Deduction Deception

Written by dvm Friday, 11 September 2009 15:39

Here is an excerpt from an e-mail discussion I had with a friend:

This is what I managed to find out.
There are apparently two ways of paying tax:

1. Pay your full tax on a monthly basis, which works out to be about 100,000 won per month, give or take a little depending on income.

2. Pay a minimum (read nominal) amount of tax every month and then hand in your tax return at the end of the fiscal year, which is what my scared employer has now decided to allow me to do. This option works out to 16,000 won per month. I then have to hand in a tax return with all my income and expenditure. The tax office will then decide whether I still owe them something (the maximum amount would be the amount paid in the first option) or whether I'm ok and don't have to pay anything on top.

Having scared the living daylights out of my employer he now went for the safe option, i.e. I can now handle all my tax issues directly with the tax office and he only deducts the 'nominal' amount. But what a bastard, eh?! And he tried the same trick on several others, i.e. subtracting 15% on our income as tax, when, in fact, the 15% deductions are PENSION + HEALTH INSURANCE + UNEMPLOYMENT INSURANCE + INCOME TAX. Nice try!"

Whether by ignorance or corruption, it it not outlandish to estimate that more than 80% of employers, including 'government' jobs, are not properly deducting and paying your legally required deductions. You need to be clear with your employer on these things. If everyone gently and firmly demands this, we will send two strong messages: 1. we are legit and want to do what is required by Korean law; 2. we are not here to be fleeced, bullied, or presumed ignorant.  If someone is not afraid to break the law against you, you have no reason to fear speaking up.