VALUE-ADDED TAX ACT

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VALUE-ADDED TAX ACT — 법갈피

Article 5(Taxable Period) #

(1) The taxable period of value-added taxes for entrepreneurs shall be as follows:

1. Simplified taxable persons: From January 1 until December 31;

2. General taxable persons:

Number of persons entering a golf course x Number of holes actually played/Total number of holes

(2) The initial taxable period for a person starting a new business shall be from the commencement date of the business until the end date of the taxable period that includes the commencement date of the business: Provided, That when an application for business registration is filed prior to the commencement date of the business under the proviso of Article 8 (1), the initial taxable period shall be from the date of such application until the end date of the taxable period that includes the date of application.

(3) If an entrepreneur closes his or her business, the taxable period shall be from the commencement date of the taxable period that includes the date of closing the business until the date of closing the business. In such cases, the standards for determining the date of closing the business shall be prescribed by Presidential Decree.

(4) Notwithstanding paragraph (1) 1, if a general taxable person is converted into a simplified taxable person, or a simplified taxable person is converted into a general taxable person, as a consequence of the application or non-application of provisions concerning simplified taxable persons under Article 62 (1) and (2), the taxable period of value-added taxes in the period for which the provisions concerning simplified taxable persons apply in the year during which such conversion is made shall be determined pursuant to the following classifications: <Newly Inserted on Jan. 1, 2014>

1. Where a general taxable person is converted into a simplified taxable person: From July 1 until December 31 after such conversion;

2. Where a simplified taxable person is converted into a general taxable person: From January 1 until June 30 before such conversion.

(5) If a simplified taxable person becomes a general taxable person by waiving the application of the provisions concerning simplified taxable persons under Article 70, each of the following periods shall be deemed one taxable period. In such cases, the period referred to in subparagraph 1 shall be deemed the taxable period for simplified taxable persons; and the period referred to in subparagraph 2, the taxable period for general taxable persons: <Amended on Jan. 1, 2014>

1. The period from the commencement date of the taxable period that includes the date of report on the waiver of application of simplified taxation under Article 70 (1) until the last day of the month in which the date of report falls;

2. The period from the first day of the month following the month in which the date of report under subparagraph 1 falls until the end date of the taxable period that includes such day.

Article 8(Business Registrations) #

(1) An entrepreneur shall file an application for business registration for each place of business with the head of the tax office having jurisdiction over each place of business, within 20 days from the commencement date of his or her business, as prescribed by Presidential Decree: Provided, That a person who intends to newly start a business may file an application for business registration even before the commencement date of the business.

(2) An entrepreneur may file an application for business registration under paragraph (1) with the head of any tax office other than the head of the tax office having jurisdiction over his or her place of business. In such cases, he or she shall be deemed to have filed an application for business registration with the head of the tax office having jurisdiction over his or her place of business.

(3) Notwithstanding paragraph (1), an entrepreneur who has at least two places of business (including entrepreneurs who have a single place of business but intend to establish an additional place of business) may file an application for registration by business unit with the head of the tax office having jurisdiction over his or her main office or principal office. In such cases, an entrepreneur so registered shall be treated as a per-business unit taxable entrepreneur. <Amended on Dec. 31, 2018>

(4) Where an entrepreneur who has filed for an application for business registration by business unit under paragraph (1) intends to be converted to a per-business unit taxable entrepreneur under paragraph (3), he or she shall file an application for modification of registration with the head of the tax office having jurisdiction over his or her main office or principal office not later than 20 days before the commencement of the taxable period during which he or she intends to be treated as a per-business unit taxable entrepreneur. The same shall also apply where a per-business unit taxable entrepreneur intends to register his or her business by business unit.

(5) Where an entrepreneur who has a single place of business, while establishing an additional place of business, intends to be treated as a per-business unit taxable entrepreneur from the taxable period that includes the commencement date of business of such additional place of business, he or she shall file an application for modification of registration with the head of the tax office having jurisdiction over his or her main office or principal office, within 20 days after the commencement of business of the additional place of business (limited to the period within the taxable period that includes the commencement date of business of the additional place of business), notwithstanding the former part of paragraph (4). <Newly Inserted on Dec. 31, 2018>

(6) If a trustee becomes a person liable to pay tax under Article 3 (2), the trustee (referring to the representative trustee if there is a joint trustee") shall file for registration of business under paragraph (1) by treating the trust property as a place of business. <Newly Inserted on Dec. 22, 2020>

(7) The head of the tax office having jurisdiction over the place of business who has received an application filed under paragraphs (1) through (6) (referring to the head of the tax office having jurisdiction over the main office or principal office in cases falling under paragraphs (3) through (5); hereafter in this Article the same shall apply) shall, upon registration of the business, issue a certificate of registration with a registration number assigned (hereinafter referred to as "business registration certificate") to the relevant entrepreneur, as prescribed by Presidential Decree. <Amended on Dec. 31, 2018; Dec. 22, 2020>

(8) Where an entrepreneur registered under paragraph (7) suspends or closes his or her business or is subject to any modification of his or her registration, he or she shall report such fact to the head of the tax office having jurisdiction over his or her place of business without delay, as prescribed by Presidential Decree. The same shall also apply where a person who has filed an application for business registration under the proviso of paragraph (1), it turns out, did not start the business: <Amended on Dec. 31, 2018; Dec. 22, 2020>

(9) If an entrepreneur registered under paragraph (7) falls under any of the following, the head of the tax office having jurisdiction over his or her place of business shall cancel his or her business registration without delay. <Amended on Dec. 31, 2018; Dec. 22, 2020; Dec. 31, 2023>

1. Where the person closes his/her business (including cases prescribed by Presidential Decree as a case of de facto closure of the business);

2. A case prescribed by Presidential Decree, where the person fails to start a business after filing an application for business registration under the proviso of paragraph (1).

(10) The head of the tax office having jurisdiction over the place of business may issue a renewed business registration certificate, as prescribed by Presidential Decree, if deemed necessary. <Amended on Dec. 23, 2014; Dec. 31, 2018; Dec. 22, 2020>

(11) If an entrepreneur liable to pay the individual consumption tax or the traffic, energy and environment tax files any of the following reports classified as follows under the Individual Consumption Tax Act or the Traffic, Energy and Environment Tax Act, he or she shall be deemed to file an application for registration or a report according to the relevant classification: <Amended on Dec. 31, 2018; Dec. 22, 2020>

1. Where he or she has reported the commencement of his or her business under the former part of Article 21 (1) of the Individual Consumption Tax Act or the former part of Article 18 (1) of the Traffic, Energy and Environment Tax Act: An application for business registration under paragraph (1) or (2);

2. Where he or she has reported the suspension or closing of his or her business or any change in his or her registered matters under the latter part of Article 21 (1) of the Individual Consumption Tax Act or the latter part of Article 18 (1) of the Traffic, Energy and Environment Tax Act: A report on the suspension or closing of his or her business or on the modification of his or her registration under paragraph (7);

3. Where he or she has reported himself or herself as a per-business unit taxable entrepreneur under Article 21 (2) or (3) of the Individual Consumption Tax Act or Article 18 (3) or (4) of the Traffic, Energy and Environment Tax Act: An application for registration as a per-business unit taxable entrepreneur under paragraph (3) or an application for registration of conversion into a per-business unit taxable entrepreneur under paragraph (4);

4. Where he or she has reported the takeover, inheritance or merger of a business under Article 21 (4) or (5) of the Individual Consumption Tax Act or Article 18 (2) of the Traffic, Energy and Environment Tax Act: A report on the modification of his or her registration under paragraph (7).

(12) Except as provided in paragraphs (1) through (11), matters necessary for the business registration, the issuance of business registration certificates, the modification or cancellation of registration, etc. shall be prescribed by Presidential Decree. <Amended on Dec. 31, 2018; Dec. 22, 2020>

Article 10(Special Cases concerning Supply of Goods) #

(1) Where an entrepreneur directly uses or consumes any of the following goods that are produced or acquired in connection with his or her own taxable business (hereafter in this Article referred to as "self-produced or acquired goods") for his or her own tax-free business and business of supplying goods or services that are not subject to VAT (hereinafter referred to as "tax-free business, etc."), it shall be deemed a supply of goods: <Amended on Dec. 31, 2018; Dec. 31, 2023>

1. Goods for which the input tax amount under Article 38 and the input tax amounts under this Act and other statutes are deductible;

2. Goods acquired through a business transfer under paragraph (9) 2, for which the business transferor is entitled to deduct the input tax amount under Article 38 and the input tax amounts under this Act and other statutes;

3. Goods to which the tax rate of zero percent applies because the supply thereof constitutes exportation under Article 21 (2) 3.

(2) Any use or consumption of self-produced or acquired goods, which falls under any of the following, shall be deemed a supply of goods: <Amended on Jan. 1, 2014>

1. Where an entrepreneur uses or consumes self-produced or acquired goods for automobiles under Article 1 (2) 3 of the Individual Consumption Tax Act or for the maintenance of such automobiles, for which the input tax amount is not deductible from the output tax amount under Article 39 (1) 5;

2. Where an entrepreneur running a transportation business, an automobile sales business, or any other type of business prescribed by Presidential Decree uses any goods, among self-produced or acquired goods, that are used for automobiles under Article 1 (2) 3 of the Individual Consumption Tax Act and for the maintenance of such automobiles, for any other purpose without using them directly for business within the relevant type of business.

(3) Where an entrepreneur having at least two places of business releases any goods produced or acquired in connection with his or her own business from one of his or her places of business to another for the purpose of sale, it shall be deemed a supply of goods: Provided, That none of the following cases shall be deemed a supply of goods:

1. Where the entrepreneur releases such goods from one of his or her places of business to another during the taxable period for which he or she is treated as a per-business unit taxable entrepreneur under the latter part of Article 8 (3);

2. Where the entrepreneur releases such goods from one of his or her places of business to another during the taxable period for which he or she is allowed to pay the value-added tax in a lump sum at his or her principal place of business under Article 51: Provided, That this shall not apply where he or she has issued a tax invoice under Article 32 and filed a return with the head of the competent tax office under Article 48 or 49.

(4) Where an entrepreneur uses or consumes self-produced or acquired goods for his or her own personal purposes or other purposes not directly related to his or her business, or where he or she allows his or her employees or other persons to use or consume such goods without any compensation or at less than the market price thereof, it shall be deemed a supply of goods. In such cases, in cases prescribed by Presidential Decree where an entrepreneur supplies goods to his or her employees without any compensation or at less than the market price thereof to reimburse actual expenses or to provide welfare, such supply shall not be deemed a supply of goods. <Amended on Dec. 31, 2018>

(5) Where an entrepreneur donates self-produced or acquired goods to his or her customers or to many unspecified persons (excluding where the price of donated goods is included in the price of the supply of goods which is the main transaction), it shall be deemed a supply of goods: Provided, That the donation made by an entrepreneur for his or her own business, as prescribed by Presidential Decree, shall not be deemed a supply of goods.

(6) Any self-produced or acquired goods left in stock at the time an entrepreneur closes his or her business shall be deemed those supplied to himself or herself. The same shall also apply where an entrepreneur filed an application for business registration prior to the commencement date of the business under the proviso of Article 8 (1), but, it turns out, in fact, did not start the business.

(7) In selling or buying goods on consignment or through an agent, the consignor or the principal shall be deemed to have supplied or received those goods directly: Provided, That when the consignor or the principal is unidentifiable, as prescribed by Presidential Decree, such goods shall be deemed to have been supplied to, or to have been received from, the consignee or agent.

