Taxes that you can get into trouble if you pretend not to know about!

 South Korea is famous for its extremely punitive taxes. It is a tax system that has a lot to say, where it is better to not earn money at all than to earn a little bit. In addition, there are ridiculous punitive taxes such as progressive tax, health insurance, national pension, etc., which make you feel that working hard is meaningless. If you ignore these strange taxes and think they are too complicated, you will be in big trouble! I will tell you about the things you absolutely must know!

 

Taxes that must be checked and rechecked ( Image by  Gerd Altmann  from  Pixabay)

Separate taxation? Classified taxation?

 

 The first thing you need to know is separate taxation and classified taxation. First, separate taxation is a separate taxation that taxes income separately, and it includes earned income, business income, interest income, dividend income, other income, and pension income. But this is not important. Separate taxation is when someone informs you of the taxation or you deduct the tax yourself. For earned income, the company deducts and reports it, and for business income, they tell you to "file your comprehensive income tax" around May every year. For interest income, dividend income, and pension income, banks or securities companies pre-deduct when they pay you. So you don't have to worry too much about paying taxes.

 However, what you absolutely need to know is classified taxation. This is a strange term that means classified taxation, and it includes capital gains tax and retirement income tax. However, retirement income tax is usually received in the form of pensions these days, so in many cases, the bank deducts the tax and pays it, just like the amount you receive as pension income. In special cases where you receive cash, it is subject to classified taxation. However, the reason why this classification taxation is important is that this is something that must be voluntarily reported within 2 months of the transaction. In other words, if you transfer an object and the difference in the transfer amount occurs, you must pay income tax on the difference in the transfer amount. Since it is a transaction between people, if you do not report it yourself, you may not know and go into the dark. Most people do not know this well and think, "If there is a tax to pay, a notice will come flying in." However, the notice does not come.


 This happens not only in real estate but also in foreign stock trading. Even if you clearly deduct the commission and tax when trading foreign stocks, if your income from foreign stock trading exceeds a certain amount, you must go to the tax office and report the transfer income tax separately. You will not receive a notice for this either. You have to do it yourself.


 However, you must be careful when you go into the dark. The National Tax Service of Korea knows everything. If you leave it alone and after about 2 years, they say you will get a call asking why you did not report it. At that point, it's no use complaining about being wronged. They tell you to sue if you're wronged. And then they collect the money by imposing a huge amount of interest on the surcharge and penalty. It's really unbelievably vicious. That's why people who aren't used to dealing like this can't help but get hurt.

 

If there was a positive transaction, be sure to check it out!

 

 If there is a transfer transaction, you must check whether there is any profit from the transfer transaction. If there is profit, you must directly report the capital gains tax to the tax office in charge. By the way, do not call the tax office to ask whether you need to report this or not. Tax officials have no obligation to provide consultation, and even if tax officials do tell you, they are not legally responsible for the information they teach you, so no matter what they say, they will later deny responsibility. So always go to the tax office, confirm it with your own eyes, and leave evidence. Don't trust tax officials too much. They say to go ahead and sue them if you want.

 

Please remember, in my experience, tax officials work for the country, not for the people.

 

 

 Once the tax is confirmed by reporting the difference in the transfer transaction, you pay it, but that's not all. A month later, a local income tax notice will arrive. I clearly paid the transfer income tax to the tax office, but this time, they are asking me to pay local income tax as well. However, this time, the local income tax notice will arrive even if I did not report it separately. The tax office will take it away once, and will hand over the list to the relevant district office and ask me to take it away again. Just pay it according to the notice. Therefore, when conducting a transfer transaction, it is important to check this enormous tax carefully and determine the transfer transaction. If you leave the difference in the transfer transaction, but pay the real estate commission and tax, you may end up losing money.

 

Inheritance tax, gift tax....endless tax Hell!!!

 

 First, I'll talk about gift tax. South Korea is a country where you have to pay taxes even if you give money to family members. However, there is a deduction limit, and if you give within this limit, you are exempt from gift tax. It is renewed every 10 years, and the gift tax exemption applies to 600 million won for couples, 50 million won for adult children, and 20 million won for minors. If it exceeds this limit, you have to pay gift tax. After 10 years of giving a gift, this limit is reinstated. Therefore, if you give an amount exceeding this limit, you have to file a gift tax report. Gift tax is a quasi-punitive tax rate, so... I don't really care about this topic since I don't have anything to receive from my parents.

 Next is inheritance tax, and this inheritance tax is also shocking. It is a terrible tax that the heir has to pay in cash within 6 months of the death of the deceased, so the heir has to decide whether to renounce the inheritance or accept the inheritance within 6 months of the death. The period is too short. In addition, since it is a tax that must be paid in cash, it may be difficult to quickly cash out inheritance money received as real estate or company shares, making it impossible to pass down the family business to future generations. To this end, they will never give a reduction, but they do have a deferred payment system that allows for installment payments. You may have heard the shocking news that the Samsung family recently paid their inheritance tax in installments.


 Also, there is a house in Seoul where two generations live together, and they live together in a house in my father's name. It is an apartment in Gangnam, so they were living comfortably without much worry in an apartment worth about 3-4 billion won, but my father suddenly passed away, and I ended up having to pay the inheritance tax in cash within 6 months. All I have is one apartment, my mother is a full-time housewife who has lived in this neighborhood for a long time, and my children are still students, so they have no other income. But it's not like I can give up an apartment worth about 4 billion won... If I inherit this and sell the real estate in a hurry and pay the inheritance tax, I'll end up being kicked out of that neighborhood. My family is in danger of falling apart just because my father passed away... because of the inheritance tax.


 Recently, many research results have been published that show that inheritance tax and gift tax ultimately reduce the competitiveness of the country, and especially in advanced European countries, there is a growing skepticism about inheritance tax, so there is a trend to abolish inheritance tax and progressive tax as a means of attracting foreign companies, but it is true that Korea still has a form of punitive tax.


 Today, we learned about taxes that you can miss if you miss them, so I hope you don't fall into a tax hell that is worse than an ant hell. And since taxes are being taken away like this, I wish they would use them sparingly and wisely, but even after all this, there is a deficit... The country is full of thieves. It's frustrating~