Flat Tax for Foreigners in Korea: 19% Becomes 21% in 2027 (Proposed), the New 2029 Deadline and Who Should Still Elect It

Last updated: 21 October 2026. Current law read on law.go.kr that day; the 2027 change is a government proposal, not yet law. ₩1,342 = $1 (Federal Reserve, 9 October 2026). A guide, not tax advice; sources at the end.

The flat tax for foreigners in Korea is the one tax choice most foreign employees here hear about in their first January: instead of Korea's progressive income-tax brackets (6% to 45%), a foreign worker can choose to pay a single 19% on their pay, with no deductions. Add the local income tax and the real figure is 20.9%. For a well-paid expat it can save tens of millions of won a year. For an English teacher or a factory worker it is usually a bad deal.

That rate is about to change. The government's 2026 tax revision, announced on 3 August 2026, would raise the flat rate to 21% (23.1% with local tax) for income from 1 January 2027, and extend the deadline for new arrivals from 31 December 2026 to 31 December 2029. The National Assembly normally votes on the year's tax bills in December. Until then it is a proposal.

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Quick Guide: Korea's flat tax for foreign workers, October 2026

The 19% rate, the 20-year window and the 2026 cut-off are law today; the 21% rate and the 2029 cut-off are in a bill. We will update this guide after the December vote.

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What the law says today: Article 18-2

The flat rate is not in the Income Tax Act. It is a special rule in the Restriction of Special Taxation Act (조세특례제한법), Article 18-2, titled 외국인근로자에 대한 과세특례 ("special taxation for foreign workers"). In the version in force on 21 October 2026, it says, in substance:

• Who: a foreign executive or employee (외국인인 임원 또는 사용인), excluding day workers (일용근로자), who first starts working in Korea on or before 31 December 2026 (2026년 12월 31일 이전에).
• What: employment income from working in Korea, for tax years ending within 20 years of the first day of work in Korea (최초로 근로를 제공한 날부터 20년 이내).
• The rate: income tax may be "the amount obtained by multiplying that employment income by 19/100" (100분의 19), instead of the normal brackets in Income Tax Act Article 55.
• The catch: if you choose it, no tax-free allowances, deductions, reductions or credits apply (비과세, 공제, 감면 및 세액공제에 관한 규정은 적용하지 아니하며). The single exception is the tax-free benefit of company-provided housing (사택), which the Enforcement Decree keeps.
• A bonus: the flat-taxed salary is not added to your comprehensive income (종합소득과세표준에 합산하지 아니한다). Any rental or business income you have in Korea is then taxed in the low brackets on its own.

Two details matter. The 19% applies to the gross, so normally tax-free items such as the ₩200,000-a-month meal allowance become taxable. And the 20-year clock starts on your first working day in Korea, not when you elect: someone who first worked here in 2020 can use it for tax years up to 2039. (If you started before 2014, older transition rules applied; check your status with the tax office.)

Local income tax (지방소득세) is 10% of national income tax, so 19% becomes 20.9% in total, and the proposed 21% becomes 23.1%.

What the 2026 tax revision would change

The government announced its 2026 tax revision (2026년 세제개편안) on 3 August 2026. On this rule it proposes two changes, as reported the same day by Korea's tax press and summarised by RSM Korea (19 August) and Vialto Partners (5 August):

1. The rate rises from 19% to 21% (20.9% to 23.1% with local tax) for income arising on or after 1 January 2027. The government's stated reason, in the Korean summaries, is fairness with Korean workers (내국인 근로자와의 과세형평).
2. The application deadline (the sunset) moves from 31 December 2026 to 31 December 2029. Without this, a foreigner who starts their first Korean job in 2027 could not elect the flat rate at all.

As we read the reports (they do not spell this out): the new rate attaches to income, so it hits everyone on the flat rate, including people who started in 2015. Your 2026 pay is still settled at 19% in January–February 2027. And the 20-year window does not change.

