NTS Sends Tax Guidance Letters to 95,000 Individuals – What Foreigners Living in Korea Need to Know

The National Tax Service (NTS) has announced the deadline for filing and paying the final income tax including capital gains tax for 2022 is May 31st 2023. Foreigners living in Korea should be aware of this deadline, as well as the fact that electronic support in Hometax or Sontax is not provided in English. It is essential to consult a tax advisor to avoid any unexpected errors in your tax return.

Who Needs to File a Tax Report for capital gains tax?

1. Individuals who sold real estate, stocks, or other assets last year but did not file a preliminary report.
2. Individuals who conducted two or more transactions and failed to report the aggregated income by asset type.
3. Individuals with no preliminary reporting obligations who generated income from overseas stock transactions or derivatives.

How to File a Tax Report

1. Electronically via Hometax or Sontax
2. Submitting the tax report in writing to the local tax office
3. Request a tax agent to file a tax report on your behalf.

Note: Since Hometax and Sontax do not provide English support, it is recommended to consult a tax advisor to avoid errors.

Convenience Services and Support

1. Hometax offers a ‘Capital Gains Tax Comprehensive Guidance Portal’ for easy calculation, electronic reporting, submission of supporting documents, and electronic payments.
2. Self-assessment services for tax exemptions and reductions are available on the portal.
3. A chatbot service is available for answering questions related to capital gains tax reporting anytime, anywhere.

Tax Relief for Natural Disaster Victims

1. Taxpayers affected by natural disasters, such as wildfires, can receive tax relief.
2. Tax filing deadline remains the same, but the payment deadline can be extended by up to three months, until August 31st.
3. If the underlying cause persists, the deadline can be further extended by up to nine months.

Penalties and Surcharge

1. Failure to report by the deadline may result in a surcharge of up to 40%.
2. Non-payment of tax may lead to a daily late payment penalty of 0.022% on the unpaid amount. (approx. 8.03% per annum)
3. False contracts can lead to exclusion of exemptions or reductions for both the seller and the buyer when transferring the property.

To avoid any unexpected errors or penalties due to language barriers, it is crucial for foreigners living in Korea to consult a tax advisor when filing their taxes.