An Easy Guide to Local Taxes for Multicultural Families in Korea(1)

▣ What are taxes?

The national government conducts national affairs of defense, diplomacy, public order etc. while local governments are responsible for residents’ welfare, public health, sanitation, water supply, wastewater treatment and so on. To procure financial resources for these activities, the government imposes taxes on citizens
according to their respective capacities, mainly in terms of income and wealth.
Taxes are classified as national taxes imposed by the national government(including customs duties) and local taxes levied by local governments.

▣ What are local taxes?

Local taxes are taxes levied on the basis of statutes to enable a
local government to procure financing to provide public services in the locality.
Local taxes collected are used for waste disposal and to build roads, maintain and manage water supply and wastewater treatment facilities, provide social welfare, open and operate fire stations, etc.
※ Out of 11 types of local taxes, those that are relevant to daily
life are summarized below. For more detailed information, please contact your local government’s tax department.

▣ Terminology of local taxes

▶ Terminology of local taxes(11 types)
General taxes: Acquisition tax, registration license tax, leisure tax, local
consumption tax, resident tax, property tax, automobile tax, local income tax, cigarette consumption tax
Earmarked taxes: Local development tax, local education

▶ The formula for assessing the amount of local taxes is as follows

Tax base × tax rate = Tax amount

▶ Tax base
The tax base is the amount that quantifies the value of the object(a house, building, vehicle, etc.) upon 
which a local tax is imposed, in terms of a specific price, quantity, etc. It is used as the basis for assessing 
a tax amount.

▶ Tax rate
The tax rate is the rate multiplied by the tax base to determine the tax amount. The tax rate is expressed in terms of a permillage, an amount for each use,
*** won per cubic centimeter (cc) of engine displacement, etc., depending on the type of tax.

▶ General levy
The tax department of a local government levies taxes by mailing a payment notice to the taxpayer with information on the tax base, the tax amount, etc.
※ Relevant taxes: Automobile tax, property tax, resident tax, registration license tax

▶ The taxpayer reports the amount of tax and pays it voluntarily
The taxpayer prepares a local tax filing form with the tax base and the tax amount, submits it at the filing window of the relevant tax department, and pays the tax at the same time.
※ Taxes paid as described above include: Acquisition tax, local income tax, registration license tax, etc.

▶ Additional amount
If a local tax levied and notified by a local government (automobile tax, property tax, etc.) is not paid by the payment due date, 3% of
the tax amount notified will be imposed pursuant to the provision of the Local Tax Act from the date after the payment is due.

▶ Additional tax
 If the amount of local tax (acquisition tax etc.) is not reported and
paid on the due date, an additional tax is levied to the assessed tax amount.
※ Summary of the rates of general additional taxes
- General under-reporting of tax amount(10%), unfair underreporting(40%)
- General failure to report(20%), unfair failure to report(40%)

▶ Measures taken when taxes are not paid
If a person who has an obligation to pay a local tax has not paid it by the payment due date and has still not paid it by the due date after being issued a notice of urgent payment, the taxpayer’s property is seized, the seized property is sold, and other measures are taken

▶ Payment of local taxes
Taxes can be paid at bank windows or cash dispensers and automated teller machines of 
all banks in the country, through
WeTax (online payment), the Internet giro system, mobile phones, Internet bank, credit cards, etc.

▶ When a tax payment obligation arises
Obligation of tax payment is established when the conditions in the Local Tax Law are met, and the local government becomes a creditor while the taxpayer becomes a debtor.

2021.11.30 - [지방세(local tax)/기타] - An Easy Guide to Local Taxes for Multicultural Families in Korea(2)-Acquisition tax