Year-End Tax Settlement and Reporting Obligations

Every February, employers in South Korea must perform the Year-End Tax Settlement for all employees who worked during the previous year.

The Process: The company collects evidence of tax deductions (medical expenses, credit card usage, insurance premiums, etc.) from employees and calculates the final tax amount.

The Result: If the employee paid more tax through monthly withholdings than their final calculated tax, they receive a refund. If they paid less, the difference is collected.

Employer's Duty: The company is responsible for the accuracy of these calculations and must issue the final tax adjustment receipts to both the employees and the National Tax Service.

In addition to the annual settlement, employers are required to submit a Summary Statement of Earned Income (간이지급명세서) periodically.

Bi-annual Reporting: Beyond monthly withholding reports, companies must report the detailed income history of their employees every six months (or in some cases, monthly for certain types of income).

Purpose: This data allows the government to track income distribution and manage social welfare benefits (like the Earned Income Tax Credit) more accurately.

Penalties for Non-compliance: Failure to submit these statements on time or submitting inaccurate data leads to administrative fines based on a percentage of the total payroll.

Managing the paperwork for dozens of employees while navigating the Korean-only tax portals is a recipe for error. We serve as your full-service tax office to ensure these cycles are completed without stress:

Automated Settlement Support: We guide your employees through the document submission process and perform the complex final tax calculations on behalf of the company.

Filing Summary Statements: We handle the periodic submission of the Summary Statements of Earned Income to the National Tax Service, ensuring all deadlines are met.

Data Integration: Because we manage your monthly payroll and withholding tax, the year-end and bi-annual reports are generated seamlessly from existing data, minimizing the chance of discrepancies.

By letting us handle these reporting obligations, you eliminate the risk of late-filing penalties and the administrative burden of year-end paperwork. You can reassure your employees that their tax settlements are being handled by professionals, which improves employee trust and satisfaction.