I would like specific guidance on the method for filing withholding tax, the procedures, the place of tax payment, and the submission deadlines.

The matter you described is a case in which a sole proprietor pays consideration for personal services to a freelancer (an individual) who does not have a business registration certificate, and it is a typical case in which a withholding obligation arises.

First, if the freelancer receiving payment is an individual who is not registered as a business, the consideration for the services can generally fall under business income or other income under the Income Tax Act.

In this case, the payer, the sole proprietor, becomes the withholding agent, so when paying the consideration, they must first deduct the income tax and then report and pay it to the State.

The timing of withholding is based on the actual date of payment, and if the time of payment is delayed to within a certain period, a special provision on the timing of withholding may apply.

The withheld income tax must be reported and paid to the competent tax office by the 10th of the month following the month to which the payment date belongs.

However, where a person has met certain requirements and obtained approval for semiannual payment, reporting and payment by the 10th of the month following the last month of the half-year is possible.

In addition, where the special provision on the timing of withholding applies, the relevant statement of payment must be submitted by March 10 of the year following the year in which the taxation period of the income amount ends.

The place of tax payment is based on the location of the business establishment, and for local income tax, earned income and retirement income are reported and paid to the local government having jurisdiction over the place of work, while other income is reported and paid to the local government having jurisdiction over the place of payment.

Where the withholding agent has withheld income tax, the local income tax must also be specially collected together with it.

The local income tax is 10% of the withheld income tax, and it is reported and paid at the same time as the income tax.

The place of tax payment for local income tax is as follows.

- Earned income and retirement income: the local government having jurisdiction over the place of work

- Other income, income from personal services, and the like: the local government having jurisdiction over the place where the income is paid

In the case of Seoul, filing and payment are made through the Seoul ETAX system, while in other regions they are made through the WETAX system.

When filing, a statement of the withheld tax amount and a statement of payment must be attached, and because the withholding tax rate may vary depending on the type of income and the amount paid, it is safe to have the method for filing withholding tax, such as calculating the specific amounts and preparing the return, reviewed by a tax attorney.

This can help prevent additional taxes or disadvantages resulting from an incorrect filing.

If you accurately understand and prepare the procedures, such as the method for filing withholding tax, the submission deadlines, and the place of tax payment, you can minimize the tax risks that may arise when a business handles the amounts it pays to a freelancer.