ENFORCEMENT DECREE OF THE VALUE-ADDED TAX ACT

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ENFORCEMENT DECREE OF THE VALUE-ADDED TAX ACT — 법갈피

Article 5-2(Trustees’ Liability for Tax Payment in Kind) #

(1) "Trust property prescribed by Presidential Decree" in Article 3 (2) of the Act, means trust property under the Trust Act or any other statute (including the income and property accrued through the management, disposal, operation, etc. of the relevant trust property).

(2) "Cases prescribed by Presidential Decree" in Article 3 (3) 2 of the Act means any of the following: <Amended on Feb. 15, 2022; Jun. 30, 2022>

1. Where a trustee concludes a trust contract for a real estate development project pursuant to paragraph Article 103 (4) after being entrusted with property referred to in Article 103 (1) 5 or 6 of the Financial Investment Services and Capital Markets Act from a trustor, and the trustee is not obligated to fund the real estate development project under the trust contract; provided, excluded herefrom are cases where a trustee is a project implementer of a redevelopment or reconstruction project, or a housing improvement project in a city block, a small-scale reconstruction project, or a small-scale redevelopment project under Article 27 (1) of the Act on the Improvement of Urban Areas and Residential Environments or Article 19 (1) of the Act on Special Cases concerning Unoccupied House or Small-Scale Housing Improvement;

2. Where the trustee is a project agent for a redevelopment or reconstruction project, a housing improvement project in a city block, a small-scale reconstruction project, or a small-scale redevelopment project under Article 28 (1) of the Act on the Improvement of Urban Areas and Residential Environments or Article 56 (1) of the Act on Special Cases concerning Unoccupied House or Small-Scale Housing Improvement;

3. Where the trustee supplies goods or services related to the trust property to a person who is in a relationship with the trustor as prescribed in Article 1-2 (1) or (2) of the Enforcement Decree of the Framework Act on National Taxes, paragraph (3) 1 of that Article, or the subparagraphs of Article 2 (5) of the Enforcement Decree of the Corporate Tax Act, at the direction of the trustor.

4. An investment trust defined in Article 9 (18) 1 of the Financial Investment Services and Capital Markets Act.

(3) Where the transfer of the trustor's status is regarded as the supply of trust property under Article 10 (8) of the Act, the existing trustor takes on the duty to pay value-added tax on the relevant supply pursuant to Article 3 (1) of the Act. <Added on Feb. 15, 2022>

[This Article Added on Feb. 17, 2021]

[Previous Article 5-2 moved to Article 5-3 <Feb. 17, 2021>]

Article 7(Standards for Closure Date of Business) #

(1) The date a business is closed under Article 5 (3) of the Act shall be as follows:

1. For a corporation that is dissolved due to a merger: The date of registering the change to, or the incorporation of, a corporation surviving the merger;

2. For a business that is closed due to a division: The date of registering the change to a divided corporation (if the divided corporation is dissolved, the date of registering the incorporation of a corporation newly incorporated after the division);

3. In cases other than those falling under subparagraphs 1 and 2: The date the business concerned is substantially closed for each place of business; provided, where the date a business is closed is unclear, it means the date a report on business closure is received under Article 13 (1).

(2) Notwithstanding paragraph (1) 3, if a domestic corporation (referring to a domestic corporation as defined in subparagraph 1 of Article 2 of the Corporate Tax Act; hereafter the same shall apply in this paragraph) in liquidation following its dissolution, or a domestic corporation for which the rehabilitation procedure is pending after its rehabilitation plan has been authorized by a court under the Debtor Rehabilitation and Bankruptcy Act, reports the closure of its business to, and obtains approval from, the head of the tax office having jurisdiction over its place of tax payment within 25 days from the date it practically closes its business, the date the value of remaining property is determined (if the value of remaining property is not determined within 365 days from the date of its dissolution, the date that falls on the 365th day from the date of its dissolution) may be construed as the date its business is closed. <Amended on Feb. 12, 2019>

(3) For an entrepreneur whose business has been registered before the commencement date of the business under the proviso of Article 8 (1) of the Act, but who has no record of supplying goods or services for six months from the date of business registration, his or her business shall be deemed closed as of the date six months after the date of business registration; provided, the same shall not apply where at least a six-month period is required to establish a place of business, or where otherwise good cause exists for delay in the commencement of business.

Article 8(Places of Business) #

(1) The scope of places of business provided in Article 6 (2) of the Act, is as prescribed in the following table: <Amended on Feb. 17, 2016>

┌──────────────────┬─────────────────────────────────────┐

│Business │Place of Business│

├──────────────────┼─────────────────────────────────────┤

│ │ │

│1. Mining business│The location of its mining office. In such cases,│

│ │if a mining office is located outside the relevant mine yard, the mining office shall be deemed situated in a mine yard registered│

│ │at the head of the mining ledger prepared for a mine yard nearest to the mining office.│

│ │ │

├──────────────────┼─────────────────────────────────────┤

│ │ │

│2. Manufacturing business │This shall exclude the place of completing end products; provided, any place where products are separately packed│

│ │or placed in containers and any oil reservoir referred to in Article 10-5 of the Individual Consumption Tax Act.│

│ │ │

├──────────────────┼────────────────┬────────────────────┤

│3. Construction business, transportation business, and real estate transaction business│(a) For a corporation The location of the corporation in the corporate registry │

│ │ │(including the location of a branch office in the registry) │

│ ├────────────────┼────────────────────┤

│ │(b) For an individual │A place where business affairs are controlled│

│ ├────────────────┼────────────────────┤

│ │(c) For the private operation of a vehicle registered in the name of a corporation│The location of the corporation │

│ │(including the location of a branch office in the registry)│

│ ├────────────────┼────────────────────┤

│ │ (d) For the private operation of a vehicle registered │ │A place where the registered individual controls his/her business affairs│ │ in the name of another individual│ │

├──────────────────┼────────────────┴────────────────────┤

│4. Water resources development and supply business│A place where the business affairs are controlled│

