Work freelance in Korea and 3.3% disappears from every payment. Here is the odd part: the number 3.3% appears in no statute.
1. What is the 3.3%. Not a rate but two laws multiplied — Income Tax Act art. 129(1)3 gives 3/100, and Local Tax Act art. 103-13(1) adds 10/100 of that. 3% x 1.1 = 3.3%. The familiar 15.4% and 22% follow the same rule.
2. Is that my tax paid. No. The 3.3% is money withheld in advance; the real liability is settled in the May global income return. The lower your income, the more likely you are getting money back.
3. What should I watch. There is more than one expense rate. Article 4 of the NTS notice applies a base rate up to ₩40M and an excess rate above it for personal services (940***) — 64.1% and 49.7% for code 940909. Knowing only “64.1%” overstates expenses on everything above ₩40M.
On 3 August 2026 a bill was published that changes the 3.3% in this article. Withholding on “small-scale personal service providers such as delivery riders” would fall from 3% to 2% — including local income tax, 3.3% becomes 2.2% (our calculation).
It is not a tax cut. Withholding is money taken in advance; the final liability is settled in the May return — withhold less now and the refund shrinks or the balance due grows. Personal services subject to year-end settlement stay at 3%, and as a government bill the release gives no start date. Everything below runs on the current 3.3% — see our guide to the 2026 tax reform bill.
As of July 2026 — the Income Tax Act says only “3/100 on business income subject to withholding” (art. 129(1)3). The Local Tax Act then adds “an amount equivalent to 10/100 of the income tax withheld … shall be specially collected as individual local income tax” (art. 103-13(1)). 3% x 1.1 = 3.3%.
Where does the 3.3% come from
Once you see the structure, all the familiar numbers explain themselves. Local income tax is 10% of the income tax amount, not a rate of its own.
| Income type | Statutory rate (art. 129) | With local income tax |
|---|---|---|
| Business income subject to withholding | 3/100 | 3.3% |
| Service charges | 5/100 | 5.5% |
| Interest and dividends (general) | 14/100 | 15.4% |
| Other income (general) | 20/100 | 22% |
| Non-business loan interest | 25/100 | 27.5% |
| Income of unverified ownership | 45/100 | 49.5% |
The famous 15.4% on bank interest is the same rule — 14% plus 10% of that. Only the left-hand column exists in the statute; the right-hand column is our multiplication.
Why is a lecture fee withheld at 8.8%
Lecture fees, writing fees and one-off consulting are usually “other income” rather than business income. The statutory rate there is 20%, yet only 8.8% is withheld. We followed the provisions to see why.
- Income Tax Act Decree art. 87(1-2) — for personal-service and similar other income, “an amount equivalent to 60/100 of the amount received by the resident shall be the necessary expense.” With a proviso: “if the necessary expense actually incurred exceeds … the excess shall also be included.”
- Income Tax Act art. 129(1)6(d) — other income generally is taxed at 20/100. Of 1,000,000 won, only 400,000 is taxable, so 80,000 won.
- Local Tax Act art. 103-13(1) — 10% of that, 8,000 won, brings it to 88,000 won.
So 8.8% is not a rate at all — it is 40% x 20% x 1.1 (our arithmetic). If the deemed 60% exceeds what you actually spent, other income treatment favours you; if your real costs are higher, documenting them is the better route.
Why is it all recalculated in May
Withholding applies a flat percentage to the gross payment. It sees no expenses, no dependants, no other income. The real liability accounts for all of those, and that reckoning is the May comprehensive income tax return.
From the government legal information service, verbatim — “A resident who has global income in the relevant taxable period (including a resident with no global income tax base or with a deficit) shall report the global income tax base to the head of the competent tax office from 1 May to 31 May of the following year” (Income Tax Act art. 70(1)).
The parenthesis carries the weight. “Including a resident with no global income tax base or with a deficit” means a zero liability is still a filing obligation. And the same page warns that without filing, “you cannot receive various tax credits and reductions, and may bear heavy penalty taxes.”
How much counts as expenses — there is more than one rate
Without bookkeeping, expenses are recognised at rates the National Tax Service publishes by business code. That table has a structure almost nobody mentions.
NTS Notice 2025-6, Article 4 — for personal-service business income earners (business code 940***), 2024 income up to KRW 40 million takes the simplified base rate and the excess takes the excess rate.
