South Korea: South Korea's Bi-Annual ‘Simplified Statement On Wage And Salary Income Payment' Adds To Payroll Workload

Last Updated: 26 June 2019
Article by ByungJin Lee

With the first six-month period ending on 30 June 2019, and only 10 days after that in which to submit the required data, employers in the country must act now.

The South Korean National Tax Service (NTS) demanded more frequent, but simplified, reporting of salary information by all employers with the introduction of bi-annual submission of the 'Simplified Statement on Wage and Salary Income Payment' from the beginning of 2019. This is to allow the government to pay 'wage subsidy' twice annually to support low-income families, rather than the previously annual payment of subsidies. With the first six-month period ending on 30 June 2019 and only 10 days after that in which to submit the required data, employers must act now.

Who must submit the new Simplified Statement on Wage and Salary Income Payment?

The new reports must be submitted by all employers, and those acting on their behalf, that retain 'wage and salary' and/or 'business income' withholdings, as reported in the annual Statement of Payments. Data must be submitted regardless of whether the income recipient is eligible to receive the wage subsidy. Although payment reporting is the responsibility of the employer, the payment of subsidies is not. Wage subsidy is calculated based on total household income and not just the individual and paid by the NTS.

When is the bi-annual submission due?

The new reports must be submitted within 10 days following the end of each six-month calendar period.

  • For the period from 1 January to 30 June - no later than 10 July.
  • For the period 1 July to 31 December - no later then 10 January.

The only exception is when an employer ceases business through liquidation or any other method. In this case, it must submit reports no later than 10 days following the date of cessation of business.

What forms must be submitted?

Four types, depending on the type of income paid:

  • Form #24-4(1): Statement of Wage and Salary Income.
  • Form #24-4(2): Statement of Business Income.
  • Form #24-4(3): Statement of Business income Subject to Year-End Settlement.
  • Form #24-4(4): Statement of Business, Ship/Aircraft Rental, Royalty, and Service Income Payment (Paid to Non-Residents).

Each form requires details of the recipient of the income, the work period, the amounts paid and other information specific to the type of income, but the withholding tax amount for each period is not required.

How can the forms be submitted?

Three ways:

  • via the online NTS website (
  • by saving the data to a mass storage device (ie. USB) and deliver to your local tax office
  • submission of the hard copy filing forms, but this is only allowed if the taxpayer has no more than five full-time employees or if the taxpayer's (annual) Statement of Payment forms for the prior year was less than 20 pages.

Does the new Simplified Statement on Wage and Salary Income Payment reporting replace the annual Statement of Payment?

No. The Simplified Statement on Wage and Salary Income Payment is introduced to enable the government to pay subsidies more frequently to those in need, it does not replace the annual Statement of Payment, it is an additional requirement adding pressure to already overstretched HR and Payroll teams.

Is there a penalty for non-submission or wrongful submission?

Yes. The penalty for non-submission of the new form and for wrongful, false or unclear submissions is 0.5% of the total submission amount, although there is a 50% reduction of any penalty amounts during 2019 due to the requirements being new. With the first submission date fast approaching, firms need to be prepared now or risk a penalty, even at this reduced rate.

Managing the complexity of the new reporting

With the reporting period just 10 days after the end of the six-month period and penalties for late or erroneous reporting, it is vitally important for employers to be prepared. TMF South Korea is already submitting forms on behalf of clients, while also managing all of their payroll and HR issues. To avoid penalties, foreign companies operating in South Korea should seek local professional advice.

Talk to us

It can be both time-consuming and complex for foreign companies to comply with the frequently changing regulations in South Korea. If your company needs help in completing the new payroll forms, TMF South Korea has a team of experts with in-depth knowledge in HR and payroll to assist you. Want to know more about our services? Contact us today.

Discover where South Korea ranks among 76 jurisdictions for business complexity – download the free report.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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