├──────────────────┼─────────────────────────────────────┤

│5. Deleted <Feb. 29, 2024> │ │

├──────────────────┼─────────────────────────────────────┤

│ │ │

│6. Business supplying goods or services│The location of the principal place of business of a multi-level marketing business entity │

│by a multi-level marketing salesperson registered│with which the multi-level marketing salesperson is registered under Article 13 of the Act on Door-to-Door Sales (hereinafter referred to as “multi-level marketing business entity”);│

│under the Act on Door-to-Door Sales│Provided, That, when there is any separate place where the multi-level marketing salesperson is stationed permanently │

│(hereinafter referred to as “multi-level marketing salesperson”)│ to perform all or some of transactions, such place shall be deemed a place of business. │

│ │ │

├──────────────────┼─────────────────────────────────────┤

│ │ │

│7. Telecommunications business in which │A place where the business affairs are controlled│

│a telecommunications business operator licensed, registered, or reported│ │

│under the Telecommunications Business Act │ │

│claims fees by integrated collection of communication fees determined │ │

│by Ordinance of the Ministry of Economy and Finance │ │

│ │ │

├──────────────────┼────────────────┬────────────────────┤

│8. Telecommunications business in which │(a) For a corporation│The location of the main office of the corporation │

│a telecommunications business operator licensed, registered, or reported├────────────────┼────────────────────┤

│under the Telecommunications Business Act provides │(b) For an individual│ A place where the business affairs are controlled │

│mobile communication services determined by Ordinance of the Ministry of Economy and Finance │ │ │

├──────────────────┼────────────────┴────────────────────┤

│9. Business supplying goods │ A place where the business affairs are controlled│

│or services through vending machines │ │

├──────────────────┼─────────────────────────────────────┤

│10. Business managed by │A place where the business affairs are controlled for each region │

│the Korea Railroad Corporation established under the Korea Railroad Corporation Act │ │

├──────────────────┼─────────────────────────────────────┤

│ │ │

│11. Delivery-service business│A place where the business affairs are controlled │

│conducted by an organization for postal services │ │

│established under the Act on Special Cases concerning the Management of Postal Service │ │

│to deliver postal parcels as defined in subparagraph 3 of Article 1-2 of the Postal Service Act │ │

│by means of receipt through personal visitation │ │

│ │ │

├──────────────────┼─────────────────────────────────────┤

│ │ │

│12. Electricity wholesale or retail in which │A place where the business affairs are controlled │

│an electricity wholesaler or retailer licensed, registered, or │ │

│reported the Electric Utility Act, claims charges by integrated collection │ │

│of electric utility charges determined by Ordinance of the Ministry│ │

│of Economy and Finance │ │

│ │ │

├──────────────────┼─────────────────────────────────────┤

│13. Business supplying goods or services by│A place where the business affairs are controlled; provided, when goods or services are │

│the State, a local government, or an association of local governments│ supplied, upon delegation or consignment, or by proxy, a place where the person to whom│

│under subparagraph 3 of Article 46 │the work is delegated, consignee or agent exercises overall control over the business affairs shall be deemed the place of business.│

├──────────────────┼─────────────────────────────────────┤

│14. Business supplying goods or services│A place where the business affairs are controlled │

│by a pipeline installer as defined in │ │

│ubparagraph 3 of Article 2 of the Oil Pipeline Safety Control Act │ │

│through oil pipelines │ │

├──────────────────┼─────────────────────────────────────┤

│15. Real estate leasing business │The location of the real estate in the registry │

└──────────────────┴─────────────────────────────────────┘

(2) Notwithstanding subparagraph 15 of Appendix in paragraph (1), if only a right over real estate is lent or any of the following entities leases real estate, a place where the business affairs are controlled shall be deemed a place of business: <Amended on Mar. 11, 2016; Sep. 10, 2020; Feb. 17, 2022>

1. The Korea Asset Management Corporation established under the Act on the Establishment of Korea Asset Management Corporation;

2. The agricultural cooperative asset management company established under the Act on the Structural Improvement of Agricultural Cooperatives;

3. A corporate restructuring real estate investment trust established under the Real Estate Investment Company Act;

4. The Korea Deposit Insurance Corporation and a financial company authorized to perform liquidation under the Depositor Protection Act;

5. An electric utility business operator licensed under the Electric Utility Act;

6. A telecommunications business operator licensed, reported, or registered under the Telecommunications Business Act;

7. A local government-invested public corporation established under the Local Public Enterprises Act, as determined by Ministerial Decree of the Economy and Finance;

8. The Korea Rural Community Corporation under the Korea Rural Community Corporation and Farmland Management Fund Act;

9. The Korea Expressway Corporation established under the Korea Expressway Corporation Act;

10. The Korea Rail Network Authority established under the Korea Rail Network Authority Act;

11. The Korea Land and Housing Corporation established under the Korea Land and Housing Corporation Act.

(3) A place in which an entrepreneur installs a special sales facility for directly selling goods produced or acquired in connection with his or her own business (hereinafter referred to as "direct sales depot") shall be deemed a place of business.

(4) Any place, other than the places of business provided in paragraphs (1) through (3), may be registered additionally as a place of business upon application by an entrepreneur; provided, the same shall not apply to any business supplying goods or services through vending machines under subparagraph 9 of Appendix in paragraph (1).

(5) Where an entrepreneur has no place of business and fails to file any application for registration under Article 8 (1) and (3) of the Act, his or her domicile or residence as at the time the tax base and the amount of tax are decided or rectified shall be deemed the place of business.

(6) For an entrepreneur who is a nonresident, any place referred to in Article 120 of the Income Tax Act shall be deemed his or her place of business; and for a foreign corporation, any place referred to in Article 94 of the Corporate Tax Act shall be deemed its place of business.

(7) Where an application for business registration is filed under Article 8 (6) of the Act, the location of the relevant trust property entered in the register, the place of registration entered in the register, or the place of business exercising overall control over the trust business shall be the place of business of the relevant trust property. <Added on Feb. 17, 2021>

Article 10(Temporary Places of Business) #

(1) A temporary place of business referred to in Article 6 (5) 2 of the Act, shall be deemed included in the place of business referred to in Article 8 that the entrepreneur uses prior to the establishment of the temporary place of business (hereafter referred to as "existing place of business" in this Article).