The simplified rate is not one number but two. The familiar “64.1% for personal services” applies only up to KRW 40 million; above that it drops to 49.7%.
| Code | Who it covers | Simplified base (to ₩40M) | Simplified excess (above ₩40M) | Standard |
|---|---|---|---|---|
| 940909 | Other self-employment — programmers, piano tuners, meter readers | 64.1% | 49.7% | 13.4% |
| 940903 | Instructors, tutors, private teachers, pattern cutters | 61.7% | 46.4% | 14.9% |
| 940906 | Insurance agents | 77.6% | 68.6% | 26.5% |
| 940908 | Door-to-door sellers — books, workbooks, cosmetics, purifiers, cars | 75.0% | 65.0% | 17.6% |
| 940600 | Advisory, supervision, consulting and proofreading fees | 58.4% | 41.8% | 5.9% |
| 940926 | Software freelancers | 64.1% | 49.7% | 20.9% |
| 940306 | Solo media creators — YouTubers, streamers | 64.1% | 49.7% | 12.1% |
— National Tax Service, “Standard and Simplified Expense Rates for 2024 income” (Notice 2025-6, effective 28 March 2025). The figures are the notice verbatim.
Identical simplified rates, very different standard rates. Codes 940909, 940926 and 940306 all carry 64.1 / 49.7 — but their standard rates are 13.4%, 20.9% and 12.1%. Once you cross out of the simplified regime, the business code decides a great deal.
The worked example printed in the notice — a book seller (940908) on the simplified rate with ₩45 million of annual income:
{₩40,000k − (₩40,000k × 75.0%)} + {₩5,000k − (₩5,000k × 65.0%)} = ₩11,750k
The first ₩40M and everything above it are computed at different rates. Applying 75% across the whole amount gives ₩11,250k — ₩500,000 too little (our calculation).
Not everyone may use the simplified rate. Prior-year income must fall below a threshold. For the “associations, repair and other personal services” group it is ₩24 million — but the notice adds separately that “personal services within repair and other personal services use a prior-year threshold of ₩36 million.”
Above the threshold you move to the standard rate, where the arithmetic itself changes: net income = receipts − main costs (purchases + rent + labour) − (receipts × standard rate). At 13.4% for 940909, net income jumps sharply if you have no documented main costs. Run your own numbers in the income tax calculator.
Is my income business income or other income
The same work can fall either way. The guidance sets out the test:
| Category | Test | Withheld |
|---|---|---|
| Business income | income from activity carried on “continuously and repeatedly on one's own account and responsibility” for profit (art. 19) | 3.3% |
| Employment income | where there is “substantial direction and supervision by the employer” or subordination, making it more appropriate to treat as labour | simplified tax table |
| Other income | one-off personal services and the like (art. 21(1)) | 8.8% |
You do not choose the category; the nature of the work does. Check which one your withholding receipt shows. If you have both, May combines them.
The 3 million won fork — what changes
Art. 14(3)8(a) defines “other income of 3 million won or less that has been withheld” as separately taxed other income — it need not be rolled into your global income at all.
| Test | Amount in the statute | Provision |
|---|---|---|
| Other income, separate taxation | other income amount of 3M won or less | art. 14(3)8(a) |
| Interest and dividends, global threshold | 20M won combined | art. 14(3)6 |
| Residential rental, separate taxation | gross receipts of 20M won or less | art. 14(3)7 |
The test is the “other income amount,” not what you were paid. That is the figure after the 60% deemed expense — so 3 million won corresponds to 7.5 million won of gross fees (our arithmetic: 7.5M x 40% = 3M). The same “3 million” differs by more than double depending on which stage it refers to.
The provision continues with a proviso beginning “provided that, where a resident with such income …” — separate taxation is an option, not a requirement. Someone in a low bracket may do better by combining.
How do I file
- Window — 1 May to 31 May of the following year (art. 70(1)).
- Method — verbatim: “electronic filing via Hometax, electronic filing via mobile Sontax, filing through a tax agent, downloading the form from the National Tax Service website, or completing a form available at the tax office and submitting it to the competent tax office.”
- Pre-filled returns — the guidance notes that someone on the simplified expense rate with only delivery-agency business income can use the pre-filled return, with the refund or payment already computed by the tax office.
- Payment — Hometax electronic payment, a bank, Cardrotax or Internet Giro.
