South Korea is an economic powerhouse home to thriving companies such as Samsung and Hyundai. With a large, highly educated population, it is a great place to expand to if you want...
South Korea is an economic powerhouse home to thriving companies such as Samsung and Hyundai. With a large, highly educated population, it is a great place to expand to if you want to tap into this workforce and participate in international trade. However, the country has some unique guidelines for setting up South Korea payroll that can make expansion difficult. Globalization Partners can remove this difficulty and help you start your business without needing to set up a subsidiary.
South Korea is an economic powerhouse home to thriving companies such as Samsung and Hyundai. With a large, highly educated population, it is a great place to expand to if you want to tap into this workforce and participate in international trade. However, the country has some unique guidelines for setting up South Korea payroll that can make expansion difficult. Globalization Partners can remove this difficulty and help you start your business without needing to set up a subsidiary.
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Taxation Rules in South Korea
Companies in South Korea are responsible for various taxes. The first 200 million won of your taxable income is subject to a 10% tax rate of the corporate tax. Any income between 200 million and 20 billion won is taxed at 20%, income between 20 billion won and 300 billion won is taxed at 22%, and anything more than 300 billion won has a 25% tax rate of the corporate tax. Companies must also pay a 10% local income surtax on all income before tax credits and exemptions.
South Korea uses a progressive income tax rate for employees that includes additional rates for local income tax. Employees are all part of a mandatory social security system and National Health Insurance (NHI), and both employees and employers contribute to the NHI at a rate that depends on the employee’s salary.
South Korea Payroll Options for Companies
Companies can choose from four main South Korea payroll options when expanding:
Remote: If you already run payroll from your parent company, you could add your South Korean employees to that payroll. However, the different sets of employees will fall under separate compliance standards.
Internal: You can run payroll out of your subsidiary if you have the time and resources to hire HR staff. This option is best suited for larger companies that plan to maintain a strong presence in South Korea.
South Korea payroll processing company: A local South Korea payroll processing company can help you outsource your payroll, but you will still be held liable for compliance issues.
Globalization Partners: When you work with Globalization Partners for South Korea payroll outsourcing, we’ll both take on the burden of compliance and run your payroll for you.
How to Set Up a Payroll in South Korea
Before setting up your South Korea payroll, you’ll need to establish a subsidiary in the country or choose a subsidiary alternative. Individuals will need a visa, and your company will have to decide which business structure is best for your expansion.
The steps to set up your payroll depend on what kind of structure you choose. Generally, you will need to register for the National Tax Information System, the Internet Registry Office, and local tax payments.
Entitlement/Termination Terms
It is best practice in South Korea to draft a written employment contract when hiring employees. You can include entitlement and termination terms in this contract such as notice periods and severance payments. In South Korea, employers must provide at least 30 days notice or pay the employee 30 days of their salary instead.
Payroll Processing Company in South Korea
When you are ready to set up your South Korea payroll, choose Globalization Partners. Contact us today to learn more about our South Korea payroll outsourcing services.
THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). G-P does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect G-P’s product delivery in any given jurisdiction. G-P makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.
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