(8) If the status of a trustor is transferred under Article 10 of the Trust Act, the existing trustor shall be deemed to have supplied the trust property to a new trustor: Provided, That in cases prescribed by Presidential Decree in which it is impracticable to deem that a substantial change in the ownership of trust property has occurred, such transfer shall not be deemed a supply of trust property. <Newly Inserted on Dec. 8, 2021>

(9) None of the following cases shall be deemed a supply of goods: <Amended on Jan. 1, 2014; Dec. 19, 2017>

1. Offering any goods as security, which is prescribed by Presidential Decree;

2. Transferring any business, which is prescribed by Presidential Decree: Provided, That this shall exclude where the transferee of the business pays a value-added tax after collecting it from the recipient of the transfer price at the time of payment thereof pursuant to Article 52 (4);

3. Paying any tax in kind pursuant to statutes, which is prescribed by Presidential Decree;

4. Transferring ownership of trust property, which falls under any of the following:

(a) Transferring trust property from the trustor to the trustee;

(b) Transferring trust property from the trustee to the trustor due to the termination of trust;

(10) Except as provided in paragraphs (1) through (9), matters necessary for special cases concerning a supply of goods shall be prescribed by Presidential Decree. <Amended on Dec. 19, 2017>

Article 17(Special Cases concerning Time of Supply of Goods and Services) #

(1) Where an entrepreneur is fully or partly paid the price for goods or services and issues a tax invoice provided for in Article 32 or a receipt provided for in Article 36 with respect to such payment, prior to the time of supply of goods or services referred to in Article 15 or 16 (hereafter in this Article referred to as "time of supply of goods or services"), the time such tax invoice or receipt is issued shall be deemed the time of supply of such goods or services, respectively. <Amended on Dec. 19, 2017>

(2) Where an entrepreneur issues a tax invoice provided for in Article 32 prior to the time of supply of goods or services and then is paid the price for such goods or services within seven days of issuance of the tax invoice, the time the tax invoice is issued shall be deemed the time of supply of such goods or services.

(3) Notwithstanding paragraph (2), even though the entrepreneur who supplies goods or services issues a tax invoice provided for in Article 32 prior to the time of supply of such goods or services and then is paid the price for such goods or services after seven days of issuance of the tax invoice, the time the tax invoice is issued shall be deemed the time of supply of such goods or services, in either of the following cases: <Amended on Dec. 19, 2017; Dec. 31, 2018; Dec. 8, 2021>

1. Where the time the demand for payment is made (referring to the date the relevant tax invoice is issued) and the time the payment is made are separately specified in a written contract, a written agreement, or the like between the parties; and the interval between the time the demand for payment is made and the time the payment is made is not more than 30 days;

2. Where the time for supplying goods or services arrives during the taxable period that includes the date of issuance of the tax invoice (or within 30 days from the date of issuance of the tax invoice if the person to whom such goods or services are supplied receives an early refund under Article 59 (2)).

(4) Where an entrepreneur who supplies goods or services in installments issues a tax invoice provided for in Article 32 or a receipt provided for in Article 36 prior to the time of supply of goods or services applicable to cases prescribed by Presidential Decree, the time such tax invoice or receipt is issued shall be deemed the time of supply of such goods or services, respectively.

Article 26(Tax Exemptions for Supply of Tax-Free Goods or Services) #

(1) A supply of any of the following goods or services shall be exempt from value-added tax: <Amended on Aug. 11, 2015; Jan. 19, 2016; Dec. 31, 2018; Dec. 31, 2022>

1. Unprocessed foodstuffs (including agricultural products, stock farm products, marine products, and forest products which are served for human consumption), and agricultural products, stock farm products, marine products, and forest products which are produced in the Republic of Korea and are not served for human consumption and which are prescribed by Presidential Decree;

2. Tap water;

3. Briquettes and anthracite coal;

4. Menstrual hygiene products;

5. Medical and health services (including veterinary services) prescribed by Presidential Decree, and blood;

6. Educational services prescribed by Presidential Decree;

7. Passenger transport services: Provided, That any of the following passenger transport services prescribed by Presidential Decree shall be excluded herefrom:

(a) Passenger transport services by aircraft, express buses, chartered buses, taxies, special vehicles, special-type ships, or rapid-transit trains;

(b) Passenger transport services by cable ways, cruise ships, or any other means of transportation for tourism or entertainment;

8. Books (including book lending and indoor reading services), newspapers, magazines, Official Gazettes, news communications prescribed by the Act on Promotion of News Communications, and broadcasting, which are prescribed by Presidential Decree: Provided, That advertisements shall be excluded;

9. Postage stamps (excluding those for collection), revenue stamps, certificate stamps, lottery tickets, and public telephones;

10. Tobacco as defined in Article 2 of the Tobacco Business Act, which falls under any of the following:

(a) Tobacco whose selling price under Article 18 (1) of the Tobacco Business Act is not more than the amount of money prescribed by Presidential Decree;

(b) Tobacco for special use under Article 19 of the Tobacco Business Act, which is prescribed by Presidential Decree;

11. Financing and insurance services prescribed by Presidential Decree;

12. Lease of housing and its appurtenant land, which are prescribed by Presidential Decree;

13. Lease of daycare centers attached to collective housing as welfare facilities defined in subparagraph 14 of Article 2 of the Housing Act provided by the management entities defined in Article 2 (1) 10 of the Multi-Family Housing Management Act or by the councils of occupants’ representatives defined in Article 2 (1) 8 of that Act pursuant to the management rules established under Article 18 (2) of that Act;

14. Land;

15. Personal services prescribed by Presidential Decree, which authors, composers, or other persons provide professionally;

16. Creative works of art, artistic events, cultural events, or amateur athletic games, which are prescribed by Presidential Decree;

17. Admission to libraries, science halls, museums, art galleries, zoos, botanical gardens, or other places prescribed by Presidential Decree;

18. Goods or services which are supplied by any organizations for religion, charity, scholarship, relief, or other public interest and which are prescribed by Presidential Decree;

19. Goods or services which are supplied by the State, local governments, or local government associations and which are prescribed by Presidential Decree;

20. Goods or services which are supplied free of charge to the State, local governments, local government associations, or organizations for public interest prescribed by Presidential Decree.

(2) A supply of goods or services ordinarily incidental to the supply of the goods or services exempt from tax under paragraph (1) shall be deemed to be included in the supply of the tax-free goods or services.

Article 27(Importation of Tax-Free Goods) #

An importation of any of the following goods shall be exempt from value-added tax:

1. Unprocessed foodstuffs (including agricultural products, stock farm products, marine products, and forest products which are served for human consumption) which are prescribed by Presidential Decree;

2. Books, newspapers, and magazines, which are prescribed by Presidential Decree;

3. Goods which are imported by academic research organizations, educational institutions, the Korea Educational Broadcasting System established under the Korea Educational Broadcasting System Act, or cultural organizations for scientific, educational, or cultural purposes and which are prescribed by Presidential Decree;

4. Goods which any foreign country donates to religious, charitable, or relief organizations for the purposes of religious rites, charity, relief, or other public interest and which are prescribed by Presidential Decree;

5. Goods which any foreign country donates to the State, local governments, or local government associations;

6. Low-priced and duty-free goods that are received by residents;

7. Goods imported as a result of relocation, immigration, or inheritance, which are exempt from customs duties or to which the simplified tariff rates under Article 81 (1) of the Customs Act apply;

8. Personal effects, separately delivered baggage, and mailed parcels of travelers, which are exempt from customs duties or to which the simplified tariff rates under Article 81 (1) of the Customs Act apply;

9. Goods imported as samples or advertising materials, which are exempt from customs duties;

10. Goods which are imported, free of charge, for the purpose of display in any fairs, exhibitions, prize contests, film festivals, or other similar events held in the Republic of Korea and which are exempt from customs duties;

11. Goods which are exempt from customs duties in accordance with treaties, international laws and regulations, or international customs and which are prescribed by Presidential Decree;

12. Goods re-imported after exportation, as prescribed by Presidential Decree, from among those eligible for duty reductions or exemptions: Provided, That in cases of a duty reduction, the value-added tax reduction shall only be granted in proportion to such reduction;

13. Goods imported temporarily under conditions of re-exportation, as prescribed by Presidential Decree, from among those eligible for duty reductions or exemptions: Provided, That in cases of a duty reduction, the value-added tax reduction shall only be granted in proportion to such reduction;

14. Tobacco provided for in Article 26 (1) 10;

15. Duty-free or duty-reducible goods, other than those under subparagraphs 6 through 13, which are prescribed by Presidential Decree: Provided, That in cases of a duty reduction, the value-added tax reduction shall only be granted in proportion to such reduction.

Article 29(Tax Bases) #

(1) The tax base for value-added tax on a supply of goods or services shall be the total value of all supplies of goods or services provided during the relevant taxable period.

(2) The tax base for value-added tax on the importation of goods shall be the sum of the taxable value for customs duties and the customs duties, individual consumption tax, liquor tax, education tax, special rural development tax, and traffic, energy and environment tax on such goods.

(3) The value of supply referred to in paragraph (1) means each of the following. In such cases, it shall include payments, rates, fees, or all other things of value, whatever their names are, which are provided by recipients of goods or services, but exclude value-added taxes: <Amended on Dec. 19, 2017>

1. Where payments are made in money: The payments: Provided, That when payments are made in any foreign currency or other foreign exchange, they mean the value converted in the manner prescribed by Presidential Decree;

2. Where payments other than money are made: The market price of goods or services supplied by the supplier himself or herself;

3. Where a business is closed: The market price of goods in stock at the time of closing the business;

4. Where goods or services are deemed to be supplied under Articles 10 (1), (2), (4) and (5) and 12 (1): The market price of the goods or services supplied by the supplier himself or herself;

5. Where goods are deemed to be supplied under Article 10 (3): The value prescribed by Presidential Decree based on the acquisition value, etc. of the goods;

6. Where goods or services are supplied through credit sales, installment sales, or sales in which payments are settled wholly or partly with mileage, etc. prescribed by Presidential Decree: The value prescribed by Presidential Decree based on the types, etc. of supply.

(4) Notwithstanding paragraph (3), if the supply of goods or services to a related person (including goods or services relating to trust property provided by a trustee to a related person of a trustor) falls under any of the following cases and if it is deemed likely to unreasonably reduce tax burden, the market price of the supplied goods or services shall be deemed the value of supply thereof: <Amended on Dec. 8, 2021>

1. Where payments for a supply of goods are unreasonably low or no payments therefor are made;

2. Where payments for a supply of services are unreasonably low;

3. Where no payment is made for a supply of services and the proviso of Article 12 (2) is applicable.

(5) None of the following amounts shall be included in the value of supply:

1. The amount of discount made directly on the normal price of goods or services based on their quality, quantity, conditions of delivery, methods of making payments for supply, and other conditions of supply, at the time of supply thereof;

2. The value of returned goods;

3. The value of goods, which are broken, damaged, or lost before they reach a person to whom they are supplied;

4. National subsidies and public subsidies not directly related to the supply of goods or services;

5. Overdue interests received due to a delay in payments for supply;

6. The amount of discount by an entrepreneur from the original value of supply on grounds of receiving payments for supply in advance of the agreed date.

(6) Neither an incentive and other amount similar thereto that an entrepreneur pays to a person to whom goods or services are supplied nor a bad debt amount under Article 45 (1) shall be deducted from the tax base.

(7) Where it is unclear whether payments for goods or services supplied by an entrepreneur include value-added taxes, an amount calculated by multiplying the payments by 100/110 shall be the value of supply.

