Creating and managing payroll in South Korea
South Korea’s economy has grown exponentially over just a few decades and is now ranked as the 4th largest in Asia and the 12th largest in the world. This huge growth has been powered largely by a varied manufacturing and technology boom, including automobiles, electronics, and more.
For organizations looking to expand into South Korea, the country’s renowned focus on education has created a huge pool of highly qualified talent, making it the ideal location to recruit locally. To hire locally, you’ll need to set up an in-country payroll, which involves understanding the unique tax rules and employment law. This can be a complex process for foreign organizations, and failing to follow the rules can result in large fines and legal trouble, so proper research is vital.
Horizons offers a flexible range of South Korea payroll outsourcing services for organizations expanding into South Korea. Our experts can handle all the legal work, tax, and administration, even acting as your employer of record in the country, making the whole expansion process simpler, faster, and more efficient.
Why choose the Horizons payroll solution?
If you have an entity
If your organization has already set up an entity in South Korea, our payroll experts can handle all the administration and payroll management so you don’t have to.
This service is perfect for any organization looking to simplify their South Korea payroll by outsourcing the complex compliance and administrative work to us.
If you don’t have an entity
If you haven’t established an entity in South Korea, our South Korea PEO can act as your employer of record. We will take care of all payroll, contracts, associated legal work, and administration, helping you to outsource all the legwork and focus on successful expansion.
This service is perfectly suited to an organization looking for full flexibility and low risk when expanding into South Korea. We will take care of everything for you and be legally liable for employment, while you get to benefit from locally sourced talent.
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South Korea payroll tax rate & laws
What are the rules for payroll tax in South Korea?
South Korea follows a progressive taxation model, with higher earners paying a higher percentage in taxes. This rate reaches as high as 42% for earnings above 500 million won.
Employees in South Korea are all included in national health insurance (NHI) and social security programs. Employers and employees both need to pay towards the NHI fund, with a variable rate dependent on income level.
Excluding local rates, corporate tax is 10% of incomes up to 200 million won. Between 200 million and 20 billion, the rate is 20%. Between 20 billion and 300 billion, the rate is 22%, and above 300 billion the rate is 25%.
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National Pension
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4.50%
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National Health Insurance (includes long term care insurance assessed at 10.25% of National Health Insurance contribution)
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3.68%
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Employment Insurance
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1.05%-1.65%
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Worker Accident Compensation Insurance
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0.73%-18.63%
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Total Employment Cost
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9.955-28.455% |
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National Pension
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5.25% |
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National Health Insurance (includes long term care insurance assessed at 10.25% of National Health Insurance contribution)
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1.75% |
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Employment Insurance
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3.15% |
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Total Employee Cost
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8.635% |
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up to 12 million KRW
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6.6% (including 10% local residence tax)
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12 million – 46 million KRW
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16.% (including 10% local residence tax)
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46 million – 88 million KRW
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26.4% (including 10% local residence tax)
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88 million – 150 million KRW
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38.5% (including 10% local residence tax)
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150 million – 300 million KRW
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41.8% (including 10% local residence tax)
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300 million – 500 million KRW
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44% (including 10% local residence tax)
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500 million KRW and up
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46.2% (including 10% local residence tax)
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Rules for contracts and terminations
How to establish South Korea payroll outsourcing
Establishing a payroll in South Korea for local employment can be a complex and confusing process. Firstly, your organization will need an in-country subsidiary to act as employer of record for any hirees. You will then need to register with various official channels, such as the National Tax Information System and other relevant bodies.
Alternatively, you can choose to outsource all the setup to Horizons to ensure your expansion into South Korea is as simple and hassle-free as possible. Additionally, we can offer our employer of record service, so even organizations without an entity in the country can benefit from our comprehensive services.
Manage payroll in South Korea
Whether it’s EOR service or just payroll management, Horizons’ employment experts can help you get started in 24h.