(2) Any person who seeks to establish a temporary place of business under Article 6 (5) 2 of the Act, shall file (including submission via the national tax information and communications network defined in subparagraph 19 of Article 2 of the Framework Act on National Taxes) a report on establishment of a temporary place of business, specifying the following particulars, with the head of the tax office having jurisdiction over the temporary place of business within 10 days from the date of commencement of business at the temporary place of business; provided, when the period for which the temporary place of business is opened, does not exceed 10 days, a report on establishment of a temporary place of business need not be submitted: <Amended on Feb. 17, 2021>

1. The entrepreneur’s personal details;

2. The location of the temporary place of business;

3. The period for which the temporary place of business is opened;

4. Other reference information.

(3) Upon receipt of a report submitted under paragraph (2), the head of a tax office shall ascertain whether establishment of a temporary place of business is appropriate and give notice of the conclusion to the applicant and the head of the tax office having jurisdiction over the existing place of business.

(4) Where a person who has established a temporary place of business closes the temporary place of business, he or she shall submit a report on closure of a temporary place of business, specifying the following particulars, to the head of the tax office having jurisdiction over the temporary place of business within 10 days from the date of closure of the temporary place of business:

1. The entrepreneur’s personal details;

2. The date of, and grounds for, closure;

3. Other reference information.

Article 11(Filing Applications for Business Registration and Issuance of Business Registration Certificates) #

(1) An entrepreneur who intends to have his or her business registered under Article 8 (1) of the Act shall file (including via the national tax information and communications network) an application for business registration, specifying the following particulars, with the head of a tax office (referring to either of the head of the competent tax office and the head of any other tax office chosen at the convenience of the applicant) for each place of business: <Amended on Feb. 17, 2021>

1. The entrepreneur’s personal details;

2. Grounds for filing an application for business registration;

3. The date of commencement of business or the date the entrepreneur starts establishing the place of business;

4. Other reference information.

(2) Notwithstanding paragraph (1), an entrepreneur who intends to file an application for registering himself or herself as a per-business unit taxable entrepreneur under Article 8 (3) through (5) of the Act shall file an application for business registration, specifying the particulars referred to in each subparagraph of paragraph (1) regarding his or her main office or principal office (hereinafter referred to as "place of business subject to per-business unit taxation"), with the head of the tax office having jurisdiction over the place of business subject to per-business unit taxation. <Amended on Feb. 12, 2019>

(3) The application under paragraphs (1) and (2) shall be accompanied by the documents classified in the following table, and where the entrepreneur who intends to apply for business registration under paragraphs (1) and (2) is a minor, the written consent of the legal representative prescribed by Ordinance of the Ministry of Economy and Finance shall be additionally attached. <Amended on Feb. 21, 2014; Feb. 12, 2019; Feb. 29, 2024>

┌─────────────────────┬───────────────────────┐

│Classification │Accompanying Documents │

├─────────────────────┼───────────────────────┤

│ │ │

│1. For business subject to licensing, registration, │A copy of a business license, a copy of a business registration certificate,│

│or reporting under statutes or regulations│or a copy of a certificate of report │

│ │ │

├─────────────────────┼───────────────────────┤

│ │ │

│2. For a place of business leased│A copy of a lease contract │

│ │ │

├─────────────────────┼───────────────────────┤

│ │ │

│3. For a commercial building partly leased under │A plan of the relevant portion │

│under Article 2 (1) of the Commercial Building Lease Protection Act │ │

│ │ │

├─────────────────────┼───────────────────────┤

│ │ │

│4. For wholesale or retail trading of gold bullion│A document detailing business funds, financial status, etc., │

│A document detailing business funds, financial status, etc., │as prescribed by Ordinance of the Ministry of Economy and Finance │

│(hereinafter referred to as “gold bullion”) │ │

│ │ │

├─────────────────────┼───────────────────────┤

│ │ │

│5. For business in a taxable entertainment venue under │A document detailing business funds, financial status, etc., │

│Article 1 (4) of the Individual Consumption Tax Act│as prescribed by Ordinance of the Ministry of Economy and Finance│

│ │ │

├─────────────────────┼───────────────────────┤

│ │ │

│6. For an entrepreneur who intends to registe│Documents referred to in subparagraphs 1 through 5│

│by his or her business unit under Article 8 (3) through (5) of the Act│ of this Table regarding a place of business, other than the places of business subject to │

│ │per-business unit taxation (hereinafter referred to as “ancillary place of business”), and│

│ │other documents prescribed by Ordinance of the Ministry of Economy and Finance that state│

│ │the location of the place of business, the type and items of business, etc. │

│ │ │

├─────────────────────┴┬──────────────────────┤

│ │ │

│ │

│7. For wholesale trading of liquid fuel and related products,│A document detailing business funds, financial status, etc., │

│wholesale trading of gaseous fuel and related products, business operating vehicle refueling stations, │ as prescribed by Ordinance of the Ministry of Economy and Finance│

│gas vehicle refueling business, retail trading of liquid fuel for domestic use,│ │

│and retail trading of gas fuel for domestic use│ │

│ │ │

├─────────────────────┼───────────────────────┤

│ │ │

│8. For renewable materials collection and sale business│A document detailing business funds, financial status, etc.,│

│ │as prescribed by Ordinance of the Ministry of Economy and Finance. │

│ │ │

└─────────────────────┴───────────────────────┘

(4) In the case of the proviso of Article 8 (1) of the Act, if business registration is made prior to filing for registration for incorporation of the relevant corporation or the business license, registration, or report, a copy of an application for a business license, a copy of an application for business registration, a copy of a business report, or a business plan for incorporation of the corporation may be submitted in lieu of the documents referred to in subparagraph 1 of Appendix in paragraph (3).