(8) Where a business operator supplies goods commonly used for a taxable business, a tax-free business, etc., the amount calculated as prescribed by Presidential Decree shall be the supply value. <Amended on Dec. 31, 2023>

(9) Where an entrepreneur supplies land with buildings, structures, etc. standing thereon, the actual transaction price of such buildings, structures, etc. shall be the value of supply: Provided, That in any of the following cases, the value of supply shall be the amount calculated on a pro rata basis as prescribed by Presidential Decree: <Amended on Dec. 31, 2018; Dec. 8, 2021>

1. Where the distinction between the price of land and the price of any building, structure, etc. in the actual transaction price is unclear;

2. Where a difference of at least 30/100 exists between the price of any land, building, structure, etc. an entrepreneur has determined based on the actual transaction price and the amount calculated on a pro rata basis as prescribed by Presidential Decree: Provided, That excluded herefrom are cases falling under the grounds prescribed by Presidential Decree such as where the price is differentiated as prescribed by other statutes or regulations.

(10) Where an entrepreneur leases any of the following real estate, the value of supply shall be an amount calculated according to the formula prescribed by Presidential Decree:

1. Where he or she receives security money for lease on a deposit basis or for lease in return for the lease of the real estate;

2. Where he or she provides a taxable real estate lease along with a tax-free housing lease and so the distinction between the leases or between the rents is unclear;

3. Where he or she leases real estate over at least two taxable periods on conditions of receiving the rents in advance or later.

(11) Where any goods deemed a supply of goods under Article 10 (1), (2), and (4) through (6) constitute a depreciable asset prescribed by Presidential Decree (hereinafter referred to as "depreciable asset"), an amount calculated according to the formula prescribed by Presidential Decree shall be the value of supply, notwithstanding paragraph (3) 3 and 4.

(12) Matters necessary for calculating market prices and other values of supply and tax bases shall be prescribed by Presidential Decree.

Article 32(Tax Invoices) #

(1) Where an entrepreneur supplies goods or services (excluding a supply of goods or services exempt from value-added tax), he or she shall issue an invoice stating the following matters (hereinafter referred to as "tax invoice") to the person who receives the supply:

1. Registration number and name or denomination of the supplier;

2. Registration number of the recipient: Provided, that where the recipient is neither a business operator nor a registered business operator, an identification number prescribed by Presidential Decree or the resident registration number of the recipient;

3. The value of supply and the amount of value-added tax;

4. Date of preparation;

5. Other matters prescribed by Presidential Decree.

(2) Where any corporate entrepreneur or any sole proprietor prescribed by Presidential Decree intends to issue tax invoices under paragraph (1), he or she shall do so by electronic method (hereinafter referred to as "electronic tax invoices") prescribed by Presidential Decree.

(3) Where electronic tax invoices have been issued under paragraph (2), the entrepreneur shall transmit a list of the issued electronic tax invoices prescribed by Presidential Decree to the Commissioner of the National Tax Service by the deadline prescribed by Presidential Decree.

(4) Notwithstanding paragraph (2), where an electric utility business entity defined in subparagraph 2 of Article 2 of the Electric Utility Act supplies electricity for industrial use, etc. as specified by Presidential Decree, the entity may issue invoices specifying that they are electronic tax invoices, as prescribed by Presidential Decree, and may transmit the electronic tax invoice file to the Commissioner of the National Tax Service. In such cases, electronic tax invoices shall be deemed to have been issued under paragraph (2), and a list of issued electronic tax invoices shall be deemed to have been transmitted under paragraph (3).

(5) Any entrepreneur other than those required to issue electronic tax invoices may issue electronic tax invoices and transmit a list of the issued electronic tax invoices, as prescribed in paragraphs (2) and (3).

(6) In cases prescribed by Presidential Decree, such as selling on consignment or through an agent, even though a person is not the supplier or recipient of the relevant goods or services, he or she may issue a tax invoice or an electronic tax invoice or have it issued as prescribed by Presidential Decree, notwithstanding paragraph (1).

(7) Where an error in the entries in a tax invoice or electronic tax invoice is found or a ground prescribed by Presidential Decree arises in connection with the entries in a tax invoice or electronic tax invoice issued, a new tax invoice (hereinafter referred to as "corrected tax invoice") or a new electronic tax invoice (hereinafter referred to as "corrected electronic tax invoice") in which such error, etc. is corrected may be issued, as prescribed by Presidential Decree.

(8) Matters necessary for preparing and issuing tax invoices, electronic tax invoices, corrected tax invoices, and corrected electronic tax invoices shall be prescribed by Presidential Decree.

Article 35(Import Tax Invoices) #

(1) Where the head of a customs office collects a value-added tax (including deferring the payment of a value-added tax under Article 50-2) on any imported goods, he or she shall issue a tax invoice for the imported goods (hereinafter referred to as "import tax invoice") to the importer, as prescribed by Presidential Decree. <Amended on Dec. 15, 2015>

(2) The head of a customs office shall issue, to an importer, an import tax invoice corrected, as prescribed by Presidential Decree (hereinafter referred to as "corrected import tax invoice"), in any of the following cases: <Amended on Dec. 19, 2017; Dec. 31, 2022; Dec. 31, 2023>

1. Where the importer files a revised declaration, etc. (excluding where he or she files a revised declaration under subparagraph 3), as prescribed by Presidential Decree, before the head of the customs office determines or rectifies the tax base or the amount of tax pursuant to the Customs Act;

2. Where the head of a customs office determines or rectifies the tax base or the amount of tax under the Customs Act (limited to where an importer does not fall under any of the following, in connection with the importation of relevant goods):

(a) Where a person is accused of a violation of Article 270 (including cases of an attempted crime under Article 271 (2)), 270-2, or 276 of the Customs Act, or against whom a notification disposition has been issued under Article 311 of that Act;

(b) Where the person under-reports the duty base or the amount of duties by unlawful acts prescribed in Article 42 (2) of the Customs Act or any unjust acts prescribed in the proviso of Article 36 (1) 1 of the Act on Special Cases of the Customs Act for the Implementation of Free Trade Agreements;

(c) Where an importer commits a serious mistake prescribed by Presidential Decree, such as repeating the errors already notified based on a customs duty investigation, etc. while declaring a duty base or the amount of duties;

3. Where an importer files a revised declaration under the Customs Act before the determination or rectification of the duty base or the amount of duties is made, knowing beforehand that the duty base or the amount of duty will be determined or rectified upon the occurrence of an act prescribed by Presidential Decree such as a customs duty investigation, etc. by a customs officer (limited to cases where the importer does not fall under any item of subparagraph 2 in connection with the importation of the relevant goods).

(3) Where the head of a customs office becomes aware of the fact that an importer falls under any item of paragraph (2) 2 after issuing a corrected import tax invoice based on the determination, rectification, or revised declaration under paragraph (2) 2 or 3, he or she shall issue a corrected import tax invoice. <Newly Inserted on Dec. 31, 2022>

(4) Where the head of a customs office fails to issue a corrected import tax invoice under paragraph (2) 2 or 3 on the grounds that the importer falls under paragraph (2) 2 (a) or where a person re-issued with a corrected import tax invoice under paragraph (3) receives a disposition not to institute a prosecution for non-prosecution or a final judgment of non-guilty, the head of the relevant customs office shall issue a corrected import tax invoice based on his or her prior determination or rectification or on a revised declaration filed by the importer. <Newly Inserted on Dec. 31, 2022>

(5) If the head of a customs office fails to issue a corrected import tax invoice notwithstanding paragraph (2) or (4), the importer may file an application with the head of the customs office for issuance of the corrected import tax invoice within the period prescribed in Article 26-2 (1) or (6) 1 of the Framework Act on National Taxes, as prescribed by Presidential Decree. <Newly Inserted on Dec. 19, 2017; Dec. 31, 2019; Dec. 31, 2022>

(6) The head of the customs office who issues corrected import tax invoices under paragraphs (2) through (4) shall submit a sum table of tax invoices by customer, which is prepared and corrected by applying mutatis mutandisArticle 54, to the head of the tax office who has jurisdiction over the location of the customs office. <Amended on Dec. 19, 2017; Dec. 31, 2022>

(7) The preparation and issuance of import tax invoices or corrected import tax invoices and other relevant matters shall be prescribed by Presidential Decree. <Amended on Dec. 19, 2017; Dec. 31, 2022>

[This Article Wholly Amended on Jul. 26, 2013]

Article 36(Receipts) #

(1) Notwithstanding Article 32, if any of the following persons supplies goods or services (excluding a supply of goods or services exempt from value-added tax), he or she shall issue a receipt, instead of a tax invoice, to the person who receives the supply, as prescribed by Presidential Decree, at the time of supplying such goods or services under Article 15 or 16: <Amended on Dec. 22, 2020>

1. An entrepreneur prescribed by Presidential Decree, who supplies goods or services mainly to a person other than an entrepreneur;

2. Any of the following persons among simplified taxable persons;

(a) The aggregate amount of proceeds from supply in the immediately preceding year (or the amount converted under Article 61 (2), if the sole proprietor commences his or her business in the immediately preceding taxable period) is less than 48 million won;

(b) A sole proprietor starting a new business, who is in the first taxable period during which he or she is a simplified taxable person under Article 61 (4).

(2) Notwithstanding Article 32, if an operator of the electric utility business defined in subparagraph 2 of Article 2 of the Electric Utility Act supplies electricity for non-industrial use or in any other cases prescribed by Presidential Decree, he or she may issue receipts. In such cases, if the entity chooses not to issue a receipt, he or she shall issue a tax invoice instead.

(3) Notwithstanding paragraphs (1) and (2), if a person supplied with goods or services demands the issuance of a tax invoice, presenting his or her business registration certificate, as specified by Presidential Decree, a tax invoice shall be issued to him or her.

(4) Notwithstanding paragraphs (1) and (2), an entrepreneur issuing receipts may install a cash register to issue invoices specifying the proceeds from supply, instead of receipts. In such cases, if the entrepreneur issues invoices and keeps the relevant audit tapes, he or she shall be deemed to issue receipts under paragraph (1) and to fulfill the preparation of an account book under Article 71, and value-added tax may be imposed on him or her on the basis of cash income. <Amended on Dec. 22, 2020>

(5) Any credit card sales slip, etc. under Article 46 (1) shall be deemed a receipt under paragraph (1).

(6) Matters necessary for the entries in and the preparation of receipts and invoices shall be prescribed by Presidential Decree.

