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Organization :
Ministry of Economy and Finance
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Regulation :
Income Tax Act
Grievance
(Background)
Profits related to the provision of company housing were previously excluded from earned income, but are now classified as non-taxable income. For foreign workers who were subject to the flat tax rate under Article 18-2 of the Restriction of Special Taxation Act, profits related to the provision of company housing are included in taxable income.
* However, in the supplementary provisions on the revision of the Enforcement Decree of the Income Tax Act, it is separately specified that the revisions will be applied to income generated after January 1, 2022 for foreign workers who are subject to special taxation under the Article 18-2 of the Restriction of Special Taxation Act. Foreign workers who are subject to the flat tax rate from January 1, 2022, will incur a steep income tax burden.
Although the purpose of the amendment to the law was not to expand the scope of taxation but to clarify that profits from providing company housing are included in non-taxable income, the side effect of an excessive increase in the income tax burden on foreign workers who were subject to the flat tax rate occurred.
Profits from providing company housing, which were previously excluded from taxation regardless of whether Koreans or foreigners were subject to taxation, will be taxed differentially only for foreign workers. Considering that the purpose of the flat tax rate is to attract high-skilled workers, there are also concerns about the loss of effectiveness of special taxation.
(Grievance)
Request to amend related taxation law so that profits from providing company housing will not be considered as earned income for foreign workers who are subject to the flat tax rate after January 1, 2022
Resoultion and Results
(Resolution)
Request to ease tax burdens of foreign workers who are subject to flat tax rate by excluding profits earned from company housing from the taxable income
(Result)
The Act was amended that profits from providing company housing are not included in taxable income (Article 18-2 ③ of the Restriction of Special Taxation Act)
