A tax guide for World Cup and for tourists
◇ Most income related to the FIFA World Cup shall be tax-exempted
◇ Certain income, however, shall be subject to taxation
FOREIGN TOURISTS and VALUE-ADDED TAX (VAT) EXEMPTION
◇ Most VAT for the foreign tourists shall be exempted
USEFUL INFORMATION WHEN YOU TRAVEL AROUND KOREA
Most income related to the World Cup
shall be tax-exempted ◆ Income of Foreign Referees and Staffs
- Although the income of
foreign referees and staffs received from the FIFA in relation to the FIFA World
Cup is subject to taxation as income earned for personal services rendered in
Korea, such income shall be tax-exempted for the success of the World Cup.
◆ Salary of Foreign Officers and Employees of
FIFA
- Although earned income for
the services rendered in Korea is subject to taxation, the salary earned by
foreign officers and employees of FIFA shall be tax-exempted.
◆ Income of Foreign Football Associations
- Although income for the
services of dispatching players is subject to taxation in Korea, any income
(i.e., reserve fund, air fare, accommodation expenses, etc.) paid by FIFA for
dispatching players to the foreign football associations participating in the
World Cup shall be tax-exempted.
◆ VAT levied on World Cup Game Entrance Tickets
- VAT shall not be levied on
the FIFA World Cup game entrance tickets issued and sold by the Korean FIFA
World Cup Organizing Committee (KOWOC) since the KOWOC is an agent of the Korean
government affairs.
Certain income, however, shall be
subject to taxation.◆ Royalty from Broadcasting Rights for the World Cup
Games
- The royalty paid by a Korean
broadcasting corporation to KIRCH MEDIA which acquired the broadcasting rights
for FIFA World Cup games from the FIFA, shall be taxed as Korean source royalty
income.
◆ Royalty for the Use of FIFA World Cup Marks
- The royalty, which two Korean
sponsors (Hyundai Motors and Korea Telecom) pay to the FIFA for the rights to
promote sales using the FIFA World Cup Marks (i.e., logo, emblem and mascot) and
the stadium advertising materials, shall be taxed as Korean source royalty
income.
- The royalty, which a Korean
licensee (Kolon TNS, etc) pays to the FIFA for the right to use the FIFA World
Cup Marks on its products, shall be also taxed as Korean source royalty
income.
◆ Foreign Artiste’s Income
- The income, which Korean
advertising companies (Cheil Communications, Inc. and LG Ad, etc.) pay to the
foreign artistes participating in cultural events for the FIFA World Cup such as
the eve of opening ceremony and the opening ceremony, etc., shall be taxed as
artiste’s income or personal services income.
◆ Income of Foreign Soccer Players and Coaches
- Game allowances, which the
FIFA pays to soccer players and coaches belonging to the foreign football
associations, are taxable as Korean source sportsman income (for soccer players)
and personal services income (for coaches).
- Only the portion of game
allowances allocated to players and coaches are taxable, not the whole amount of
the game allowances paid to each participating team.
- In addition, any special
allowances paid by each government or companies pay to their players and coaches
shall be taxable.
《Taxing rights shall be allocated
between Korea and Japan due to the joint holding.》- Income of players and coaches
whose teams play games in either Korea or Japan shall be taxable only in the
playing country.- Taxes on income earned by players and coaches whose teams
play in both Korea and Japan shall be allocated according to the number of games
played in each country.
The taxes are paid in the following
manners.◆ Royalty from the Broadcasting Rights for FIFA World
Cup Games
- When a Korean broadcasting
corporation pays the royalty for the broadcasting rights to KIRCH MEDIA, it
should withhold taxes based on the korea Tax Treaty with its resident country
and pay it to the tax office
◆ Royalty for the Use of FIFA World Cup Marks
- When a sponsor or a licensee
pays the royalty for the use of FIFA World Cup Marks, it should withhold 10%
(including inhabitant surtax) of the royalty under the Switzerland-Korea Tax
Treaty and pay it to the tax office.