Article 39(Input Tax Amounts Not to Be Deducted) #

(1) Notwithstanding Article 38, none of the following input tax amounts shall be deducted from an output tax amount: <Amended on Dec. 19, 2017; Dec. 31, 2019; Dec. 31, 2022>

1. If a sum table of tax invoices by customer is not submitted, the relevant input tax amount pursuant to Article 54 (1) and (3); or if a sum table of tax invoices by customer is submitted, but all or any of the registration numbers or the values of supply by transaction party, among the items to be entered on the list, are omitted or misrepresented, an input tax amount on the omitted or misrepresented portion: Provided, That in cases prescribed by Presidential Decree, the input tax amount involved shall be excluded;

2. If neither a tax invoice nor an import tax invoice is issued, or if all or any of the items to be entered under Article 32 (1) 1 through 4 (hereinafter referred to as "requisite entry items") on a tax invoice or import tax invoice issued are omitted or misrepresented, the relevant input tax amount (where the value of supply is misrepresented, referring to a tax amount equivalent to the difference between the actual value of supply and the misrepresented amount): Provided, That in cases prescribed by Presidential Decree, the input tax amount involved shall be excluded;

3. Deleted; <Jan. 1, 2014>

4. An input tax amount on expenditure, as prescribed by Presidential Decree, which is not directly related to business;

5. An input tax amount on purchasing, leasing, and maintaining vehicles (excluding those directly used for operating a transportation business, a vehicle sales business, or any other business within the types of business prescribed by Presidential Decree) under Article 1 (2) 3 of the Individual Consumption Tax Act;

6. An input tax amount related to the disbursement of business development expenses and other similar expenses prescribed by Presidential Decree;

7. An input tax amount related to a tax-free business, etc. (including an input tax amount related to investments in the tax-free business, etc.), and an input tax amount related to land prescribed by Presidential Decree;

8. An input tax amount before filing an application for business registration under Article 8: Provided, That when such application for registration is filed within 20 days after the end of the taxable period during which the supply was made, it shall exclude an input tax amount in a period calculated from the date of the registration application back to the date from which the taxable period during which the supply was made is reckoned (referring to the initial date for reckoning the taxable period pursuant to Article 5 (1)).

(2) Matters necessary for the scope of the input tax amounts not to be deducted under paragraph (1) shall be prescribed by Presidential Decree.

Article 45(Special Cases concerning Tax Deductions for Bad Debts) #

(1) Where an entrepreneur supplies goods or services subject to value-added tax, if all or some of relevant credit sales or other sales claims (referring to those which include value-added tax) become irrecoverable as bad debt due to the bankruptcy of or compulsory execution against the person who receives the supply or any other cause prescribed by Presidential Decree, an amount computed according to the following formula (hereinafter referred to as "bad debt tax amount") may be deducted from the output tax amount for the taxable period that includes the date the bad debt becomes fixed: Provided, That when the entrepreneur recovers the whole or part of the amount irrecoverable as bad debt (hereinafter referred to as "bad debt amount"), a bad debt tax amount related to the recovered bad debt amount shall be added to the output tax amount for the taxable period that includes the date of recovery:

Bad debt tax amount = bad debt amount × 10/110

(2) An entrepreneur who wishes to be eligible for the application of paragraph (1) shall submit a document attesting to the fact that a bad debt amount has occurred, as prescribed by Presidential Decree, along with the return under Article 49. <Amended on Dec. 31, 2019>

(3) In applying paragraphs (1) and (2), where an entrepreneur in receipt of a supply of goods or services has the whole or part of a bad debt tax amount deducted as an input tax amount under Article 38, if the supplier of such goods or services has the bad debt tax amount deducted under paragraph (1) before the relevant entrepreneur closes his or her business, the entrepreneur in receipt of the supply of the goods or services shall deduct the relevant bad debt tax amount from his or her own input tax amount for the taxable period that includes the date the bad debt becomes definite: Provided, That when the entrepreneur in receipt of the supply fails to make such deduction, the head of the tax office having jurisdiction over the entrepreneur shall correct such failure through a decision or rectification, as prescribed by Presidential Decree.

(4) Where the entrepreneur who has deducted a bad debt tax amount from an input tax amount (including where such deduction is made through a decision or rectification by the head of the competent tax office) under paragraph (3) refunds the whole or part of the bad debt amount, the bad debt tax amount involved in the refunded bad debt amount shall be added to the input tax amount for the taxable period that includes the date of refund, as prescribed by Presidential Decree.

(5) Matters necessary for the scope of and procedures for bad debt tax deductions, other than those prescribed in paragraphs (1) through (3), shall be prescribed by Presidential Decree.

Article 46(Tax Deductions Subsequent to Use of Credit Cards) #

(1) Where an entrepreneur falling under subparagraph 1 supplies any goods or services subject to value-added tax and subsequently issues documents evidencing such transaction under subparagraph 2 (hereafter in this Article referred to as "credit card sales slips, etc.") during the time limit for issuing tax invoices under Article 34 (1) or receives payments by any means of electronic settlement prescribed by Presidential Decree, the amount specified in subparagraph 3 shall be deducted from the amount of tax payable: <Amended on Dec. 31, 2019; Dec. 22, 2020; Dec. 8, 2021; Dec. 31, 2023>

1. Entrepreneur: Any of the following entrepreneurs:

(a) Any entrepreneur running a business prescribed by Presidential Decree, which supplies goods or services mainly to general taxable persons other than entrepreneurs (excluding both corporate entrepreneurs and sole proprietors whose total proceeds from supply of goods or services in the immediately preceding year exceed an amount prescribed by Presidential Decree);

(b) A simplified taxable person falling under Article 36 (1) 2;

2. Documents evidencing transactions: Any of the following documents:

(a) Credit card sales slips under the Specialized Credit Finance Business Act;

(b) Cash receipts under Article 126-3 of the Restriction of Special Taxation Act;

3. The amount deducted (the ceiling of which shall be five million won a year, but shall be 10 million won a year until December 31, 2023): One percent (1.3 percent until December 31, 2026) of the issuance amount or settlement amount:

(a) Deleted; <Dec. 22, 2020>

(b) Deleted; <Dec. 22, 2020>

(2) In applying paragraph (1), if an amount deducted exceeds the amount of tax payable prior to the deduction of the relevant amount [referring to the tax amount computed by the deduction or addition of the tax amount (excluding the penalty imposed under Article 60 of this Act and Articles 47-2 through 47-4 of the Framework Act on National Taxes) that shall be deducted or added under this Act, the Framework Act on National Taxes, and the Restriction of Special Taxation Act from the amount of tax payable under Article 37 (2), and if the tax amount calculated is less than "zero," it shall be deemed "zero"], the portion of such excess shall be deemed zero.

(3) Where an entrepreneur receives any goods or services supplied by another entrepreneur prescribed by Presidential Decree and a credit card sales slip, etc. in which the value-added tax amount is identifiable separately, the value-added tax amount shall be deemed the input tax amount deductible under Article 38 (1) or 63 (3), if he or she satisfies all of the following requirements: <Amended on Dec. 22, 2020>

1. He or she shall submit a statement on the receipts of the credit card sales slip, etc. prescribed by Presidential Decree;

2. He or she shall keep the credit card sales slip, etc. by applying mutatis mutandisArticle 71 (3). In such cases, the credit card sales slip, etc. deemed to have been duly kept if the evidentiary materials have been kept in accordance with the method prescribed by Presidential Decree.

3. It shall not be credit card sales slips, etc. issued by a simplified taxable person during the period for which the simplified taxable person is required to issue receipts under Article 36-2 (1) and (2).

(4) Where deemed necessary to manage tax payment, the Commissioner of the National Tax Service may designate any entrepreneur prescribed by Presidential Decree, who supplies goods or services mainly to consumers other than entrepreneurs, as a person required to be a credit card merchant under the Specialized Credit Finance Business Act or as a person required to be a cash receipt merchant under Article 126-3 of the Restriction of Special Taxation Act and direct him or her to become such merchant.

(5) Except as provided in paragraphs (1) through (4), the scope of tax deductions based on credit card sales slips, etc., the designation of persons required to be credit card merchants or persons required to be cash receipt merchants, and other necessary matters shall be prescribed by Presidential Decree.

Article 48(Preliminary Returns and Payments) #

(1) Within 25 days after the end of a period set forth in the table below (hereinafter referred to as "preliminary return period") in each taxable period, an entrepreneur shall return the tax base and the amount of tax payable or the amount of tax refundable for each preliminary return period to the head of the tax office having jurisdiction over his or her place of tax payment, as prescribed by Presidential Decree: Provided, That the first preliminary return period for a person who starts or intends to start a new business shall be from the start date of the business (if an application for business registration is filed prior to the start date of the business under the proviso of Article 8 (1), the date of application) until the end date of the preliminary return period that includes the start date.

Number of persons entering a golf course x Number of holes actually played/Total number of holes

(2) Where an entrepreneur makes a return under paragraph (1) (hereinafter referred to as "preliminary return"), he or she shall pay the amount of tax payable for the relevant preliminary return period either to the head of a tax office having jurisdiction over each place of tax payment (in cases falling under Article 51, referring to the head of the tax office having jurisdiction over the principal place of business) along with a preliminary return on value-added tax or to the Bank of Korea (including branches thereof) or postal agencies (hereinafter referred to as the "Bank of Korea, etc.") along with a statement of payment prepared under the National Tax Collection Act.

(3) Notwithstanding paragraphs (1) and (2), the head of a tax office having jurisdiction over a place of tax payment shall, with respect to any sole proprietor and any corporate entrepreneur prescribed by Presidential Decree, determine an amount (where there is a fractional amount below 1,000 won, it shall be rounded down) equivalent to 50 percent of the amount of tax payable for the immediately preceding taxable period in each preliminary return period (if any tax amount is deducted or reduced from the amount of tax payable under Article 46 (1) or 47 (1) of this Act or Article 104-8 (2) or 106-7 (1) of the Restriction of Special Taxation Act, referring to an amount remaining after balancing the relevant tax amount; and if there exists any decision or rectification under Article 57 of this Act or any decision on the revised return or the request for correction under Article 45 or 45-2 of the Framework Act on National Taxes, referring to an amount which reflects the details thereof) and collect it within 25 days after the end of the relevant preliminary return period, as prescribed by Presidential Decree: Provided, That collection shall not be made in any of the following cases. <Amended on Dec. 23, 2014; Dec. 20, 2016; Dec. 31, 2018; Dec. 31, 2019; Dec. 8, 2021>

1. Where the amount to be collected is less than 500,000 won;

2. Where a simplified taxable person is converted to a general taxable person as at the commencement date of the relevant taxable period;

3. Where an entrepreneur is deemed unable to pay an amount to be collected by the head of the competent tax office due to a cause falling under any subparagraph of Article 13 (1) of the National Tax Collection Act.

(4) Notwithstanding paragraph (3), if the deterioration of business performance is caused by the suspension of or a slump in business operations or if any cause prescribed by Presidential Decree exists, the relevant entrepreneur may make a preliminary return under paragraph (1) and then pay the amount of tax payable for the preliminary return period under paragraph (2). In such cases, the determination under the main clause of paragraph (3) shall be considered not to have been made. <Amended on Dec. 31, 2019>

Article 50-2(Deferred Payment of Value-Added Tax on Imported Goods) #

(1) Where a small or medium business owner or middle-standing business owner who meets the requirements prescribed by Presidential Decree (hereafter in this Article referred to as "small or medium business owner or middle-standing business owner"), such as the ratio of exports to sales, files in advance an application for deferred payment of value-added tax on the importation of raw materials and other goods prescribed by Presidential Decree that are used to manufacture and process articles, the head of the competent customs office may defer the payment of value-added tax on the importation of those goods, notwithstanding Article 50. <Amended on Dec. 20, 2016>

(2) A small or medium business owner or middle-standing business owner granted a deferral of the payment of value-added tax under paragraph (1) shall adjust or pay the deferred amount of tax, as prescribed by Presidential Decree, when filing a preliminary return under Article 48 or a final return under Article 49 with the head of the tax office having jurisdiction over the place of tax payment. In such cases, the amount of tax paid to the head of the tax office having jurisdiction over the place of tax payment shall be deemed paid to the head of the competent customs office. <Amended on Dec. 20, 2016>

(3) Where a small or medium business owner or middle-standing business owner granted a deferral of the payment of value-added tax under paragraph (1) falls under the grounds prescribed by Presidential Decree, such as failing to pay national taxes, the head of the competent customs office may revoke the deferral of payment. In such cases, the head of the customs house shall give notice of such revocation to the relevant small or medium business owner or middle-standing business owner. <Amended on Dec. 20, 2016>

(4) Procedures for applying for the deferral of payment and the period of deferred payment under paragraphs (1) through (3), and other matters necessary for the deferral of payment, shall be prescribed by Presidential Decree.