(5) Upon receipt of an application filed under paragraph (1) or (2), the head of a tax office having jurisdiction over the applicant’s place of business shall issue to the applicant a business registration certificate stating the entrepreneur’s personal details and other necessary matters within two days (excluding days falling under the subparagraphs of Article 5 (1) of the Framework Act on National Taxes; hereafter the same shall apply in this paragraph) from the date of receipt of the application; provided, when the Commissioner of the National Tax Service deems it necessary to inspect business facilities or operations, he or she may extend the deadline for issuance by up to five days and issue a business registration certificate based on the findings of such inspection. <Amended on Feb. 11, 2020; Feb. 28, 2023>

(6) Where a business entity fails to file for business registration pursuant to Article 8 (1) through (3) of the Act or where an overseas business entity, etc. fails to file for simplified business registration pursuant to Article 53-2 (1) and (2) of the Act, the head of the competent tax office having jurisdiction over the place for tax payment may investigate and register it. <Amended on Feb. 29, 2024>

(7) Upon receipt of an application for business registration filed under the proviso of Article 8 (1), the head of a tax office having jurisdiction over the applicant’s place of business may refuse the registration if the applicant is found to not have commenced a business.

(8) Where a multi-level marketing salesperson registered with a multi-level marketing business entity under Article 15 of the Act on Door-to-Door Sales reports himself or herself to the multi-level marketing business entity as a wholesale or retail dealer to engage in wholesale or retail trading, if the multi-level marketing business entity files a report on the personal details of the multi-level marketing salesperson, the commencement date of business, and other matters determined by the Commissioner of the National Tax Service with the head of the tax office having jurisdiction over the place of business not later than the 10th of the month following the date of reporting, the multi-level marketing salesperson shall be deemed to file an application for business registration under paragraph (1); provided, this shall not apply to any multi-level marketing salesperson not exempt from the obligation to pay tax under Article 69 of the Act and any multi-level marketing salesperson who falls under the proviso of subparagraph 6 of Appendix in Article 8 (1) of this Decree.

(9) With respect to a multi-level marketing salesperson who is reported under the main clause of paragraph (8), the certificate of registration as a multi-level marketing salesperson issued by a multi-level marketing business entity under Article 15 of the Act on Door-to-Door Sales, Etc. shall be deemed a business registration certificate issued by the head of the competent tax office to the multi-level marketing salesperson pursuant to paragraph (5).

(10) Where a person who operates a tax-free business after being registered under Article 168 of the Income Tax Act and Article 111 of the Corporate Tax Act intends to operate a taxable business additionally, he or she shall be deemed to have filed an application for business registration under paragraphs (1) and (2) upon filing of a report on correction of business registration by applying Article 14 (1) mutatis mutandis.

(11) Where a trustee files an application for business registration pursuant to Article 8 (6) of the Act and meets all the following requirements, an application for business registration may be filed with the head of the tax office having jurisdiction over the place exercising overall control of the trust business, as at least two trust property can be regarded as one business place: <This Article Newly Inserted on Feb. 15, 2022; Feb. 29, 2024>

1. The trustee has concluded at least two trust contracts with one or at least two trustors;

2. The trust contract falls under any of the following items:

(a) A trust contract under which the trustee is entrusted with and manages the assets under Article 103 (1) 5 or 6 of the Financial Investment Services and Capital Markets Act from the truster in order to secure the performance of the truster's obligations;

(b) A trust contract under which a trust business entity under the Financial Investment Services and Capital Markets Act is entrusted with and manages the property under Article 103 (1) 7 of the same Act;

(c) A trust contract under which a person operating a copyright trust management business under subparagraph 26 of Article 2 of the Copyright Act entrusts and manages the rights under the same subparagraph;

(d) A trust contract under which a person who engages in technology trust management business defined in subparagraph 8 of Article 2 of the Technology Transfer and Commercialization Promotion Act is entrusted with and manages technology and rights to use such technology under the same subparagraph.

(12) Upon receipt of an application for business registration filed under the proviso of Article 8 (1) of the Act, the head of a tax office having jurisdiction over the applicant’s place of business shall inquire into the certified copies of promoters’ resident registration cards through administrative data matching under the Electronic Government Act; provided, when the applicant for business registration does not consent to such inquiry, the head of the tax office shall have him or her submit the certified copies of promoters’ resident registration cards. <Amended on Feb. 15, 2022>

(13) If it is deemed that the details of an application for business registration filed under paragraphs (1) through (4) require corrections, the head of the tax office having jurisdiction over the applicant’s place of business may require the applicant to make corrections, within a prescribed period not exceeding 10 days. In such cases, the correction period shall not be included in the period referred to in the main clause of, and the proviso of, paragraph (5). <Amended on Feb. 15, 2022>

Article 13(Reporting on Business Suspension or Closure) #

(1) Where an entrepreneur whose business has been registered under the main clause of Article 8 (1) of the Act and paragraphs (3) through (7) of that Article suspends or closes his or her business, or an entrepreneur whose business has been registered under the proviso of Article 8 (1) of the Act and paragraph (7) of that Article is found to not have commenced a business, the entrepreneur shall, without delay, file (including via the national tax information and communications network) a report on business suspension (closure) stating the following, with the head of the competent tax office or the head of any other tax office chosen at the convenience of the reporting person, pursuant to Article 8 (8) of the Act: <Amended on Feb. 12, 2019; Feb. 17, 2021>

1. The entrepreneur’s personal details;

2. The date of business suspension or closure and the grounds therefor;

3. Other reference information.

(2) A report on business closure filed under paragraph (1) shall be accompanied by a business registration certificate. <Amended on Feb. 17, 2021>

(3) Notwithstanding paragraph (1), if an entrepreneur who closes his or her business submits the final return of value-added tax under Article 91, stating the date of business closure and the grounds therefor, along with his or her business registration certificate, he or she shall be deemed to file a report on business closure. <Amended on Feb. 17, 2021>

(4) In cases of a corporate merger, a corporation surviving the merger (for a consolidation, a new corporation resulting from the consolidation) or a corporation dissolved following the merger (hereafter referred to as "absorbed corporation" in this paragraph) shall report the business closure of the absorbed corporation to the head of the tax office having jurisdiction over the absorbed corporation, along with a report on corporate merger, stating the following particulars, and its business registration certificate:

