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Exclusive Tax Privileges for Foreigners in Korea

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Foreign workers in Korea enjoy several special tax incentives that are not available to Korean nationals.

1. The "5-Year Rule" on Global Income Tax​

By law, residents must pay tax on all income generated worldwide. However, foreigners enjoy a significant exception:

  • Rule: If you have resided in Korea for a total of no more than 5 years within the last 10 years.
  • Benefit: You only have to pay tax on income earned in Korea. Overseas income is only taxed if you transfer those funds into Korea. If the money remains in a foreign account, it is Tax Exempt.

2. Tax Reduction for Foreign Engineers/Experts​

  • Target: Engineers working in high-tech industries, research institutes, or experts in materials, parts, or equipment.
  • Benefit: A 50% reduction in the amount of income tax payable for 10 years. (For materials/parts/equipment experts: 70% reduction for the first 3 years, and 50% for the next 2 years).

3. Tax Exemption for Teachers (Teacher Exemption)​

  • Target: Citizens of countries that have a tax treaty with Korea (such as the US, Australia, UK, South Africa, etc.).
  • Benefit: Complete exemption from income tax for the first 2 years of teaching or research work.

[!CAUTION] You must submit an "Application for Tax Exemption under Tax Treaty" to your school or the tax office. Citizens of Canada, Norway, and Sweden currently do not have this incentive.