TAX WITHHOLDING

A. Obligation of Tax Withholdong

A person paying interest, dividends, business profits prescribed by the Presidential Decree,

Class A wage and salary income, and retirement income, or other income is required to

withhold income tax due thereon at the time of such payment, and to pay it to the

government by the tenth day of the following month. However, a businessman who has

less than ten employees on average at the end of every month from January to October of

the preceding year may pay taxes withheld to the government by the tenth day of the

following month each half-year, after obtaining the approval of the head of the tax office

concerned.

B. Rates of Withholding

INTEREST INCOME

Interest on a long-term saving with a redemption period of 5 years or longer and interest

on a long-term bond with a redemption period of 5 years: 30%

Other interest: 15%

Interest from non-commercial loans : 25%

DIVIDEND INCOME

15%

BUSINESS INCOME

Business income from personal services and medical or health services are exempt from

VAT: 3% of total revenue

CLASS A WAGE AND SALARY INCOME

Tax rates : the basic tax rates applicable to global income

Monthly Tax Withholding : If wage or salary is paid monthly, the tax amount to be

withheld is calculated by the "Simplified Tax Table" attached at the end of the Income

Tax Law.

Year-end adjustment : A person subject to tax withholding must calculate the total annual

tax amount in January of the following year or at the time of the last payment of income

in the year (i.e., when the income earner completes employment during the year) and

collect or refund the difference between the tax amount payable. This amount is calculated

by applying the basic tax rates and the tax amount withheld, which is explained in the

"Simplified Tax Table."

Application for personal exemption : Class A wage and salary income earners who are

entitled to personal exemptions must submit an application for personal exemptions,

together with documentary evidence in support thereof, to the withholding agent before

receiving wage and salary income for January of the following year.

Daily wage : Tax is withheld from the wages of daily workers at a rate of 8%.

CLASS A SEVERANCE INCOME : basic tax rates

PENSION INCOME

national pension, government employee pension: basic tax rates (identical to labor income

tax)

retirement pension, private pension: 5%

OTHER INCOME : 20 %