[This Article Newly Inserted on Dec. 15, 2015]

Article 52(Payments by Proxy) #

(1) Any of the following persons (hereafter in this Article and Articles 53, 53-2, and 60 (1) referred to as "foreign entrepreneur") who receives the supply (including bringing into the Republic of Korea which does not constitute an importation of goods subject to the return and payment of value-added tax with customs duties under Article 50; hereafter the same shall apply in this Article and Article 53) of services or rights (hereafter in this Article and Article 53 referred to as "services, etc.") in the Republic of Korea from any of the following persons (excluding where the services, etc. supplied are delivered to a taxable business, but including where the services, etc. not eligible for the deduction of the input tax amount under Article 39 are supplied) shall collect value-added tax from the person receiving the payment for such services, etc. at the time of making such payment: <Amended on Dec. 22, 2020; Dec. 31, 2023>

1. A nonresident or a foreign corporation that has no domestic place of business under Article 120 of the Income Tax Act or Article 94 of the Corporate Tax Act (hereafter in this Article referred to as "domestic place of business");

2. A nonresident or a foreign corporation that has a domestic place of business (limited to supply of services, etc. with no relation to the domestic place of business of the nonresident or foreign corporation, as prescribed by Presidential Decree).

(2) Any person who collects value-added tax under paragraph (1) shall submit a return on value-added tax payment by proxy, as prescribed by Presidential Decree; and shall pay the value-added tax by applying Articles 48 (2) and 49 (2) mutatis mutandis.

(3) In applying paragraphs (1) and (2), matters necessary for the methods of pro rata calculation and other relevant matters where the actual attribution of the services, etc. supplied is unclear due to the common use of such services, etc. for both a taxable business and a tax-free business, etc. shall be prescribed by Presidential Decree.

(4) The transferee of a business transferred under the main clause of Article 10 (9) 2 (including where it is unclear whether a business is so transferred) may, notwithstanding the main clause of Article 10 (9) 2 and Article 31, collect a value-added tax from the recipient of the transfer price at the time of payment thereof; and may pay it to the head of the tax office having jurisdiction over his or her place of business no later than the 25th day of the month following the month in which the payment date of the transfer price falls, as prescribed by Presidential Decree, by applying Article 49 (2) mutatis mutandis. <Newly Inserted on Jan. 1, 2014; Dec. 20, 2016; Dec. 19, 2017; Dec. 31, 2018>

Article 52-2(Special Cases concerning Payments under Secondary Liability Related to Trust) #

(1) Where the head of a tax office having jurisdiction over a trustee liable to pay a value-added tax under Article 3-2 intends to collect a value-added tax, etc. of the trustee from a person secondarily liable for tax payment, he or she shall issue the person secondarily liable for tax payment a notice of payment stating the following matters; in such cases, the head of a tax office having jurisdiction over the trustee shall notify both the head of a tax office having jurisdiction over the person secondarily liable for tax payment and the trustee of such fact: <Newly Inserted on Dec. 22, 2020>

1. Taxable period for the value-added tax, etc. to be collected, the amount of tax, and the basis for calculation thereof;

2. Payment deadline for the value-added tax, etc., and the place of payment thereof;

3. The amount to be collected from a person secondarily liable for tax payment and the basis for calculation thereof;

4. Other matters necessary for collecting the value-added tax, etc.

(2) Where the head of a tax office having jurisdiction over a trustor liable to pay a value-added tax under Article 3 (3) intends to collect a value-added tax, etc. of the trustor from the trustee under Article 3-2 (2), he or she shall issue the trustee a notice of payment stating the following matters; in such cases, he or she shall notify both the head of a tax office having jurisdiction over the trustee and the trustor of such fact. <Amended on Dec. 22, 2020>

1. Taxable period for the value-added tax, etc., the amount of tax, and the basis for calculation thereof;

2. Payment deadline for the value-added tax, etc., and the place of payment thereof;

3. Other matters necessary for collecting the value-added tax, etc.

(3) Even though the trustor, who is a person liable to pay tax, renounces or transfers the right to benefit from trust or transfers trust property after notice is given under paragraph (2), it shall not affect the liability for tax payment to the extent notified under paragraph (2). <Amended on Dec. 22, 2020>

(4) If the trustee of trust property is changed, the new trustee shall succeed to the liability for tax payment, the notice of which is given to the old trustee pursuant to paragraph (2). <Amended on Dec. 22, 2020>

(5) The head of the tax office having jurisdiction over the trustor who is a person liable to pay tax under paragraph (2) may collect the value-added tax, etc. of the trustor from the present trustee of trust property under Article 3-2 (2) based on the date trust is created for the initial trustee. <Amended on Dec. 22, 2020>

(6) Where a forced collection is made against a trust property under the National Tax Collection Act, the trustee has the right to be preferentially reimbursed for necessary expenses or profitable expenses incurred in preserving and improving trust property under Article 48 (1) of the Trust Act, notwithstanding Article 35 (1) of the Framework Act on National Taxes. <Amended on Dec. 22, 2020; Dec. 29, 2020>

(7) Except as provided in paragraphs (1) through (6), matters necessary for secondary tax liabilities and the payment, etc. of liability for tax payment in kind. <Amended on Dec. 22, 2020>

[This Article Newly Inserted on Dec. 19, 2017]

[Title Amended on Dec. 22, 2020]

Article 53-2(Special Cases concerning Business Registration and Payment by Foreign Entrepreneurs Providing Electronic Services) #

(1) Where a foreign entrepreneur supplies any of the following services (hereinafter referred to as "electronic services"), through information and communications networks (referring to the information and communications networks defined in Article 2 (1) 1 of the Act on Promotion of Information and Communications Network Utilization and Information Protection; hereafter in this Article the same shall apply), to consumers in the Republic of Korea [excluding where services are supplied for the taxable business or tax-free business of a person whose business has been registered under Article 8 of this Act, Article 168 (1) of the Income Tax Act, or Article 111 (1) of the Corporate Tax Act (hereafter in this Article referred to as "registered entrepreneur") ], by using a mobile communications terminal, computer, or the like, he or she shall file for registration of business by simplified means prescribed by Presidential Decree ("hereinafter referred to as "simplified business registration") within 20 days after commencing the business: <Amended on Dec. 15, 2015; Dec. 31, 2018; Dec. 22, 2020; Dec. 8, 2021>

1. Any game, audio or video file, software, or other services prescribed by Presidential Decree;

2. Services to run advertisements;

3. Cloud computing services defined in subparagraph 3 of Article 2 of the Act on the Development of Cloud Computing and Protection of Its Users;

4. Services to broker goods or services, which are prescribed by Presidential Decree;

5. Any other services prescribed by Presidential Decree, which are similar to those specified in subparagraphs 1 through 4.

(2) Where a foreign entrepreneur supplies any electronic services to consumers in the Republic of Korea through any of the following third persons (including any nonresident or foreign corporation referred to in any of the subparagraphs of Article 52 (1)) (excluding where supply is made for the taxable business or tax-free business of a registered entrepreneur or where special cases concerning a supply of services, etc. by foreign entrepreneurs apply pursuant to Article 53), the third person shall be deemed to supply the electronic services in the Republic of Korea, and the third party shall file for simplified business registration within 20 days after commencing the business: <Amended on Dec. 22, 2020; Dec. 8, 2021>

1. A person who operates an open market or others similar thereto to provide services to enable electronic services transactions through an information and communications network, etc.;

2. A person who acts as an intermediary, etc. in electronic services transactions in a manner that collects the payment from the purchaser and pays it to the seller;

3. A person prescribed by Presidential Decree, who participates in electronic services transactions in a manner similar to subparagraph 1 or 2.

(3) Deleted. <Dec. 22, 2020>

(4) Notwithstanding Article 52, a person who has filed for simplified business registration shall make a return and payment under Article 48 (1) or (2) or 49 according to the method prescribed by Presidential Decree.

(5) No person who has filed for simplified business registration is entitled to any deduction from the output tax amount or the amount of tax payable, other than the input tax amount to be deducted under Articles 38 and 39, in relation to the supply of relevant electronic services.

(6) A person who has filed for simplified business registration shall retain the detailed statement of transactions regarding the supply of electronic services (including the detailed statement of transactions in cases of supplying services to the taxable business or tax-free business of a registered entrepreneur) for five years after the deadline for filing a final return for the taxable period during which the relevant transactions are made. In such cases, the details to be included in the detailed statement of transactions shall be prescribed by Presidential Decree. <Newly Inserted on Dec. 8, 2021>

(7) The Commissioner of the National Tax Service may require any person who has filed for simplified business registration to submit a detailed statement of transactions of electronic services (hereafter in this Article referred to as "detailed statement of transactions of electronic services") prescribed by Ordinance of the Ministry of E and Finance to verify the appropriateness of filing a return on value-added tax. <Newly Inserted on Dec. 8, 2021>

(8) A person who has filed for simplified business registration shall submit a detailed statement of transactions of electronic services to the Commissioner of the National Tax Service within 60 days from the date of receipt of a request under paragraph (7). <Newly Inserted on Dec. 8, 2021>

(9) The Commissioner of the National Tax Service may cancel simplified business registration where a person who has filed for simplified business registration under paragraph (1) or (2) has closed his or her business in the Republic of Korea (including cases prescribed by Presidential Decree as a case of de facto closure of business). <Newly Inserted on Dec. 8, 2021>

(10) Other matters necessary for the place of tax payment of a person who has filed for simplified business registration, the determination as to the time of supply of electronic services, simplified business registration, etc., shall be prescribed by Presidential Decree. <Amended on Dec. 8, 2021>

[This Article Newly Inserted on Dec. 23, 2014]

[Title Amended on Dec. 22, 2020]

Article 54(Submission of Sum Table of Tax Invoices) #

(1) Where an entrepreneur issues or receives tax invoices or import tax invoices, he or she shall submit a sum table of tax invoices by customer and a sum table of tax invoices by seller (hereinafter referred to as "sum table of tax invoices by customer and by seller"), specifying the following matters, at the time of making the relevant preliminary return or final return (if the main clause of Article 48 (3) applies, referring to the final return for the relevant taxable period):

1. Registration number, and name or denomination, of the entrepreneur who gives or takes supplies;

2. Period of transactions;

3. Date of preparation;

4. Sum of supply values and that of tax amounts during the period of transactions;

5. Other matters prescribed by Presidential Decree.

(2) Where electronic tax invoices are issued or received under Article 32 (2) or (5) and the list of the issued electronic tax invoices under Article 32 (3) and (5) is transmitted to the Commissioner of the National Tax Service not later than the 11th day of the month following the last day of the taxable period (in cases of a preliminary return, the preliminary return period) that includes the time the relevant goods or services are supplied, the sum table of tax invoices by customer and by seller need not be submitted at the time of the relevant preliminary return or final return (if the main clause of Article 48 (3) applies, the final return for the relevant taxable period), notwithstanding paragraph (1).

(3) Where an entrepreneur making each preliminary return under Article 48 (1) and (4) fails to submit the sum table of tax invoices by customer and by seller along with each such preliminary return, he or she may submit them at the time of making the final return for the taxable period that includes the relevant preliminary return period.

(4) The head of the customs office who has issued import tax invoices shall submit a sum table of tax invoices by customer to the head of the tax office having jurisdiction over the location of the customs office by applying paragraphs (1) and (2) mutatis mutandis.