Actual liability by bracket is worked through in the comprehensive income tax article, and you can run your own figures in the income tax calculator. For years already missed, see the amended return.
Questions that remain
They already took 3.3% — why file again?
Because withholding is a flat percentage of the gross payment with no expenses or deductions in it. May compares that against the real liability: overpaid comes back, underpaid is topped up.
Can I skip it if I earned very little?
The provision expressly includes “a resident with no global income tax base or with a deficit.” The obligation does not depend on the amount.
When does the refund arrive?
We could not confirm this. Neither the provisions nor the guidance page states a payment date. An earlier version of this article said “usually June or July”; with no source, it is gone.
Is other income better than business income?
It depends on whether the deemed 60% beats what you actually spent. If your real costs are higher, the Decree's proviso lets you include the excess — so keep the documentation.
What about VAT?
Some personal services are VAT-exempt. The structure is in the VAT guide, and the year's deadlines in the tax calendar.
Sources
- National Tax Service — primary source — “Standard and Simplified Expense Rates for 2024 income” (Notice 2025-6, effective 28 March 2025). Source of the per-code simplified base and excess rates and standard rates (940909 64.1/49.7/13.4, 940903 61.7/46.4/14.9, 940906 77.6/68.6/26.5, 940908 75.0/65.0/17.6, 940600 58.4/41.8/5.9), Article 4 on the ₩40 million split, the worked example for book sellers, the net income formulas for both methods, and the ₩36 million prior-year threshold for personal services.
- Korean Law Information Center — statute — Income Tax Act art. 129 (withholding tax rates) (in force 1 Jan 2026, Act no. 21221). Source for 3/100 on business income, 20/100 on other income, 14/100 on interest and dividends, 25/100 on non-business loan interest, 5/100 on service charges and 45/100 on income of unverified ownership.
- Korean Law Information Center — statute — Local Tax Act art. 103-13 (duty of special collection) (in force 1 Jan 2026, Act no. 21308). Source for the “10/100 of the income tax withheld” rule and the 10th-of-the-following-month deadline.
- Korean Law Information Center — statute — Income Tax Act Enforcement Decree art. 87 (necessary expenses for other income) (in force 1 Jul 2026, Decree no. 36343). Source for the 60% deemed expense and the “excess also included” proviso.
- Korean Law Information Center — statute — Income Tax Act art. 14 (computation of the tax base). Source for the 3M won, 20M won and 20M won separate-taxation thresholds.
- Ministry of Government Legislation, Easy-to-Find Practical Laws — primary source — “Delivery app workers > Filing the comprehensive income tax return” (page states as of 15 July 2026). Source for the business-versus-employment test, the 1–31 May window, the consequence of not filing, the filing and payment methods, and the pre-filled return.
- Our own arithmetic — 3.3% / 5.5% / 15.4% / 22% / 27.5% / 49.5% (statutory rate x 1.1), 8.8% = 40% x 20% x 1.1, and 7.5M won gross = 3M won of other income.
Where to check further
- Which business code is yours. Expense rates are set per code and your contract decides which one — check Hometax's expense-rate lookup or the code printed on your May filing notice. Several codes have been split out of 940909, including software freelancers (940926) and solo media creators (940306).
- When a refund is actually paid, and the specific penalty rates. Neither the statutes nor the Easy Law page state them; the source stops at “you may face heavy penalties” — the National Tax Service helpline (126) answers both.
- Whether your income counts as personal-service other income. Enforcement Decree art. 87(1-2) points at several subparagraphs and the answer turns on your contract, so we do not assert one — the taxpayer advocate at your district tax office will check the contract free of charge.
3.3% is not a rate — it is 3% x 1.1. And it is not a tax bill either; it is money taken in advance. The actual figure appears in May.
As of July 2026 (Income Tax Act and Local Tax Act in force 1 Jan 2026; Decree 1 Jul 2026; guidance page as of 15 Jul 2026). Rates and provisions are the Korean Law Information Center verbatim; the x1.1 multiplications, the 8.8% breakdown and the 7.5M won conversion are ours. This is not tax advice — expense rates and actual liability vary by trade and income, so confirm through Hometax or a tax professional.
The 3.3% withheld is set against the tax in May, and if you trade at any scale a second bill follows in November — the interim payment calculator works out that one.
