South Korean vat compliance and rates
South Korean VAT compliance
There are detailed rules controlling the recording and processing of Korean transactions. These include guidelines on:
- Korean invoice requirements;
- Foreign currency reporting and translation;
- Credit notes and corrections; and
- What accounting records must be maintained.
South Korean VAT returns
Periodic VAT returns must be submitted by all companies with a Korean VAT number, detailing all taxable supplies (sales) and inputs (costs). There are two return periods each year in South Korea, ie. 1st January – 30th June, and 1st July – 31st December. However, preliminary returns are also required at the end of the first and third calendar quarters.
The return deadline in Korea is 25 days from the period end, and any associated VAT liability must also be paid by this deadline. In the case of a tax credit (where the VAT incurred by the company exceeds the VAT charged on its sales in the reporting period), approved credits will be paid over to the company within 30 days of the return deadline.
South Korean VAT recovery
If a foreign company is not making taxable supplies in Korea, but is incurring Korean VAT on local goods or services, then the VAT may, in certain circumstances, by recovered through a VAT reclaim. However, this regulation applies only where the tax refundable exceeds KRW 300,000 (approx. €200,000) and where a similar taxation system like VAT does not exist in the foreigner's nation, or a reciprocity agreement is in place with the foreign taxpayer’s country of residence.
South Korean VAT rate
The Korean VAT rate is currently 10%.
|Rate||Type||Which goods or services|
|10%||Standard||All other taxable goods and services|
|0%||Zero||Exports and associated transport services; finance and insurance services; services rendered overseas; some business support services|
Latest South Korean news
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...
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...
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...
- South Korea