The 3.3% is closer to a deposit than a tax
The 3.3% withholding is 3% income tax plus 0.3% local tax (10% of the income tax). On a 3M contract, 99,000 is withheld and 2,901,000 paid out.
It is a prepayment, not a final assessment. The actual liability is settled the following May with expenses and deductions applied, and the difference refunded or collected.
Occasional income is withheld at 8.8% — writing, lectures, advisory work. That category automatically recognises 60% as expenses, so the real burden is lower than the headline rate.
Leaving a refund on the table
Treating the 3.3% as final and skipping the May filing forfeits a refund, and at higher incomes adds a non-filing penalty.
Without expense records the refund shrinks sharply. Equipment, communications, transport and office rent all qualify with documentation. At lower revenues a simplified expense rate may be better — compare both.
Above a revenue threshold, VAT registration becomes mandatory. Freelancers supplying only personal services are often exempt, but it varies by sector.
Withholding by amount
Business income from freelance services is withheld at 3% plus 0.3% local tax; occasional other income such as lecture and writing fees at 20% plus 2%, but with 60% recognised as expenses the effective rate is 8.8% of the amount paid (Income Tax Act, Art. 129; Enforcement Decree, Art. 87). Amounts below are from this calculator, with withholding rounded down to 10 won.
| Amount | Business 3.3% | Paid out | Other 8.8% | Paid out |
|---|---|---|---|---|
| 500,000 | 16,500 | 483,500 | 44,000 | 456,000 |
| 1,000,000 | 33,000 | 967,000 | 88,000 | 912,000 |
| 3,000,000 | 99,000 | 2,901,000 | 264,000 | 2,736,000 |
| 5,000,000 | 165,000 | 4,835,000 | 440,000 | 4,560,000 |
| 10,000,000 | 330,000 | 9,670,000 | 880,000 | 9,120,000 |