(5) The State, a local government, a local government association, or any other person prescribed by Presidential Decree that has had tax invoices issued shall submit a sum table of tax invoices by seller to the head of the tax office having jurisdiction over the place of tax payment within 25 days after the end of the relevant taxable period.

(6) Except as provided in paragraphs (1) through (5), matters necessary for preparing and submitting the sum table of tax invoices by customer and by seller shall be prescribed by Presidential Decree.

Article 57(Decisions and Rectification) #

(1) Only when an entrepreneur falls under any of the following, the head of the tax office or the commissioner of a regional tax office having jurisdiction over the place of tax payment or the Commissioner of the National Tax Service (hereafter in this Article referred to as the "head of the tax office having jurisdiction over the place of tax payment, etc.") shall conduct investigations to decide or rectify the tax base and the amount of tax payable or the amount of tax refundable for value-added tax in the relevant preliminary return period and taxable period:

1. Where he or she fails to file the preliminary return or final return;

2. Where there are any errors or omissions in details of the preliminary return or final return;

3. Where, in filing the final return, he or she fails to submit a sum table of tax invoices by customer or by seller, or where he or she omits or misrepresents all or some of the items to be entered in the sum table of tax invoices by customer or by seller;

4. Where he or she is likely to evade value-added tax on the grounds prescribed by Presidential Decree.

(2) In deciding or rectifying the tax base and the amount of tax payable or the amount of tax refundable for each preliminary return period and taxable period through an investigation under paragraph (1), the head of the tax office having jurisdiction over the place of tax payment, etc. shall do so on the basis of tax invoices, import tax invoices, account books, and other evidentiary materials: Provided, That in any of the following cases, an estimation may be made as prescribed by Presidential Decree:

1. Where tax invoices, import tax invoices, account books, or other evidentiary materials necessary for calculating the tax base are either missing or incomplete in material particulars;

2. Where details of tax invoices, import tax invoices, account books, or other evidentiary materials are obviously false in view of the capacity of facilities, the number of employees, and the market prices of raw materials, commodities, products, or various charges;

3. Where details of tax invoices, import tax invoices, account books, or other evidentiary materials are obviously false in view of the quantity of raw materials used, the amount of electric power used, and other operating situations.

(3) Where any error or omission is found in the tax base, the amount of tax payable, or the amount of tax refundable that is decided or rectified under paragraphs (1) and (2), the head of the tax office having jurisdiction over the place of tax payment, etc. shall immediately re-rectify such error or omission.

Article 60(Additional Tax) #

(1) If a business entity or a foreign business entity falls under any of the following cases, the amount indicated in each corresponding subparagraph shall be added to the amount of tax payable or deducted from the amount of tax refundable: <Amended on Jan. 1, 2014; Dec. 20, 2016; Dec. 31, 2023>

1. Where he or she fails to file an application for registration within the time limit prescribed in the main clause of Article 8 (1), one percent of the total value of supplies during the period from the commencement date of the business to the date immediately preceding the date the registration application is filed;

1-2. Where he or she fails to file an application for registration within the due date specified in Article 53-2 (1) and (2), one percent of the total value of supplies during the period from the commencement date of the business to the date immediately preceding the date the registration application is filed;

2. Where it is confirmed that he or she is engaged in his or her business after completing the business registration under Article 8 in the name of another person specified by Presidential Decree or through using the business registration under Article 8 in the person’s name, one percent of the total value of supplies during the period from the commencement date of business in the person’s name to the date immediately preceding the date the fact that he or she is actually engaged in the business is confirmed.

(2) Where an entrepreneur falls under any of the following cases, the amount under each corresponding subparagraph shall be added to the amount of tax payable or deducted from the amount of tax refundable. In such cases, subparagraphs 3 through 5 shall not apply to the portion covered by subparagraph 1 or 2, and subparagraphs 3 and 4 shall not apply to the portion covered by subparagraph 5: <Amended on Dec. 23, 2014; Dec. 20, 2016; Dec. 31, 2018; Dec. 31, 2019>

1. Where a tax invoice is issued by the deadline for filing a final return for the taxable period during which the relevant goods or services are supplied after the elapse of the time limit for issuing tax invoices under Article 34, one percent of the value of supply;

2. Where a tax invoice is not issued by the deadline for filing a final return for the taxable period during which the relevant goods or services are supplied after the elapse of the time limit for issuing tax invoices under Article 34, two percent of the value of supply: Provided, That it shall be one percent of the value of supply in any of the following cases:

(a) Where a person who is required to issue electronic tax invoices under Article 32 (2) does not issue an electronic tax invoice but issues a tax invoice other than the electronic tax invoice during the time limit for issuing tax invoices under Article 34;

(b) Where an entrepreneur who has at least two places of business does not issue a tax invoice in the name of the place of business that supplied the relevant goods or services, but instead issues a tax invoice in the name of another place of business he or she has during the time limit for issuing tax invoices under Article 34;

3. Where a list of the electronic tax invoices issued is transmitted to the Commissioner of the National Tax Service by the deadline for filing a final return for the taxable period during which the relevant goods or services are supplied after the deadline under Article 32 (3) passes, 0.3 percent of the value of supply;

4. Where a list of the electronic tax invoices issued is not transmitted to the Commissioner of the National Tax Service by the deadline for filing a final return for the taxable period during which the relevant goods or services are supplied after the deadline under Article 32 (3) passes, 0.5 percent of the value of supply;

5. Where all or any of the requisite entry items in a tax invoice are omitted or misrepresented by mistake or negligence, one percent of the value of supply: Provided, That the same shall not apply where transactions are confirmed, as prescribed by Presidential Decree.

(3) Where an entrepreneur falls under any of the following cases, the amount under each corresponding subparagraph shall be added to the amount of tax payable or deducted from the amount of tax refundable: <Amended on Dec. 20, 2016; Dec. 19, 2017; Dec. 31, 2019>

1. Where he or she issues a tax invoice or a credit card sales slip, etc. provided for in Article 46 (3) (hereinafter referred to as "tax invoice, etc.") without supplying any goods or services: Three percent of the value of supply stated in the tax invoice, etc.;

2. Where he or she is issued a tax invoice, etc. without being supplied with any goods or services: Three percent of the value of supply stated in the tax invoice, etc.;

3. Where he or she supplies any goods or services, but issues a tax invoice, etc. in any name other than that of the person actually supplying or supplied with the goods or services: Two percent of the value of supply;

4. Where he or she is supplied with any goods or services, but is issued a tax invoice, etc. in any name other than that of the person actually supplying the goods or services: Two percent of the value of supply;

5. Where he or she supplies any goods or services, but overstates the value of supply in a tax invoice, etc.: Two percent of the value of supply regarding the overstated portion;

6. Where he or she is supplied with any goods or services, but is issued a tax invoice, etc. as prescribed in subparagraph 5: Two percent of the value of supply regarding the overstated portion.

(4) Where a person, other than an entrepreneur, issues a tax invoice without supplying goods or services or has a tax invoice issued without being supplied with goods or services, the head of the tax office having jurisdiction over the place of tax payment to the person who issues the tax invoice or to whom the tax invoice is issued shall collect, as a penalty, three percent of the value of supply which is entered in the tax invoice, deeming that such person is an entrepreneur. In such cases, the amount of tax payable under Article 37 (2) shall be deemed zero. <Amended on Dec. 20, 2016; Dec. 19, 2017; Dec. 31, 2023>

(5) Where an entrepreneur falls under any of the following cases, the amount as classified in the following subparagraphs shall be added to the amount of tax payable or deducted from the amount of tax refundable: <Amended on Dec. 8, 2021>

1. Where he or she obtains a deduction of an input tax amount by any reason prescribed by Presidential Decree not by submitting credit card sales slips, etc. issued under Article 46 (3) while filing a preliminary or final return under Article 48 (1) or (4) or 49 (1): 0.5 percent of the supply value;

2. Where he or she excessively understates the value of supply on a statement on the receipts of credit card sales slips, etc. submitted under Article 46 (3) 1 in order to obtain a deduction of an input tax amount: 0.5 percent of the supply value which is excessively understated compared to the actual value of supply (excluding the supply value of the portion stated by mistake and whose transactions are verified by credit card sales slips, etc.).

(6) Where an entrepreneur falls under any of the following cases, an amount provided for in each corresponding subparagraph shall be added to the amount of tax payable or deducted from the amount of tax refundable: Provided, That when there is an error in entries on a sum table of tax invoices by customer submitted under Article 54 (1), this shall not apply to the supply value of the portion for which the relevant transactions are confirmed based on tax invoices issued by the entrepreneur: <Amended on Dec. 20, 2016>

1. Where a sum table of tax invoices by customer under Article 54 (1) and (3) is not submitted, 0.5 percent of the supply value of the portion for which the sum table of tax invoices by customer is not submitted;

2. Where all or any of the registration numbers or supply values by transaction parties in entries on a sum table of tax invoices by customer submitted under Article 54 (1) and (3), are omitted or misrepresented, 0.5 percent of the supply value of the portion for which the items to be entered on the sum table of tax invoices by customer are omitted or misrepresented;

3. Where a sum table of tax invoices by customer is submitted at the time of making a final return in the taxable period that includes a preliminary return period under Article 54 (3) because it is not submitted at the time of making the preliminary return, to which subparagraph 2 is not applicable, 0.3 percent of the supply value.

(7) Where an entrepreneur falls under any of the following cases, an amount provided for in each corresponding subparagraph shall be added to the amount of tax payable or deducted from the amount of tax refundable: Provided, That when there is an error in entries on a sum table of tax invoices by seller, the same shall not apply to the supply value of the portion for which the relevant transactions are confirmed based on tax invoices or import tax invoices received by the entrepreneur: <Amended on Dec. 20, 2016>

1. Where an input tax amount is deducted pursuant to the proviso of Article 39 (1) 2, as prescribed by Presidential Decree, 0.5 percent of the supply value corresponding to the input tax amount deducted based on tax invoices or import tax invoices, not the sum table of tax invoices by seller;

2. Where a sum table of tax invoices by seller under Article 54 (1) and (3) is not submitted, or all or any of the registration numbers or supply values by transaction parties in entries on a sum table of tax invoices by seller submitted are omitted or misrepresented, 0.5 percent of the supply value corresponding to the input tax amount deducted based on tax invoices or import tax invoices, not the sum table of tax invoices by seller: Provided, That excluded herefrom are cases prescribed by Presidential Decree;

3. Where the supply value in entries on a sum table of tax invoices by seller submitted under Article 54 (1) and (3) is an overstated misrepresentation, 0.5 percent of the supply value overstated in the entries on the sum table of tax invoices by seller.

