Procedures in Daegu

  1. Income Tax Filing

    • When to File: Annual income tax returns must be filed between May 1 and May 31 for the previous tax year.
    • How to File:
      • Online: Use the National Tax Serviceโ€™s Hometax website (https://www.hometax.go.kr). The website is available in English and Korean.
      • In-person: Visit the Daegu Regional Tax Office (details below).
    • Documents Required:
      • Alien Registration Card (for expatriates)
      • Proof of income (e.g., salary statements)
      • Deduction-related documents (e.g., receipts for medical expenses, education costs)

  2. Property Tax Payment

    • When to Pay: Property tax is typically paid in two installmentsโ€”July and September.
    • How to Pay:
      • Online: Through the Hometax website or your bankโ€™s online banking system.
      • In-person: At local banks or the Daegu Metropolitan Government office.

  3. VAT Filing for Businesses

    • When to File: VAT returns are filed quarterly (January, April, July, and October).
    • How to File: Use the Hometax system or consult a tax professional.

  4. Capital Gains Tax

    • When to File: Within two months of the sale of the asset.
    • How to File: Submit the required forms and payment through the Hometax system or at the Daegu Regional Tax Office.

Deadlines

  • Income Tax: May 31 (for the previous tax year)
  • Property Tax: July and September
  • VAT: Quarterly (January, April, July, October)
  • Capital Gains Tax: Within two months of the transaction

Tax Services and Offices in Daegu

  1. Daegu Regional Tax Office

    • Address: 88, Gongpyeong-ro, Jung-gu, Daegu
    • Services:
      • Assistance with income tax filing
      • Guidance on property tax and local taxes
      • Support for expatriates with tax-related queries
    • Contact: +82-53-661-7200
    • Hours: Monday to Friday, 9:00 AM โ€“ 6:00 PM

  2. Daegu Metropolitan Government Tax Division

    • Address: 88, Gongpyeong-ro, Jung-gu, Daegu
    • Services:
      • Local tax inquiries (e.g., property tax, automobile tax)
      • Payment assistance
    • Contact: +82-53-120 (Daegu City Call Center)

  3. National Tax Service (NTS) Hometax Website

    • Website: https://www.hometax.go.kr
    • Services:
      • Online tax filing and payment
      • Tax calculators and guides
      • Multilingual support (including English)

  4. Tax Professionals and Accountants

    • Many accounting firms in Daegu specialize in assisting expatriates with tax filing and compliance. Look for firms with English-speaking staff if needed.

Unique Considerations for Expatriates in Daegu

  • Residency Status: Your tax obligations depend on your residency status. If you stay in South Korea for 183 days or more in a calendar year, you are considered a resident and are taxed on worldwide income.
  • Tax Treaties: South Korea has tax treaties with many countries to prevent double taxation. Check if your home country has a treaty with South Korea and how it applies to your situation.
  • Language Barrier: While the NTS Hometax website offers English support, in-person services at local offices may primarily be in Korean. Consider hiring a bilingual tax consultant if needed.

Tips for Managing Taxes in Daegu

  1. Keep Records: Maintain detailed records of your income, expenses, and deductions throughout the year.
  2. Use Online Services: The Hometax system is user-friendly and can save you time.
  3. Seek Professional Help: If you are unfamiliar with South Korean tax laws, consult a tax professional to ensure compliance and maximize deductions.
  4. Stay Informed: Tax laws in South Korea can change, so stay updated on any new regulations.

By following this guide, you should be well-prepared to handle your tax obligations in Daegu, South Korea. If you have further questions or need personalized assistance, consider visiting the Daegu Regional Tax Office or consulting a local tax expert.