Vialto adds that the separate 50% reduction for qualifying foreign engineers (Article 18, not covered here) would also run to 31 December 2029.

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Flat 19% or 21% vs the normal brackets: a worked example

The brackets in Income Tax Act Article 55 run from 6% on the first ₩14 million of taxable income to 45% above ₩1 billion. But taxable income is far below gross pay: the employment-income deduction (근로소득공제) alone takes out up to ₩20 million, and credits come off the tax. That is why the flat rate loses for most people.

The table is our own calculation for one person with no dependants, using only the employment-income deduction (Article 47), the ₩1.5 million basic personal deduction, the employment-income tax credit (Article 59) and the ₩130,000 standard credit. Pension and health-insurance premiums, dependants and other credits would lower the bracket figure further. All figures include local tax.

The row to look at is ₩150 million. At 19% the flat rate saves about ₩2.4 million (≈ $1,800). At the proposed 21% it costs about ₩0.9 million more than the brackets. In our simplified model the break-even moves from roughly ₩136 million to roughly ₩156 million of gross pay. Anyone whose salary sits between those two lines should run the numbers again before the January 2027 payroll.

At ₩300 million the 21% rate costs ₩6.6 million (≈ $4,900) more than 19% did, but still about ₩25 million less than the brackets.

Who can elect the flat rate, and who cannot

You can elect it if you are not a Korean national on the last day of the tax year (dual nationals are out), you are an executive or regular employee rather than a day worker (일용근로자), you first started working in Korea by 31 December 2026 (2029 if the proposal passes), and the tax year ends within 20 years of that first day. Visa type does not matter.

You cannot use it if you work for a company related to you. The law excludes a "specially related" company (특수관계기업): one with which you have a family or management-control relationship under the Framework Act on National Taxes, in plain terms a company you or your relatives own or control. A foreign-invested company receiving certain tax reductions under the same Act is not treated as related. The article also has a separate proviso for a qualifying regional headquarters (지역본부) of a foreign company; if that is your employer, ask a tax adviser how it applies to you.

How to elect it: monthly withholding and the year-end settlement

There are two separate applications. The Enforcement Decree, Article 16-2, sets out both.

1. For monthly payroll (optional). Submit the 단일세율적용 원천징수신청서 (application for flat-rate withholding) to the tax office through your employer by the 10th of the month after the month you worked. From then, payroll withholds 19% (20.9% with local tax) instead of using the standard withholding table. To stop, file the 단일세율적용 원천징수포기신청서 (withdrawal); it takes effect from the next tax year, not the next month.

2. For the year (this is what decides your tax). At the year-end settlement (연말정산, January to February), attach the 외국인근로자 단일세율적용신청서 (application for the flat rate for foreign workers) to the deduction form (근로소득자 소득·세액공제신고서) you give your employer. If you file your own return in May instead, attach it there and send it to the tax office. Without this form the normal brackets apply, so do not assume payroll has filed it for you.

What it means for January 2027 payroll

If the proposal passes in December, flat-rate payslips change on the first payroll of 2027. The difference per month, including local tax, is 2.2% of gross pay:

What to do between now and then:

• If you are on the flat rate and earn under about ₩160 million, ask payroll for a 2027 side-by-side. The annual choice for 2027 is made at the settlement in early 2028; monthly withholding is trued up then.
• If your employer grosses up your tax (common in expat packages), the 2% rise is the company's cost. Check your contract wording.
• If you start a new Korean job in 2027, the flat rate exists for you only if the 2029 extension passes. Do not sign a package that assumes 19% or 21% before December.

