In general, Korean tax rates are very low compared to most Western countries. Teachers will have to pay a general residential tax of between 3% and 7% depending on which city or district they live in and how much money they make each month.
Most schools efficiently deduct the necessary taxes, however teachers should be wary if they are not required to pay any taxes at all. Schools have been known to suddenly deduct a large amount from their teacher’s final pay or bonus pay in lieu of not paying taxes during the course of the contract. In these instances, the deducted tax tends to be much higher than normal and can be suspect. Teachers should check that their employment contract clearly stipulates how much tax they must pay and when they must pay it.
Furthermore, foreign teachers need to be aware of the tax laws in their own countries. For instance, New Zealand tax laws stipulate that citizens are taxed only on income earned in New Zealand. Thus, Kiwi teachers who complete their one year contract in Korea do not need to worry about their Korean income being taxed when they return home. However, Canadian tax laws stipulate that its residents are required to pay Canadian income tax on world income less the tax paid in other countries. With Korean tax being between 3% and 7% and Canadian tax being 33-35%, teachers may be ordered to pay 28-32% in taxes on their Korean income to the Canadian government if they are audited in Canada (extremely rare).
Tax Links
Canada Customs and Revenue Agency: residents temporarily outside Canada
U.S. Citizens and Resident Aliens Abroad – Filing Requirements
Australian Taxation Office – Working overseas – overview
New Zealand Inland Revenue – Tax Residency
United Kingdom HM Revenue & Customs – Tax When Leaving the UK