South Korea

VAT was introduced into South Korea in 1977 to consolidate the 8 indirect taxes previously in place, and streamline the Korean tax system.  It is similar to the European Union’s VAT system, requiring re-calculation and payments to the tax authorities at each transaction point in the onward sales chain.

VAT in Korea is administered by the National Tax Service.

Requirement to register for Korean VAT

For foreign companies making taxable supplies in South Korea, there may be a statutory obligation to register for VAT.  Once registered, non-resident traders must comply with local filing rules, (see below).

Typical situations requiring a Korean VAT registration include:

  • Where goods are delivered within Korea;
  • If the foreign trader imports, installs or assembles goods in Korea;
  • Export of goods from Korea;
  • Supply of services where the place of supply is Korea

Korea fiscal representative

A foreign company may register for VAT without the requirement to form a local company; however they must appoint a Korean Fiscal Representative.

The representative and company are jointly liable for the reporting and payment of VAT to the Korean authorities.  In addition, the agent is responsible for all communications between the company and the Tax authorities.

Korea permanent establishment

Although it is possible for a company to register for VAT in South Korea without the requirement to form a local company, it is possible for the Authorities to determine, following the VAT registration, that the corporation concerned has a PE in Korea. There are currently no clear guidelines on this.

Latest South Korean news

South Korea levies 10% VAT on foreign digital services

December 18, 2018

South Korea is to require non-resident providers of digital services to consumers liable to charge 10% VAT from 1 July 2019...

South Korea extends VAT to foreign cloud computing

August 5, 2018

The Republic of Korea (South Korea) has extended the scope of VAT to non-resident B2C providers of cloud computer services. This new liability will... 

South Korea e-service foreign intermediaries VAT liable

June 25, 2016

The South Korean tax office has ruled that non-resident online market place intermediaries are liable to collect VAT on e-services provided to consumers. This...