1. The personal details of the corporation surviving the merger or the new corporation resulting from the consolidation;

2. The personal details of the absorbed corporation;

3. The date of the merger or consolidation;

4. Other reference information.

(5) In cases of the business subject to licensing, registration, reporting, etc. under statutes or regulations, a report on business suspension (closure) referred to in paragraph (1) may be filed with the competent authority having jurisdiction over the business subject to licensing, registration, reporting, etc.; upon receipt of the report on business suspension (closure), the competent authority shall forward (including via the information and communications network; hereafter the same shall apply in this paragraph) the document to the head of the competent tax office without delay; and when a report to be filed under the statutes or regulations with the competent authority having jurisdiction over the business subject to licensing, registration, reporting, etc. is filed with the head of the competent tax office, the head of the competent tax office shall forward the document to the competent authority without delay.

(6) The date of business suspension under paragraph (1) refers to the date of actual suspension of business (if the date of actual suspension of business is unclear, the date a report on business suspension is received under paragraph (1)) for each place of business.

(7) In calculating a period of business suspension stated in a report on business suspension under paragraph (1), the off-season period of a seasonal business shall be deemed a period of business suspension.

Article 14(Modification of Business Registration) #

(1) An entrepreneur shall, without delay, file (including via the national tax information and communications network) a report on correction of business registration stating his or her personal details, the modifications in his or her business registration, and other necessary information with the head of the head of the competent tax office or the head of any other tax office chosen at the convenience of the reporting person, where any of the following circumstances arises: <Amended on Feb. 17, 2021>

1. Where the entrepreneur changes his or her trade name;

2. Where a corporation or an organization prescribed by Ministerial Decree of the Economy and Finance, other than those deemed corporations under Article 13 (1) and (2) of the Framework Act on National Taxes, replaces its representative;

3. Where a change occurs in the type of business prescribed by Ministerial Decree of the Economy and Finance;

4. Where the entrepreneur relocates his or her place of business [for a per-business unit taxable entrepreneur as provided in Article 8 (3) of the Act (hereinafter referred to as "per-business unit taxable entrepreneur"), referring to a place of business subject to per-business unit taxation];

5. Where the entrepreneur’s name is changed by inheritance;

6. Where any of the joint entrepreneurs or his or her investment shares is changed;

7. Where a lessor, subject matter of the lease or its size, security deposit, rent, or lease period is changed or a commercial building is newly leased (limited to where a lessee of a commercial building as defined in Article 2 (1) of the Commercial Building Lease Protection Act intends to file a report on correction of his or her business registration; where a lessee intends to file an application for the certification of a fixed date under Article 5 (2) of that Act; or where any change occurs to a lessee who has obtained the certification of a fixed date);

8. Where a per-business unit taxable entrepreneur changes the place of business subject to per-business unit taxation;

9. Where a per-business unit taxable entrepreneur newly establishes or relocates an ancillary place of business;

10. Where a per-business unit taxable entrepreneur suspends or closes a business conducted at his or her ancillary place of business;

11. Where an entrepreneur who engages in the business of supplying goods or services after registering his or her personal details and other information on a cyber-mall [referring to a virtual place of business established by an entrepreneur who engages in the value-added telecommunications business classified under Article 5 of the Telecommunications Business Act (hereinafter referred to as "value-added telecommunications business entity") to trade goods, etc. using computers, etc. and information and communications equipment; hereinafter the same shall apply] (hereinafter referred to as "mail order distributor") changes the name of the cyber-mall or the Internet domain thereof under the Internet Address Resources Act.

(2) A report on correction of business registration filed under paragraph (1) shall be accompanied by a business registration certificate: Provided, That an entrepreneur, in whose case the content prescribed in any subparagraph of the classification column of Article 11 (3) is changed, shall submit the accompanying documents prescribed in the relevant subparagraphs. <Amended on Feb. 13, 2018>

(3) Upon receipt of a report filed under paragraph (1), the head of a tax office shall correct the entries in the business registration certificate and reissue it after ascertaining the details of modifications within the deadline classified below: <Amended on Feb. 17, 2021>

1. For the circumstances provided in paragraph (1) 1 and 11: The date the report is filed;

2. For the circumstances provided in paragraph (1) 2 through 10: Within two days from the date the report is filed.

(4) Where an entrepreneur files a report on correction of business registration on grounds of paragraph (1) 4 or 8, the head of the tax office having jurisdiction over the place of business shall, without delay, give notice to the head of the tax office having jurisdiction over the previous place of business of the relocation or change of the place of business.

(5) Where an entrepreneur whose place of business and place of domicile are the same gives consent, in filing an application for business registration or a report on correction of business registration, that if his or her domicile is changed under the Resident Registration Act, the address of his or her place of business is changed accordingly, the entrepreneur shall be deemed to submit a report on correction of business registration under paragraph (1) if he or she files a move-in report under Article 16 (1) of the Resident Registration Act. <Added on Feb. 11, 2020>

Article 18(Scope of Supply of Goods) #

(1) The supply of goods under Article 9 (1) of the Act is as follows:

1. Delivery or transfer of goods based on a contract for cash sale, credit sale, installment sale, long-term installment sale, conditional or fixed-term sale, consignment sale, or other trade;

2. Delivery of goods based on a processing contract under which one party makes new goods, processing the goods delivered by the other party, in which all or some of the essential materials are provided by the former;

3. Delivery or transfer of goods based on an exchange contract under which other goods are delivered or services are provided for in return for the delivery of those goods;

4. Delivery or transfer of goods based on auction, expropriation, investment in kind, or other contractual or legal grounds;

5. Re-bringing into the territory of Korea of any article that is bailed from the territory of Korea to a bonded warehouse (limited to a warehouse referred to in paragraph (2) 1 and 2).