(8) If an entrepreneur fails to submit a statement of cash sales under Article 55 (1) or a statement of supply prices in real estate lease contracts under Article 55 (2) or the amount of income (for a statement of cash sales, referring to cash sales; hereafter in this paragraph the same shall apply) entered in such statement is misrepresented, one percent of either the amount of income omitted or the difference between the amount of income entered in the statement and the actual amount of income shall be added to the amount of tax payable or deducted from the amount of tax refundable. <Amended on Dec. 20, 2016>

(9) In applying paragraphs (1) through (7), the corresponding provisions described in each of the following shall not apply to the portion covered by any of paragraphs (1) through (3): <Amended on Dec. 23, 2014; Dec. 20, 2016; Dec. 19, 2017; Dec. 31, 2018; Dec. 31, 2019>

1. For the portion covered by paragraph (1): Paragraphs (2) (excluding subparagraph 2 thereof), (5), and (6);

2. For the portion covered by paragraph (2) (excluding subparagraph 2): Paragraph (6);

3. For the portion covered by paragraph (2) 2 or (3): Paragraphs (1), (6), and (7);

4. For the portion covered by paragraph (3) 3: The main clause of paragraph (2) 2;

5. For the portion covered by paragraph (3) 5: The main clause of paragraph (2) 5.

(10) The penalties specified in paragraphs (2) 2 and (6) 2 shall not apply to the portion subject to penalties under Article 75-6 (2) 3 of the Corporate Tax Act or Article 81-9 (2) 3 of the Income Tax Act. <Newly Inserted on Dec. 31, 2018; Dec. 31, 2019>

Article 61(Scope of Application of Simplified Taxation) #

(1) With respect to any sole proprietor, the sum of whose proceeds from supply in the immediately preceding calendar year falls short of the amount prescribed by Presidential Decree within the limit of at least 80 million won and not more than an amount equal to 130 percent of that amount, this Chapter shall apply, notwithstanding the provisions of Chapters IV through VI, except as otherwise provided in this Act: Provided, That none of the following entrepreneurs shall be deemed a simplified taxable person: <Amended on Dec. 22, 2020>

1. An entrepreneur who has another place of business not subject to the application of simplified taxation;

2. An entrepreneur who is prescribed by Presidential Decree in consideration of the business type, business size, district, etc.

3. An entrepreneur who operates a taxable entertainment place defined in Article 1 (4) of the Individual Consumption Tax Act (hereinafter referred to as "taxable entertainment place"), whose aggregate amount of proceeds from supply in the immediately preceding year of the relevant type of business is at least 48 million won;

4. An entrepreneur who has at least two places of business and whose aggregate amount of proceeds from supply of those two or more places of business in the immediately preceding year is at least the amount referred to in the main clause, with the exception of the subparagraphs, of paragraph (1): Provided, That in cases of an entrepreneur running two or more places of business constituting real estate lease business or taxable entertainment place, an entrepreneur whose aggregate amount of proceeds from supply for the two or more places of business (referring to the proceeds from supply of the real estate lease business or taxable entertainment place in cases of an entrepreneur who concurrently runs at least two business at a single place of business) is at least 48 million won.

(2) With respect to any sole proprietor starting a new business during the immediately preceding taxable period, paragraph (1) shall apply based on the annualized total amount of the proceeds from supply from the start date of the business to the end date of the taxable period. In such cases, a period of less than a month shall be deemed a month.

(3) Where a sole proprietor starting a new business expects that the aggregate amount of his or her proceeds from supply in a calendar year in which he or she starts his or her business will be short of the amount under paragraphs (1) and (2), he or she shall declare whether to apply simplified taxation to the head of the tax office having jurisdiction over his or her place of tax payment, as prescribed by Presidential Decree, at the time of filing an application for registration under Article 8 (1) or (3).

(4) Any sole proprietor who makes a declaration under paragraph (3) shall be deemed a simplified taxable person for the first taxable period: Provided, That this shall not apply to any entrepreneur who falls under the proviso of paragraph (1). <Amended on Jan. 1, 2014>

(5) Any sole proprietor who fails to register under Article 8 (1) or (3) shall be deemed a simplified taxable person for the first taxable period if the aggregate amount of his or her proceeds from supply in a calendar year in which he or she starts his or her business falls short of the amount under paragraphs (1) and (2): Provided, That this shall not apply to any entrepreneur who falls under the proviso of paragraph (1).

(6) Any sole proprietor, the aggregate amount of whose proceeds from supply, which is decided or rectified under Article 68 (1), equals or exceeds the amount under paragraphs (1) and (2) shall be deemed a simplified taxable person until the taxable period that includes the date of such decision or rectification.

Article 63(Tax Bases and Tax Amounts for Simplified Taxable Persons) #

(1) The tax base for a simplified taxable person shall be the sum of his or her proceeds from supply in the relevant taxable period (in cases of the return and payment under Article 66 (2) or (3), it refers to the preliminary imposition period under paragraph (1) of that Article; hereafter in this Article the same shall apply). <Amended on Dec. 22, 2020>

(2) The amount of tax payable by a simplified taxable person shall be an amount calculated according to the following formula. In such cases, if a simplified taxable person runs concurrently two or more types of businesses, a total of amounts calculated by each business type shall be the amount of tax payable.

Number of persons entering a golf course x Number of holes actually played/Total number of holes

(3) Where a simplified taxable person receives tax invoices, etc. issued by other entrepreneurs and submits a sum table of tax invoices by seller prescribed in Article 54 (1) or a statement on the receipts of credit card sales slips, etc. prescribed by Presidential Decree to the head of the tax office having jurisdiction over his or her place of tax payment, as prescribed by Presidential Decree, the amount calculated according to each of the following shall be deducted from the amount of tax payable for the relevant taxable period: Provided, That this shall not apply to the input tax amount not to be deducted under Article 39: <Amended on Dec. 22, 2020>

1. An amount calculated by multiplying the proceeds from supply of goods or services entered in the tax invoices, etc. received during the relevant taxable period by 0.5 percent;

2. Deleted. <Dec. 22, 2020>

3. Where a simplified taxable person runs concurrently a taxable business and a tax-free business, etc., an amount calculated according to the formula prescribed by Presidential Decree.

(4) If a simplified taxable person (excluding a simplified taxable person falling under any item of Article 36 (1) 2) issues an electronic tax invoice by December 31, 2024 (limited to where he or she transmits a list of the issued electronic tax invoices to the Commissioner of the National Tax Service by the deadline under Article 32 (3)) and submits a return on tax deduction subsequent to issuance of electronic tax invoices prescribed by Ordinance of the Ministry of Economy and Finance to the head of the tax office having jurisdiction over his or her place of tax payment, Article 47 (1) shall apply mutatis mutandis to the deduction of value-added tax for the relevant taxable period. <Newly Inserted on Dec. 31, 2022>

(5) Article 29 shall apply mutatis mutandis to the calculation of the tax base for a simplified taxable person. <Amended on Dec. 31, 2022>

(6) In cases of a simplified taxable person, if an aggregate of the amounts deducted under paragraphs (3) and (4) and Article 46 (1) exceeds the amount of tax payable for each taxable period, the relevant excess portion shall be deemed zero. <Amended on Dec. 22, 2020; Dec. 31, 2022>

(7) Where the sum of a simplified taxable person’s proceeds from supply in the pertinent year, which is decided or rectified under Article 68 (1) or for which a revised return is filed under Article 45 of the Framework Act on National Taxes, is not less than the amount prescribed in Article 61 (1), the amount of tax payable for the taxable period prescribed by Presidential Decree shall be an amount calculated by applying mutatis mutandisArticle 37, notwithstanding paragraph (2). In such cases, the value of supply shall be an amount computed by multiplying the proceeds from supply by 100/110, and in the calculation of the input tax amount, no amount of tax deducted under paragraph (3) on the portion for which tax invoices, etc. are issued shall be included in the input tax deduction. <Amended on Dec. 31, 2022>

Article 66(Preliminary Imposition and Payments) #

(1) Notwithstanding Article 67, with respect to any simplified taxable person, the head of a tax office having jurisdiction over the place of business shall determine 50 percent of the amount of tax payable (if there exists any amount of tax which is deducted or reduced from the amount of tax payable under Article 46 (1) or 63 (3) or (4) of this Act or Article 104-8 (2) of the Restriction of Special Taxation Act, referring to an amount remaining after subtracting the relevant amount of tax; and if there exists any decision or rectification under Article 68 of this Act or any decision on the revised return or request for correction under Article 45 or 45-2 of the Framework Act on National Taxes, referring to an amount which reflects the details thereof) for the immediately preceding taxable period (if the immediately preceding taxable period is the taxable period under Article 5 (4) 1, it refers to the full amount of tax payable for the immediately preceding taxable period; and if there is a fractional amount below one thousand won, such amount shall be rounded down), as the amount of tax payable for the period between January 1 and June 30 (hereafter in this Article referred to as "preliminary imposition period"), and then collect it no later than the 25th day after the end of the preliminary imposition period (hereinafter referred to as "preliminary imposition deadline"), as prescribed by Presidential Decree: Provided, That collection shall not be made in any of the following cases: <Amended on Jan. 1, 2014; Dec. 23, 2014; Dec. 20, 2016; Dec. 31, 2018; Dec. 22, 2020; Dec. 8, 2021; Dec. 31, 2022>

1. Where the amount to be collected is less than 500,000 won;

2. Where a simplified taxable person is subject to the application of the taxable period provided for in Article 5 (4) 2;

3. Where a simplified taxable person is deemed unable to pay an amount to be collected by the head of the competent tax office due to a cause falling under any subparagraph of Article 13 (1) of the National Tax Collection Act.

(2) Notwithstanding paragraph (1), any simplified taxable person prescribed by Presidential Decree may return the tax base and the amount of tax payable for the preliminary imposition period to the head of the tax office having jurisdiction over his or her place of business by the preliminary imposition deadline.

(3) Notwithstanding paragraph (1), a simplified taxable person who issues a tax invoice during the preliminary imposition period under Article 32 or 36 (3) shall return the tax base and the amount of tax payable for the preliminary imposition period to the head of the tax office having jurisdiction over his or her place of business by the preliminary imposition deadline. <Newly Inserted on Dec. 22, 2020>

(4) Where a determination has been made under the main clause of paragraph (1), and where the relevant simplified taxable person files a return under paragraph (2) or (3), the determination shall be considered not to have been made. <Amended on Dec. 22, 2020>

(5) Any simplified taxable person who files a return under paragraph (2) or (3) shall pay the amount of tax payable for the relevant preliminary imposition period to the head of the tax office having jurisdiction over his or her place of business, as prescribed by Presidential Decree. <Amended on Dec. 22, 2020>

(6) A simplified taxable person who files a return under paragraph (2) or (3) shall submit a sum table of tax invoices by customer and by seller at the time of filing a return under paragraph (2) or (3), as prescribed by Presidential Decree: Provided, That where a sum table of tax invoices by customer and by seller is not submitted at the time of filing a report under paragraph (2) or (3), it may be submitted at the time of filing a return under Article 67 (1). <Amended on Dec. 22, 2020>

Article 68-2(Additional Tax on Simplified Taxable Persons) #

(1) Article 60 (1) and (2) and paragraph (3) 1, 3, and 5 of that Article shall apply to the imposition of additional taxes on a simplified taxable person. In such cases, in the subparagraphs of Article 60 (1), the "value of supply" shall be construed as "proceeds from supply", and "one percent" as "0.5 percent."

(2) if a simplified taxable person falls under any of the following subparagraphs, the amount as classified in the following subparagraphs shall be added to the amount of tax payable or deducted from the amount of tax refundable: <Amended on Dec. 31, 2022>

1. Where a simplified taxable person is supplied with any goods or services by an entrepreneur who is required to issue tax invoices under Article 32 but fails to receive a tax invoice (excluding where he or she fails to receive a tax invoice during the period in which he or she is required to issue a receipt under Article 36-2 (1) or (2)): 0.5 percent of the proceeds from supply;

2. Where a simplified taxable person who has been issued a tax invoice, etc. fails to have the relevant amount deducted under Article 63 (3), but has it deducted as an input tax amount in calculating the amount of tax payable under the former part of Article 63 (7), upon confirmation by the relevant determining or rectifying agency under Article 57 (1): 0.5 percent of the proceeds from supply.