Tax Withholding System is..
Income of Foreign Soccer Players and
Coaches - The 22% (withholding tax
rate) of the game allowances to be paid by the FIFA to the football association
of each country shall be reserved until the tax amount is confirmed.
- The football association of
each country shall be the withholding agent for the game allowances, etc. to be
distributed to players and coaches of that country. In addition, for the
convenience of tax payment, KOWOC shall be appointed as their tax manager.
- KOWOC, as the tax manager
should settle and pay the withholding tax using the game allowances reserved by
the FIFA.
For Treaty Countries
- For the players’ income, 22%
of withholding tax shall be applied as sportsmen’s income. However, for the
income of the U.S. players, as a personal service income, 22% of withholding
tax shall be applied when the income exceeds US$3,000.
- However, the coaches’ income
is subject to tax as a personal service income, only if the condition under the
tax treaty are met(for example, when the length of stay in Korea is 183 days or
more). Therefore, it is expected that most of the coaches’ income will be
non-taxable.
For Non-treaty Countries
- Both players’ and coaches’
income shall be subject to 22% of withholding tax, as a personal service
income.
※ Non-treaty countries
participating in the FIFA World Cup (9 countries):Saudi Arabia, Cameroon,
Nigeria, Senegal, Argentina, Paraguay, Ecuador, Uruguay and Croatia
Tax Payment Procedure for Foreign
Soccer Players and Coaches1)The football association of
each country submits an application through FIFA, appointing the KOWOC as its
tax administration agent.
2)The FIFA pays net game
allowances after withholding 22% to each football association, based on the
final ranks of the games.
3)Each football association
submits the details of compensations paid to players and coaches to the KOWOC
through FIFA.
4)The KOWOC submits tax
calculation statements to the FIFA after calculating withholding taxes of player
and coach based on the details of compensations.
5)The FIFA remits tax amounts
to the KOWOC and remits the remaining balances of reserved payments to each
football association, if any.
- The KOWOC should immediately
pay withholding taxes collected from the FIFA to the Namdaemun District Tax
Office.
◆ Foreign Artiste’s Income
- When the advertising
companies (Cheil Communications, inc. and LG Ad, etc.) holding FIFA World Cup
cultural events pay compensations to foreign artistes participating in each
event, they should withhold 22% (including inhabitant surtax) for taxes.
Treaty Countries
- Most of countries withhold
taxes with respect to domestic performances regardless of whether the performer
is an individual or a corporation.
- However, in the case of four
countries below, the remuneration is taxed only if any of the specified
conditions is met
[United States of America (for individual)]
(a) He is present in Korea for 183 days or more in the taxable year;
(b) Such income exceeds US$ 3,000; or
(c) He maintains a fixed place of business for 183 days or more in the
taxable year
[Japan]
(a) Individual : the income is over US$ 10,000 in the taxable year
(b) Corporation : Service is rendered in Korea
[Thailand]
(a) service income exceeds either US$ 50 for each day; or
(b) aggregate amount of service income exceeds US$ 1,500.
[Bulgaria]
(a) Individual: Service is rendered in Korea
(b) Corporation: It has a permanent establishment in
Korea
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Non-treaty countries
- Income of both individuals
and corporations shall be taxed as a personal service income only if the service
is performed in Korea.
Most VAT for the Foreign Tourists
shall be exempted◆ Summary of the VAT Exemption System
○When foreign tourists purchase
goods, there are two exemption systems ? the advance VAT exemption system that
applies at the time of purchasing and the post VAT exemption system that applies
after purchasing.
◆ How to Get Tax Exemption at the Time of
Purchase?
○The foreign tourists can
purchase goods at the prices that exclude VAT, etc. at the bonded shops, tourism
souvenir shops, special tour course, etc.