(2) Notwithstanding paragraph (1) 1, none of the following shall be treated as the supply of goods:

1. Transfer of a warehouse receipt issued by the Administrator of the Public Procurement Service for any article kept in a bonded warehouse of the Public Procurement Service (referring to a bonded warehouse established by the Administrator of the Public Procurement Service and licensed by the head of a customs office under Article 174 of the Customs Act; hereinafter the same shall apply), which does not entail the return of the bailed article (including cases where an entrepreneur holding a warehouse receipt receives a delivery of a bailed article from a warehouse of the Public Procurement Service to deliver the article to another entrepreneur within the bonded area);

2. Transfer of a warehouse receipt issued by a designated bonded warehouse of an exchange prescribed by Ministerial Decree of the Economy and Finance for any article kept in the designated bonded warehouse of that exchange, which does not entail the return of the bailed article (including cases where an entrepreneur holding a warehouse receipt receives a delivery of a bailed article from a designated warehouse to deliver the article to another entrepreneur within the bonded area);

3. Delivery of raw materials by an entrepreneur to consign the processing thereof to an overseas processor without compensation (excluding those subject to the tax rate of zero percent (hereinafter referred to as "zero tax rate") under Article 31 (1) 5);

4. A loan for consumption through which the Korea National Oil Corporation established under the Korea National Oil Corporation Act supplies petroleum stockpiled pursuant to the Petroleum and Alternative Fuel Business Act to a nonresident or foreign corporation who has no domestic place of business as provided for in Article 8 (6) by means of riskless arbitrage, keeping such petroleum in a bonded area without undergoing the process for import customs clearance.

(3) Notwithstanding paragraph (1) 4, none of the following shall be treated as the supply of goods: <Amended on Feb. 17, 2021; Feb. 28, 2023>

1. Delivery or transfer of goods through a public auction under Article 66 of the National Tax Collection Act (including sale of goods by a negotiated contract under Article 67 of that Act);

2. Delivery or transfer of goods through an auction under the Civil Execution Act (including any compulsory auction and auction to exercise a security right under that Act and any auction under the Civil Act, the Commercial Act and other statutes);

3. Receipt of compensation for expropriated goods by the owner of the goods expropriated through the expropriation procedures under the Act on the Improvement of Urban Areas and Residential Environments, the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects, and other statutes.

4. Delivery or transfer of goods based on a request for sale made by a project implementer under Article 64 (4) of the Act on the Improvement of Urban Areas and Residential Environments.

Article 28(Time of Supply of Goods by Specific Types of Transactions) #

(1) The time of supply of goods by specific type of transaction under the latter part of Article 15 (1) of the Act shall be as prescribed in the following table:

┌──────────────────────┬───────────────────┐

│Classification │Time of Supply │

├──────────────────────┼───────────────────┤

│1. For cash sales, credit sales, or installment sales│The time goods are delivered or made available│

├──────────────────────┼───────────────────┤

│ │ │

│2. Where gift certificates, etc. are sold│The time goods are actually delivered│

│for cash or on credit and thereafter│ │

│exchanged for goods │ │

│ │ │

├──────────────────────┼───────────────────┤

│ │ │

│3. For processing deemed the supply of goods│The time processed goods are delivered│

│ │ │

└──────────────────────┴───────────────────┘

(2) For a return-conditional sale, consent-conditional sale or other conditional sale or for a fixed-term sale, the time the condition is fulfilled or the sale is determined upon expiration of the fixed term shall be deemed the time of supply.

(3) If any of the following is applicable, the time each payment is determined to be made shall be deemed the time of supply of goods; provided, in the case of subparagraph 2 or 3, with respect to the portion of payment determined to be made after the date goods are delivered or made available, the date the goods are delivered or made available shall be deemed the time of supply of the goods:

1. Long-term installment sales prescribed by Ministerial Decree of the Economy and Finance;

2. The supply of goods upon milestone payments;

3. The supply of goods upon interim payments prescribed by Ministerial Decree of the Economy and Finance;

4. The continuous supply of electric power or other goods via an inseparable supply unit.

(4) Where goods are deemed supplied under Article 10 of the Act, the time classified as follows shall be deemed the time of supply of the goods:

┌─────────────────────┬───────────────┐

│Classification │Time of Supply │

├─────────────────────┼───────────────┤

│ │ │

│1. Where goods are deemed supplied under │When such goods are used or consumed│

│Article 10 (1), (2), and (4) of the Act│ │

│ │ │

├─────────────────────┼───────────────┤

│ │ │

│2. Where goods are deemed supplied under│When such goods are carried out │

│Article 10 (3) of the Act│ │

│ │ │

├─────────────────────┼───────────────┤

│ │ │

│3. Where goods are deemed supplied under│When such goods are donated│

│Article 10 (5) of the Act│ │

│ │ │

├─────────────────────┼───────────────┤

│ │ │

│4. Where goods are deemed supplied under│The date of business closure under Article 7 │

│Article 10 (6) of the Act│ │

│ │ │

└─────────────────────┴───────────────┘

(5) Where goods are supplied through a vending machine, the time the entrepreneur takes cash out of the vending machine shall be deemed the time of supply of the goods.

(6) Where goods are exported, the time classified as follows shall be deemed the time of supply of the goods: <Amended on Feb. 12, 2019>

┌─────────────────────┬─────────────────┐

│Classification │Time of Supply │

├─────────────────────┼─────────────────┤

│ │ │

│1. Where Article 21 (2) 1 of the Act or│The date of shipping (loading)│

│Article 31 (1) 1 or 6 of this Decree is applicable│exported goods │

│ │ │

├─────────────────────┼─────────────────┤

│ │ │

│2. In the case of pelagic fishery│When the supply value of exported goods is determined│

│or where Article 31 (1) 2 is applicable │ │

│ │ │

├─────────────────────┼─────────────────┤

│ │ │

│3. Where any of Article 31 (1)│When goods are delivered in a foreign country│

│3 through 5 is applicable│ │

│ │ │

└─────────────────────┴─────────────────┘

(7) Where the supply of goods by an entrepreneur within a bonded area to a domestic area outside the bonded area is treated as importation of goods, the date the import declaration is received shall be deemed the time of supply of goods.