(3) If a simplified taxable person falls under any of the following cases, an amount provided in each corresponding subparagraph shall be added to the amount of tax payable or deducted from the amount of tax refundable: Provided, That when there is an error in entries on a sum table of tax invoices by customer submitted under Article 66 (6) or 67 (3), this shall not apply to the supply value of the portion for which the relevant transactions are confirmed based on tax invoices issued by the entrepreneur:

1. Where a sum table of tax invoices by customer under Article 66 (6) or 67 (3) is not submitted, 0.5 percent of the supply value of the portion for which the sum table of tax invoices by customer is not submitted;

2. Where all or any of the registration numbers or supply values by transaction parties in entries on a sum table of tax invoices by customer submitted under Article 66 (6) or 67 (3), are omitted or misrepresented, 0.5 percent of the supply value of the portion for which the items to be entered on the sum table of tax invoices by customer are omitted or misrepresented;

3. Where a sum table of tax invoices by customer is submitted at the time of making a final return in the taxable period that includes a preliminary return period because it is not submitted at the time of filing a return under the proviso of Article 66 (6), to which subparagraph 2 is not applicable, 0.3 percent of the supply value.

(4) For the purposes of applying paragraphs (1) through (3), the provisions classified as follows shall not apply to the portion to which paragraph (1) shall apply mutatis mutandis:

1. For the portion to which Article 60 (1) shall apply mutatis mutandis: Article 60 (2) (excluding subparagraph 2), paragraph (2) 2 and (3) of this Article;

2. For the portion to which Article 60 (2) (excluding subparagraph 2) shall apply mutatis mutandis: Paragraph (3) of this Article;

3. For the portion to which Article 60 (2) 2 or (3) 1, 3, or 5 shall apply mutatis mutandis: Article 60 (1) and paragraph (3) of this Article;

4. For the portion to which Article 60 (3) 3 shall apply mutatis mutandis: The main clause of Article 60 (2) 2;

5. For the portion to which Article 60 (3) 5 shall apply mutatis mutandis: The main clause of Article 60 (2) 5.

(5) The additional tax provided in Article 60 (2) 2 and paragraph (3) 2 of this Article shall not apply to the portion to which an additional tax applies under Article 81-9 (2) 3 of the Income Tax Act.

[This Article Newly Inserted on Dec. 22, 2020]

Article 69(Exemption of Simplified Taxable Persons from Payment Obligations) #

(1) Where the aggregate amount of a simplified taxable person’s proceeds from supply in the corresponding taxable period falls short of 48 million won, he or she shall be exempted from the obligation to pay the relevant tax under Article 63 (2), notwithstanding Articles 66 and 67: Provided, That the same shall not apply to any amount of tax that must be added to the amount of tax payable under Article 64. <Amended on Dec. 31, 2018; Dec. 22, 2020>

(2) Article 60 (1) shall not apply where the obligation for tax payment is exempted pursuant to paragraph (1): Provided, That Article 60 (1) 1 shall apply where no application for business registration is made within the deadline prescribed under Article 8 (1) (excluding where no fixed place of business prescribed by Presidential Decree exists), in which case "one percent" in Article 60 (1) 1 shall be "0.5 percent or 50,000 won, whichever is greater". <Amended on Dec. 20, 2016>

(3) In applying paragraph (1), if any of the following is applicable, the aggregate amount of the proceeds from supply provided in each such subparagraph shall be based on the respective annualized total amounts. In such cases, a period of less than one month shall be deemed one month: <Amended on Jan. 1, 2014>

1. As to a simplified taxable person newly starting his or her business during the relevant taxable period, the aggregate amount of the proceeds from supply from the commencement date of the business to the end date of the taxable period;

2. As to a simplified taxable person who temporarily suspends or permanently closes his or her business or who changes taxable type during the relevant taxable period, the aggregate amount of the proceeds from supply from the commencement date of the taxable period to the date the business is temporarily suspended or permanently closed or the taxable type is changed;

3. As to a simplified taxable person subject to application of the taxable period under any subparagraph of Article 5 (4), the aggregate amount of the proceeds from supply during the relevant taxable period.

(4) If it is confirmed that an entrepreneur who is exempted from the obligation to pay tax under paragraph (1) has voluntarily paid the relevant tax, the head of the tax office having jurisdiction over the place of tax payment shall refund the amount paid.

Article 70(Waiver and Reapplication of Simplified Taxation) #

(1) Where a simplified taxable person or a general taxable person subject to application of the provisions for simplified taxable persons under Article 62 intends to waive the application of the provisions for simplified taxable persons and to make himself or herself subject to the application of the provisions for general taxable persons, he or she may be subject to the application of the provisions of Chapters IV through VI, notwithstanding Article 61 (1). In such cases, he or she shall file a report thereon with the head of the tax office having jurisdiction over his or her place of tax payment, as prescribed by Presidential Decree, no later than the last day of the month preceding the month in which he or she intends to be subject to such application. <Amended on Jan. 1, 2014>

(2) Where a sole proprietor starting a new business reports his or her intent to waive the application of the provisions for simplified taxable persons and to make himself or herself subject to the application of the provisions for general taxable persons to the head of the tax office having jurisdiction over his or her place of tax payment, as prescribed by Presidential Decree, at the time of filing an application for business registration under Article 8 (1) or (3), he or she may be subject to the application of the provisions of Chapters IV through VI, notwithstanding Article 61 (1). <Newly Inserted on Jan. 1, 2014>

(3) No sole proprietor who has filed a report pursuant to paragraphs (1) and (2) shall be entitled to the application of the provisions for simplified taxable persons from either of the following dates to the end of the taxable period that includes their respective third anniversary dates: <Amended on Jan. 1, 2014>

1. Where he or she has filed a report pursuant to paragraph (1): The first day of the month during which he or she intends to make himself or herself subject to the application of the provisions for general taxable persons;

2. Where he or she has filed a report pursuant to paragraph (2): The first day of the month in which the date when he or she starts his or her business falls.

(4) Notwithstanding paragraph (3), a sole proprietor prescribed by Presidential Decree, including those whose total amount of consideration for supply in the immediately preceding year is not less than 48 million won and less than the amount prescribed in the main clause, with the exception of the subparagraphs, of Article 61 (1), among those who have reported under paragraphs (1) and (2), may be subject to the provisions concerning simplified taxable persons even before the taxable period under paragraph (3). <Newly Inserted on Dec. 31, 2023>

(5) A sole proprietor who intends to be subject to the provisions on simplified taxable persons pursuant to paragraph (4) shall file a report thereon with the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree, no later than 10 days before the commencement of the taxable period in which he/she wishes the provisions on simplified taxable persons are applicable. <Newly Inserted on Dec. 31, 2023>

[Title Amended on Dec. 31, 2023]

VALUE-ADDED TAX ACT

Article 1(Purpose) #

Article 2(Definitions) #

(Persons Liable to Pay Tax)

Article 3-2(Trustees’ Liability for Tax Payment in Kind) #

Article 4(Taxable Objects) #

Article 5(Taxable Period) #

Article 6(Place of Tax Payment) #

Article 7(Jurisdiction of Taxation) #

Article 8(Business Registrations) #

Article 9(Supply of Goods) #

Article 10(Special Cases concerning Supply of Goods) #

Article 11(Supply of Services) #

Article 12(Special Cases concerning Supply of Services) #

Article 13(Importation of Goods) #

Article 14(Incidental Supply of Goods and Services) #

Article 15(Time of Supply of Goods) #

Article 16(Time of Supply of Services) #

Article 17(Special Cases concerning Time of Supply of Goods and Services) #

Article 18(Time of Importation of Goods) #

Article 19(Place of Supply for Goods) #

Article 20(Place of Supply of Services) #

Article 21(Exportation of Goods) #

Article 22(Services Supplied Overseas) #

Article 23(Supply of Overseas Navigation Services) #

Article 24(Supply of Goods or Services for Acquisition of Foreign Currencies) #

Article 25(Principle of Reciprocity in Application of Zero Tax Rate) #

Article 26(Tax Exemptions for Supply of Tax-Free Goods or Services) #

Article 27(Importation of Tax-Free Goods) #

Article 28(Waiver of Tax Exemption) #

Article 29(Tax Bases) #

Article 30(Tax Rate) #

Article 31(Charging in Transaction) #

Article 32(Tax Invoices) #

Article 33(Exemption from Duty to Issue Tax Invoices) #

Article 34(Time Limit for Issuing Tax Invoices) #

Article 34-2(Special Cases concerning Deductions of Input Tax Amounts Based on Purchaser-Issued Tax Invoices) #

Article 35(Import Tax Invoices) #

Article 36(Receipts) #

Article 36-2(Period Applicable to Issuance of Receipts by Simplified Taxable Persons) #

Article 37(Calculation of Amounts of Tax Payable) #

Article 38(Input Tax Amounts to be Deducted) #

Article 39(Input Tax Amounts Not to Be Deducted) #

Article 40(Pro Rata of Common Input Tax Amounts) #

Article 41(Recalculation of Common Input Tax Amounts) #

Article 42(Special Cases concerning Deductions of Fictitious Input Tax Amounts for Tax-Free Agricultural Products) #

Article 43(Special Cases concerning Deductions of Input Tax Amounts in Cases of Converting Depreciable Assets from Tax-Free Business to Taxable Business Use) #

Article 44(Special Cases concerning Deductions of Input Tax Amounts for Goods in Stock in Cases of being Converted to General Taxable Persons) #

Article 45(Special Cases concerning Tax Deductions for Bad Debts) #

Article 46(Tax Deductions Subsequent to Use of Credit Cards) #

Article 47(Special Cases concerning Tax Deductions Subsequent to Issuance and Transmission of Electronic Tax Invoices) #

Article 48(Preliminary Returns and Payments) #

Article 49(Final Returns and Payments) #

Article 50(Returns and Payments for Importation of Goods) #

Article 50-2(Deferred Payment of Value-Added Tax on Imported Goods) #

Article 51(Lump-Sum Payments at Principal Places of Business) #

Article 52(Payments by Proxy) #

Article 52-2(Special Cases concerning Payments under Secondary Liability Related to Trust) #

Article 53(Special Cases concerning Supply of Services by Foreign Entrepreneurs) #

Article 53-2(Special Cases concerning Business Registration and Payment by Foreign Entrepreneurs Providing Electronic Services) #

Article 54(Submission of Sum Table of Tax Invoices) #

Article 55(Submission of Statements of Cash Sales) #

Article 56(Submission of Accompanying Documents for Zero Tax Rate) #

Article 57(Decisions and Rectification) #

Article 58(Collection) #

Article 58-2(Special Cases concerning Compulsory Collection of Trust Property) #

Article 59(Refunds) #

Article 60(Additional Tax) #

Article 61(Scope of Application of Simplified Taxation) #

Article 62(Period of Application of Simplified Taxation and General Taxation) #

Article 63(Tax Bases and Tax Amounts for Simplified Taxable Persons) #

Article 64(Addition of Input Tax Amounts for Goods in Stock in Cases of being Converted to Simplified Taxable Persons) #

Article 65 #

Article 66(Preliminary Imposition and Payments) #

Article 67(Return and Payment by Simplified Taxable Persons) #

Article 68(Decisions, Rectification, and Collection as Regards Simplified Taxable Persons) #

Article 68-2(Additional Tax on Simplified Taxable Persons) #

Article 69(Exemption of Simplified Taxable Persons from Payment Obligations) #

Article 70(Waiver and Reapplication of Simplified Taxation) #

Article 71(Keeping and Retaining Account Books) #