Withholding Income and Resident Tax (SAP-Bibliothek

Withholding Income and Resident Tax

Purpose

As an employer, you are responsible for calculating and withholding income and resident tax from your employees, whether or not they are resident in Korea. Income and resident tax must be deducted during the monthly payroll run and during all other runs – for example, periodic bonus, non-periodic bonus.

Features

With this function, you can calculate the following:

Income tax

Income that is liable for income tax consists of:

Earned income, such as salary and bonus
Retirement income, such as retirement pay

The Income Tax Law stipulates that the employer is to pay an employee’s income tax by giro to the main tax office by the 10th of the following month.

Resident tax

The resident tax amount is 10% of taxable income tax.

The employer notifies the authorities and pays the resident tax on the employee’s behalf by giro to the local city hall, ward office or county office by the 10th of the following month.

Integration

In Customizing for Payroll Korea under Tax ® Define Tax Deduction Items for Withholding Tax Calculation, you determine the taxation deduction amount for each payroll category.