(8) Where the supply of goods entails the return of a bailed article kept in a warehouse of the Public Procurement Service or a designated warehouse of an exchange under Article 18 (2) 1 and 2, the time classified as follows shall be deemed the time of supply of goods:

┌────────────────────┬────────────┐

│Classification │Time of Supply │

├────────────────────┼────────────┤

│ │ │

│1. Where an entrepreneur holding a warehouse receipt takes│When the relevant goods are delivered│

│the delivery of the actual object at the warehouse of the Public Procurement │ │

│or the designated warehouse of the exchange and delivers it│ │

│to another entrepreneur within the bonded area│ │

│ │ │

├────────────────────┼────────────┤

│ │ │

│2. Where the receipt of the actual object│The date the import declaration is received│

│is treated as importation of goods│ │

│ │ │

├────────────────────┼────────────┤

│ │ │

│3. Where an article that is bailed from the territory of Korea to a warehouse│The date the bringing-in declaration is received│

│of the Public Procurement Service, or a designated warehouse│ │

│of an exchange is brought into the territory of Korea│ │

│ │ │

└────────────────────┴────────────┘

(9) Notwithstanding paragraphs (1) through (8), if the time of supply of goods supplied by an entrepreneur before closing his or her business arrives after the date of business closure, the date of business closure shall be deemed the time of supply.

(10) In the case of sales on consignment or through an agent under the main clause of Article 10 (7) of the Act, paragraphs (1) through (9) shall apply based on the supply of goods by the consignee or agent; provided, when the consignor or principal is unidentified under the proviso of Article 10 (7) of the Act, paragraphs (1) through (9) shall apply on the assumption that a separate supply has been made between the consignor and the consignee, or between the principal and the agent.

(11) Where an entrepreneur liable to pay tax leases facilities, etc. from any lessor registered under the Specialized Credit Finance Business Act and takes the delivery of the facilities, etc. directly from the supplier or the head of the competent customs office, paragraphs (1) through (9) shall apply on the assumption that the entrepreneur has been supplied with the goods directly from the supplier or has imported the goods directly from the relevant foreign country.

Article 29(Time of Supply of Services Supplied in Installments or on a Conditional Basis) #

(1) Where any of the following subparagraphs is applicable, the time each payment is determined to be made, shall be deemed the time of supply of services supplied in installments or on a conditional basis under Article 16 (2) of the Act; provided, in the case of subparagraph 2 or 3, with respect to the portion of payment determined to be made after the date the offer of labor is completed, the date the offer of labor is completed shall be deemed the time of supply for the services:

1. Where services are supplied on condition of long-term installment or other conditions prescribed by Ministerial Decree of the Economy and Finance;

2. Where services are supplied upon milestone payments;

3. Where services are supplied upon interim payments prescribed by Ministerial Decree of the Economy and Finance;

4. Where services are continuously supplied via an inseparable supply unit.

(2) The time of supply of services under Article 16 (2) of the Act, shall be as follows:

1. Where the time the offer of labor is completed or payment is determined to be made, cannot be deemed the time of supply: The time the provision of services is completed or the price of supply is determined;

2. Where an entrepreneur provides real estate leasing services, which falls under any of the following: The date on which the preliminary return period or taxable period ends:

(a) Where Article 29 (10) 1 of the Act is applicable;

(b) Where Article 29 (10) 3 of the Act is applicable;

(c) Where the entrepreneur renders real estate leasing services after leasing the real estate, in which case the calculation of tax base is subject to Article 65 (2);

3. Where any of the following services are provided over at least two consecutive taxable periods and the price is paid in advance: The date on which the preliminary return period or taxable period ends:

(a) Where an entrepreneur operating a fitness club or other sports center allows its members to use the facilities subject to advance payment of annual dues;

(b) Where an entrepreneur allows another entrepreneur to use his or her trademark after entering into a trademark license agreement with him or her in return for a lump-sum payment of the total amount of royalty;

(c) Where an entrepreneur establishing and operating a welfare facility for senior citizens (limited to charged ones) under the Welfare of Senior Citizens Act, allows the facility residents to use a swimming pool, fitness club, etc. in the facility after collecting the user fees in advance from them before they occupy the facility;

(d) Other services similar to those provided in items (a) through (c);

4. Where an entrepreneur allows the use of a facility established in compliance with the mode provided for in subparagraph 3 of Article 4 of the Act on Public-Private Partnerships in Infrastructure over at least two consecutive taxable periods, collecting the fees for use thereof: The date on which the preliminary return period or taxable period ends.

(3) Notwithstanding paragraphs (1) and (2), if the time of supply of services provided by an entrepreneur before closing his or her business arrives after the date of business closure, the date of business closure shall be deemed the time of supply.

Article 31(Scope of Exportation) #

(1) "Transaction prescribed by Presidential Decree, such as an intermediary trade transaction" in Article 21 (2) 2 of the Act means any of the following: <Amended on Feb. 12, 2019>

1. Export made through an intermediary trade transaction (referring to export of articles, etc. imported for export without bringing such articles, etc. into the territory of Korea, other than into the bonded areas designated under Article 154 of the Customs Act; and the places permitted for storage of goods outside bonded areas designated under Article 156 of that Act or the free trade zones designated under Article 4 of the Act on Designation and Management of Free Trade Zones);

2. Consignment export [referring to export made under a contract, the price of which is settled within the limits of proceeds from the sale of articles, etc. exported without exchange];

3. Overseas delivery export [referring to export made by means of delivering or offering exports, etc. not cleared in the Republic of Korea to a foreign country although the price is received in the Republic of Korea];

4. Export based on consignment processing trade [referring to export made by means of either exporting all or some of the raw materials to be processed (including raw materials to be manufactured, fabricated, restructured, or remodeled; hereinafter the same shall apply) in a foreign country to the other party to transaction on condition of paying processing fees or delivering processed articles, etc. to a foreign country after procuring and processing them therein];

5. If raw materials are removed from the territory of Korea to make an overseas consignment processor process them without compensation and if the processed goods are transferred, removal of the raw materials;

6. Shipment of articles kept in a bonded area into a foreign country prior to the acceptance of an import declaration for the articles under the Customs Act.

