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Korea Herald

[Contribution] Avoid penalties, claim benefits: How NTS supports foreign taxpayers

By Choi Jae-bong There is a world-renowned football player whose exceptional positioning and goal-scoring prowess have earned him many fans here in Korea. This player, Cristiano Ronaldo, while playing in Spain as a foreign athlete, once drew international media attention not only for his athletic brilliance but also for his tax troubles. He established a shell company in the low-tax jurisdiction of the British Virgin Islands and funneled his advertising income through this entity, significantly reducing the amount of tax he owed in Spain. Eventually, however, the Spanish tax authorities uncovered the scheme, and the football star was fined more than $20 million. The lesson is clear: in football, smart positioning can lead to spectacular goals. But when it comes to taxes, no matter how strategically one positions oneself, everyone is still obligated to pay their fair share in the country where they reside. The obligation to report global income is not based on nationality. In Korea, anyone considered a 'resident' under tax law — defined as having lived in Korea for 183 days or more during the previous year — must report their global income this year. This applies to both Korean citizens and foreign nationals. Any resident who earned income subject to global income tax, such as business income, must file a return by June 2. For many foreign residents in Korea, navigating the tax system can be challenging. Language barriers and unfamiliar legal procedures often put them at a disadvantage when filing their global income tax. In many cases, they may also miss opportunities to reduce their tax burden. For example, starting in 2024, eligibility for tax credits on monthly rent payments has been expanded. However, foreign residents who are unaware of these new rules may miss out on valuable benefits simply because they didn't know they were eligible. To support foreign residents in meeting their global income tax obligations, the National Tax Service has launched a number of practical initiatives. These include publishing an English-language booklet that outlines key tax laws, recent legislative updates, frequently asked questions, and example cases illustrating how to file. The booklet is available on the NTS' official English-language website. Additional resources are also provided, including step-by-step video guides and English versions of global income tax filing forms. Multilingual leaflets with filing instructions are available in English, Chinese and Vietnamese. Beyond these general resources, the NTS is also offering more personalized support for foreign residents. The agency is encouraging eligible foreign taxpayers — especially those who qualify for Korea's 'simplified expense rate' system, which allows small business owners to deduct a fixed percentage of their income as expenses — to take advantage of the 'pre-filled tax return' system. This system provides a pre-calculated tax amount based on data already held by the NTS, reducing the need for paperwork or complex calculations. Foreign residents can simply review the information and submit their returns quickly and easily using the "one-click filing service." In addition, the NTS will identify foreign residents who are likely required to file a global income tax return — particularly those with visa types typically associated with tax obligations who did not complete year-end tax settlement. These individuals may be unaware of their duty to file. To ensure compliance, the NTS will send them reminders. Through these efforts, the NTS is committed to proactive administration that supports foreign residents in filing their global income tax returns accurately and reliably. This includes the use of innovative technologies — such as big data analysis — to identify taxpayers and guide them through the process. As the legendary sports figure Yogi Berra once said, 'It ain't over till it's over.' Likewise, your economic activities in 2024 aren't truly over until you have filed your tax return and paid any tax due. If you are a foreign resident required to file global income tax, please be sure to submit your return by June 2.