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Who should NOT elect the flat rate

The flat rate sounds like an expat perk. For most foreign workers it costs money. Do not elect it if:

• You earn under about ₩136 million a year (about ₩156 million if the 21% rate passes). At ₩50 million the brackets cost about ₩3.7 million and the flat rate about ₩10.5 million: roughly $5,000 a year thrown away.
• You support dependants in Korea. Each dependant adds a ₩1.5 million deduction, and children bring tax credits. None of that survives the flat rate.
• You have big deductible costs. Medical bills, education fees, donations, housing-loan interest, card spending and pension savings all reduce bracket tax. Under the flat rate they count for nothing.
• Your pay is mostly tax-free allowances. A meal allowance and other tax-free items are taxed at the flat rate once you elect.
• You work for a company you or your family control. You are excluded by law anyway.

Who should look hard at it: senior executives and specialists on large packages, especially single people above about ₩160 million. For them the 2027 rise trims the saving but does not erase it.

The flat rate changes income tax only. Health insurance (7.19% of pay in 2026, half paid by your employer), and national pension where you are covered, are usually deducted either way.

What is still uncertain

• The National Assembly can amend the bill. The 21% rate, the 1 January 2027 start and the 2029 cut-off are the government's proposal as reported, not enacted law.
• We could not read the government's own press release online. The figures match across Korean tax press (3 August 2026) and two accounting-firm alerts (RSM Korea, Vialto Partners). We will quote the enacted text once it passes.
• Our worked example is simplified. Social insurance, dependants and most credits all make the brackets cheaper, so the real break-even is higher. A Korean tax accountant (세무사) or your payroll provider can run your exact numbers.

FAQ

Q: What is the flat tax rate for foreigners in Korea in 2026?

A: 19% of gross employment income, plus local income tax of 10% of that, so 20.9% in total. You choose it instead of the normal 6–45% brackets, and give up all deductions and credits except the tax-free benefit of company housing.

Q: Is Korea's flat tax going up to 21% in 2027?

A: The government proposed it in the 2026 tax revision announced on 3 August 2026: 21% (23.1% with local tax) on income from 1 January 2027. It becomes law only if the National Assembly passes it, normally in December. Until then, 19% is the law.

Q: Can I use the flat tax if I start working in Korea in 2027?

A: Under the current law, no: you must first start work in Korea by 31 December 2026. The proposal extends that date to 31 December 2029. If it passes, a 2027 starter could elect the flat rate, at 21%.

Q: Is the flat tax better than the normal brackets?

A: Only for high earners. In our simplified calculation for a single person, 19% wins above about ₩136 million gross (≈ $101,000) a year, and the proposed 21% above about ₩156 million (≈ $116,000). Dependants and deductions push that line higher.

Sources

• Current rule: Restriction of Special Taxation Act (조세특례제한법) Article 18-2, and its Enforcement Decree (시행령) Article 16-2, versions in force from 18 September 2026, via the National Law Information Center, read 21 October 2026. Housing-benefit exception: Income Tax Act Enforcement Decree Article 17-4, item 1.
• Brackets and deductions used in the worked example: Income Tax Act (소득세법) Articles 47 (employment-income deduction), 55 (rates) and 59 (employment-income tax credit), in force from 1 January 2026, law.go.kr, read 21 October 2026. Calculations are EpicKor's.
• 2026 tax revision: Korea tax press report of 3 August 2026 ("종전 19%에서 21%로 상향 조정 … 적용시기는 내년부터 오는 2029년까지"); RSM Korea, 2026년 세제개편안 summary (20.9% to 23.1%, income from 1 January 2027), 19 August 2026; Vialto Partners, Republic of Korea: 2026 tax reform plan announced, 5 August 2026 (sunset 31 December 2026 to 31 December 2029; foreign-engineer reduction).
• Exchange rate: Federal Reserve H.10 via FRED (DEXKOUS ₩1,342.13), 9 October 2026.

The short version: Korea's flat tax for foreigners is 19% (20.9%) today and, if the December vote goes as proposed, 21% (23.1%) from January 2027, with new arrivals allowed in until 2029. It only pays above roughly ₩136–156 million a year for a single person; below that, the normal brackets are cheaper, sometimes by thousands of dollars.