Payroll in South Korea

Opening a company in Korea implies, apart from registration, having the manpower to operate it. While hiring employees is not difficult, keeping track of their activities, paying their wages, and registering annual leaves, as well as other actions associated with their work, implies setting up the payroll.

Below, our local specialists explain the most important things to consider with respect to South Korea’s payroll regulations, specifically taxes to pay and documents associated with the respective payments.

When and how to set up the payroll for a Korean company?

Payroll in South Korea is an entire process that starts right after the incorporation of a company, when the respective entity needs to register with various labor authorities. Then, it continues with the enrollment of each employee with various institutions and the payment of social contributions. Payroll is a continuous process due to the number of workers that can increase or decrease over time. This is why many businesses use the services of an accountant to handle it.

What are the taxes and contributions under the payroll in South Korea?

It is the employer’s duty to withhold both the income tax and the social security contributions from its employees’ salaries and make the associated payments to the National Tax Service. Here are the main tax aspects to consider when it comes to payroll in Korea:

• natural persons can choose between two income tax options;
• depending on their options, the employer must withhold the income tax at different rates;
• apart from the income tax, there are several contributions that need to be withheld from one’s salary;
• the employer must also pay a certain percentage of these contributions.

Here are the rates of the income tax in Korea:

• the standard rates range from 6% to 45%;
• foreign residents, however, can opt for a flat rate of 19%;
• no matter the chosen tax bracket, a local income tax equal to 10% of the income tax due is added.

Apart from withholding the income tax, there are also several contributions to be made.

If you need support in setting up the payroll in South Korea, do not hesitate to reach out for the support offered by our local specialists.

What are the payroll taxes paid by Korean employers?

Here are the main contributions to be paid by employers under South Korea’s payroll taxation system:

• the contribution for the national pension fund is set at 4.75% of the monthly salary;
• 3.595% of the monthly salary must be paid to the health insurance scheme;
• the employment insurance ranges from 1.15% to 1.75%;
• the long-term care insurance is 13.14% of the health insurance premium (approx. 0.47% of the salary);
• the work accident compensation scheme also implies a contribution of 0.56%-18.56%, depending on the type of company.

While the contributions of the employer represent approximately 10–11% of the salary (plus the industrial accident premium), the employee’s quota is about 9.7%.

What is the salary structure in South Korea?

Here are the main aspects to consider when paying salaries in South Korea:

• there is a basic salary structure which is made of: the gross amount, net amount earned by the employee, the severance, insurance, and overtime;
• allowances provided by the employer for: housing, transportation, meals, travel, education, and family.

Does South Korea have a minimum wage system?

Yes, South Korea relies on a minimum wage system, which is now KRW 10,320 per hour in 2026, which is about USD 7–7.5/hour – KRW 2,156,880 (approx. USD 1,500) per month for full-time employment. Salary payments are made in KRW; however, the equivalent can also be written in a foreign currency in the labor agreement.

What types of employment contracts do Korean companies offer?

With respect to employment contracts, there are two types of agreements one can enter into:

• the permanent or indefinite type;
• the fixed-term contract, which in South Korea is maximum 2 years.

What is the payment cycle in Korea?

Salaries are paid once a month at a fixed date (the last working day of the month), in most cases.

How much do Korean employees pay for social security?

Here are the percentages of social security withheld from a South Korean employee:

• 4.75% goes to the National Pension (on monthly income up to KRW 6.59 million from July 2026);
• 3.595% goes to the National Health Insurance;
• 7.19% is the total health insurance rate, split equally with the employer;
• the long-term care insurance is 13.14% of the health insurance premium (approx. 0.47% of the wage per month);
• 0.90% is the contribution for the employment insurance.

The total contributions paid by an employee are about 9.7% on a monthly basis.

Are there differences between the taxation of a resident and a non-resident employee?

Yes, residents are taxed on their worldwide income in South Korea, while non-residents are taxed on the income they obtained in the country only. To make a distinction between the two categories of taxpayers, here is a breakdown of one’s situation:

• residents are people who have a domicile in Korea or reside here for 183 days or more;
• non-residents are those who spend fewer than 183 days in the country.

For foreign employees, an important rule that applies is the 5-in-10 year one. This means that they pay the tax on foreign income if they have lived in South Korea for maximum 5 years within the last 10 years, only if the income is obtained from a local company or is sent from abroad.

Do you provide payroll services in Korea?

If you need assistance for payroll in South Korea, you can rely on us for various solutions that will be tailored to your needs. We can handle the following:

• registration with labor and tax authorities as employer;
• registration and deregistration of employees with the labor and tax authorities based on the dynamics in your company;
• issuing monthly pay slips and delivering salaries to employees’ bank accounts;
• directing contributions to the National Taxation System.

Feel free to contact us and ask for our help if you need support with payroll in South Korea.