Bonded Shops
- The foreign tourists can
purchase goods at the VAT-exempted price by showing passport at the bonded area
such as duty free shop at airport or hotel, etc. under the Customs Law.
Tourism Souvenir Shops
- Under the Travel Promotion
Act, the foreign tourists can purchase the locally produced goods like amethyst,
etc. at the VAT-exempted price by showing the passport at the tourism souvenir
shops for the foreign tourists.
※ For more information, please
call “Hello Korea Call” (Simply 1330 without area code)
Rates of Tourist Hotels
- According to the Travel
Promotion Act, the foreign tourists can stay at designated hotels at the
VAT-exempted prices.
※ For more information, please
call the Hotel Information Center at the Incheon International Airport
(032-743-2570).
Special Travel Area
(Itaewon)- The foreign tourists can
purchase goods without VAT using foreign currencies by showing passports at the
retail /suits / dresses /shoe stores designated by the chief of the district tax
office.
※ For more information, please
call the Itaewon tourist Information Desk(02-3785-2514).
◆ How to Get Tax Exemption after Purchasing?
○The foreign tourists can
purchase goods at the VAT-included prices at the post VAT exemption stores
designated by the chief of the district tax office and collect VAT refund at the
airport when leaving korea.
○If foreign tourists depart
from Korea using other than Incheon or Kimhae International Airports, they can
collect the VAT refund by mailing in a stamped VAT refund slip to VAT Refund
Offices once they return to their home country.
○Over one thousand shops are
designated as the post VAT exemption shop in department stores or shopping
centers throughout Korea.
The VAT refund procedures for the post
VAT exemption goods 1)Ask for two (2) copies of VAT
refund slips (sales certificates for foreign tourists) at the VAT exemption
stores where the Tax Refund Shopping or TAX FREE SHOPPING sticker is posted.
2)3) Show the purchased goods
and the VAT refund slips to customs officials and have the VAT refund slips
stamped.
4)5) Submit the stamped VAT
refund slip to the VAT Refund Offices (Global refund, Korea refund) inside
Inchon International Airport or Kimhae International Airport and get the VAT
refund.
※ VAT Refund Office
Global refund
Suite 1106 Hotel President, 188-3
Ulchiro 1ka, Chung-Ku, Seoul, Korea
Phone: +82 2 776 2170/2171
http://www.golbalrefund.com
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Korea refund
Bumsan Bidg. 2F 97-3 Banpo-dong,
Seocho-gu Seoul. Korea
Phone: +82 2 537-1755
http://www.korea-refund.com
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Useful Information when you travel
around Korea
○National Tax Service: 02-397-1583, www.nts.go.kr
○International Airports
- Inchon International Airport : 032-741-0104,
www.airport.or.kr
- Gimpo International Airport : 02-660-2262,
www.kimpo-airport.co.kr
- Gimhae International Airport : 051-970-2313,
gimhae.airport.co.kr
- Jeju International Airport : 064-740-8313,
jeju.airport.co.kr
○The Tourist Information Center in the cities holding 2002 FIFA World Cup
Seoul(02-757-0086), Incheon(032-777-1330), Suwon(
031-228-2766), Daejeon(042-861-1330), Gwangju(062-525-9378), Jeonju
(063-242-7729), Daegu(053-627-8900), Ulsan(052-227-9605), Busan(051-469-0699),
Seogwipo(064-732-1330)
○For travel complaints
- 02-735-0101, tourcom@www.knto.or.kr
○Lost and Found
- 02-554-4182, www.lost114.com
○Emergency
- Dial 112 for the police and 119 for the ambulance
○Guide for the telephone numbers of foreign embassies in Korea
- Home page of the Ministry of Foreign Affairs and Trade (
href="http://www.mofat.go.kr" target="_blank">www.mofat.go.kr)
- “Information
services” ? “General Information”- “Diplomatic missions”
- MOFAT official
for diplomatic missions (02-720-2354)
