# Taxable Income

## Information about taxable income, global taxation and tax rates in South Korea...

Individual income consists of taxable income and non-taxable income. There are eight kinds of taxable income:

1. Interest income.
2. Dividend income.
4. Employment income.
5. Pension income.
6. Other income.
7. Capital gains
8. Severance pay

Non-taxable income is exempted automatically from taxation by law. A taxpayer can request exemption and it is a government decision to grant this or not. However, tax-exempt income is included for the purpose of calculating the tax base.

### Global Taxation

Global taxation uses a progressive tax rate on the sum of the taxpayer's business income, employment income, pension income, and other income. In addition, if the taxpayer's total income from interest and dividends (together called "financial income") exceeds KRW 40 million, both are included in the global tax calculation. If total income is less than KRW 40 million, financial income is taxed separately at a flat rate of 15.4 percent.

Separate taxation applies to pension income and capital gains. These two types of income are taxed independently and not aggregated with other taxable income types.

### Tax Period

The tax year is the calendar year from 1 January to 31 December.

### Tax Rates

The tax amount on global income is the aggregate of amounts calculated by applying each tax rate successively to the correlate income.

Tax base of global income Tax rates
< KRW 12 million 6%
? KRW 12 million, but < KRW 46 million KRW 720,000 + 15% of the amount over KRW 12 million
? KRW 46 million, but < KRW88 million KRW 5,820,000 + 24% of the amount over KRW 46 million
?KRW 88 million KRW 15,900,000 + 33% of the amount over KRW 88 million

For example, if the annual tax base for income tax is KRW 30 million the income tax is computed as follows: Since KRW 30 million is located between KRW 12 million and KRW 46 million, a 15 percent tax rate applies on all income over KRW 12 million. The total tax due would be 720,000 + [15 percent x 18 million = 2,700,000] = KRW 3,420,000.

### Report of Tax Base for Global Income

A resident is required to file a report of taxable global income at the appropriate district tax office between 1 May and 31 May in the following year. If income is only earned by employment, the resident does not have to file this report as the report is sent automatically by the employer.