The withholding of resident tax is done in a different manner than the system used to withhold the national income tax.
The national income tax is mandatorily deducted from each employees’ salary each month. Technically, companies are also supposed withhold resident tax from an employees compensation based upon the tax notice that local government sends to the employer. However, enforcement of this practice has been rather lax and many smaller companies simply elect not to deduct the resident tax from the employees salary.
In this case, the employee needs to make sure they file and pay the proper amount with the local government.
Additionally, since some local governments are getting stricter about the practice of withholding resident taxes, we recommend that all companies start to withhold resident taxes from the next resident tax period (from June).
The procedure is similar but slightly easier than the one used to withhold the national income tax. Local governments will send your company 12 tax payment slips (one for each month). Your company just needs to deduct the amount shown on the payment slip from the employee’s salary each month.
Please note that the resident tax slips will be only sent for those employees who have been on the payroll as of Dec 31 in the previous year. For example, the tax slips for 2017 will only be sent for those working in the company as at 31st of December, 2016.