04 September 2019
The taxation of private pensions in South Korea would change under a bill (Korean) awaiting approval by the National Assembly but expected to take effect in February 2020.
- A lower tax ceiling for executives’ retirement income would treat amounts exceeding the ceiling as earned income subject to a higher income tax rate.
- A tax credit would apply to individual savings account (ISA) deposits transferred to a pension account. An ISA deposit could be transferred on its expiration to a pension account, even if the amount exceeds the annual pension contribution cap (currently KRW 18 million). The tax credit would equal 10% of the transferred amount (up to KRW 3 million), provided that the transfer takes place within 60 days after the ISA’s expiration.
- Individuals aged 50 years or older who earn up to KRW 120 million will receive an expanded tax credit on pension savings up to KRW 6 million (increased from KRW 4 million) or, if their individual pensions account is included, up to KRW 9 million (increased from KRW 7 million).
- A reduced tax rate will apply to retirement income held as an annuity exceeding 10 years. For income withdrawn earlier than 10 years, the tax rate remains unchanged.
- Tax Amendment Bill (Korean) (Ministry of Economy and Finance, 25 Jul 2019)
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