Ceasing your tax residency in South Korea can be a meticulous process, but it's manageable if you follow the right steps! This guide will help you navigate through the essential procedures for ending your tax obligations in South Korea.
Step 1: Determine Your Residency Status
The first step in ceasing your tax residency in South Korea is to determine if you meet the criteria for being considered a non-resident. According to Article 1 of the Income Tax Act, you are considered a resident if you have a domicile or reside in South Korea for 183 days or more in a tax year. If you plan to leave South Korea and stay abroad for more than 183 days, you may qualify as a non-resident.
Step 2: Notify the Tax Authorities
Once you have determined that you will no longer be a resident, you must formally notify the National Tax Service (NTS) of your change in residency status. This involves submitting a "Change of Resident Status" form to your local tax office. Ensure that you provide all necessary details, including your departure date and new address abroad.
Step 3: Settle Outstanding Taxes
Before your departure, you must ensure that all outstanding taxes are settled. This includes filing any pending tax returns and paying any due taxes. Be sure to keep copies of all documents and receipts as proof of payment.
Step 4: Update Your Address
Update your address with all relevant institutions, including banks, insurance companies, and other financial entities. This ensures that all future correspondence is sent to your new address and helps prevent any issues with tax filings or payments.
Step 5: Close or Update Korean Bank Accounts
If you have bank accounts in South Korea, decide whether to close them or update them with your new address. Some banks may require you to maintain a local address, so be sure to check with your bank regarding their policies.
Step 6: Obtain a Tax Clearance Certificate
Request a Tax Clearance Certificate from the NTS. This certificate serves as proof that you have settled all your tax obligations in South Korea. It can be particularly useful when dealing with tax authorities in your new country of residence.
Step 7: Retain Records
Keep copies of all documents related to your change in residency status, tax payments, and notifications. These records may be required for future reference or in case of any inquiries from tax authorities.
Legal References
- Income Tax Act, Article 1
- National Tax Service Guidelines
- Tax Payment and Collection Act
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