(2) "Goods ... as prescribed by Presidential Decree" in Article 21 (2) 3 of the Act means any of the following:

1. Goods (excluding gold bullion) supplied by an entrepreneur using a local letter of credit or a written verification of purchase determined by Ministerial Decree of the Economy and Finance;

2. Goods supplied by an entrepreneur to the Korea International Cooperation Agency established under the Korea International Cooperation Agency Act (limited to goods that the Korea International Cooperation Agency removes from the territory of Korea to a foreign country without compensation, for the project under Article 7 of that Act);

3. Goods supplied by an entrepreneur to the Korean Foundation for International Healthcare established under the Korean Foundation for International Healthcare Act (limited to goods that the Korean Foundation for International Healthcare removes from the territory of Korea to a foreign country without compensation, for the project under Article 7 of that Act);

4. Goods supplied by an entrepreneur to the Korean National Red Cross established under the Organization of the Republic of Korea National Red Cross Act (limited to goods that the Korean National Red Cross removes from the territory of Korea to a foreign country without compensation, for the project under Article 7 of that Act);

5. Goods supplied by an entrepreneur in compliance with the following requirements:

(a) To be supplied under direct contract with a foreign nonresident or foreign corporation (hereafter referred to as "nonresident, etc." in this subparagraph);

(b) For the entrepreneur to receive the price in Korean won at a foreign exchange bank;

(d) To be removed from the territory of Korea by another domestic entrepreneur under contract with the nonresident, etc. as they are delivered, or after being manufactured or processed.

Article 33(Scope of Goods or Services Supplied for Acquisition of Foreign Currencies) #

(1) "Supply of goods or services ... which is made in the manner prescribed by Presidential Decree" in Article 24 (1) 2 of the Act means the supply of any of the following goods or services to those who present diplomatic tax exemption cards issued by the Minister of Foreign Affairs at a place of business designated by the head of the competent tax office as a diplomatic duty free shop (including a place of sales designated pursuant to Article 28 of the Enforcement Decree of the Individual Consumption Tax Act), as determined by the Commissioner of the National Tax Service, which is verified as having been supplied to the persons referred to in Article 24 (1) 2 of the Act (hereafter referred to as "diplomatic officials, etc." in this paragraph) by a diplomatic sales tax exemption record stating their names and nationalities, the numbers of diplomatic tax exemption cards, the names of articles, quantity, the values of supplies, etc.:

1. Food and accommodation services;

2. Goods referred to in Articles 24 (1) and 27 of the Enforcement Decree of the Individual Consumption Tax Act;

3. Oil referred to in Article 20 (1) of the Enforcement Decree of the Traffic, Energy and Environment Tax Act;

4. Alcoholic beverages supplied under the Liquor Tax Act;

5. Electric power;

6. Automobiles purchased with approval from the Minister of Foreign Affairs.

(2) "Which is prescribed by Presidential Decree" in Article 24 (1) 3 of the Act means the supply of any of the following: <Amended on Feb. 3, 2015; Feb. 17, 2016; Feb. 7, 2017; Feb. 11, 2020; Feb. 17, 2021; Mar. 23, 2021; Feb. 15, 2022>

1. Any of the following goods or business services that are supplied in the territory of Korea to a nonresident (excluding an individual having his or her residence in the Republic of Korea, an employee of a diplomatic office, etc. provided for in Article 24 (1) 1 of the Act, and a serviceperson or civilian employee of United Nations Armed Forces or United States Armed Forces permanently stationed in the Republic of Korea; hereafter the same shall apply in this paragraph) or foreign corporation having no domestic place of business, the price of which is paid in Korean won at a foreign exchange bank or in a manner prescribed by Ministerial Decree of the Economy and Finance; provided, the professional activities referred to in item (b) and the services referred to in items (h) and (i) shall be limited to where the relevant foreign country grants the identical tax exemption as provided for herein to Korean residents or corporations (referring to where the relevant foreign country has no provisions governing taxes equivalent to the value-added tax or other similar taxes of the Republic of Korea or exempts Korean residents or corporations from those taxes; hereafter the same shall apply in this paragraph):

(a) Goods delivered to a domestic entrepreneur designated by a nonresident or foreign corporation for the entrepreneur’s taxable business;

(b) Professional, scientific, and technical activities (excluding veterinary activities, activities of head offices for manufacturing, and activities of head offices for other industries);

(d) Communications services;

(e) Repair of containers; storage and warehousing business within bonded areas; and the shipping agency services, marine transportation brokerage business, and vessel management services under the Marine Transportation Act;

(f) News agency activities, video and audio records production and distribution services (excluding operating a theater or a video-viewing establishment), software development, computer programming, system integration and management, data processing, hosting, portals and other Internet information media service activities, and other information service activities, which all belong to the category of information and communications services;

(g) Brokerage of commodities and electronic commerce retail brokerage;

(h) Business facilities management and business support service activities (excluding landscape care and maintenance service activities, activities of travel agencies and tour operators, and other tourist assistance activities);

(i) Investment advisory services under Article 6 (1) 4 of the Financial Investment Services and Capital Markets Act;

(j) Educational services (limited to educational support activities);

(k) Human health activities (limited to cases of supplying clinical trial services);

(l) Goods or services similar to those provided for in items (a) through (j), which are prescribed by Ministerial Decree of the Economy and Finance;

2. Goods or business services referred to in any item of subparagraph 1 (for professional activities referred to in subparagraph 1 (b) and services referred to in subparagraph 1 (h) and (i), limited to where the relevant foreign country grants Korean residents or corporations the identical tax exemption as provided for herein) that are supplied in the territory of Korea under direct contract with a foreign nonresident or foreign corporation having a domestic place of business; provided, this shall apply only where the price is paid by the relevant foreign nonresident or foreign corporation either in Korean won at a foreign exchange bank or in a manner prescribed by Ministerial Decree of the Economy and Finance;

3. Export goods processing services (including export goods dyeing services; hereinafter the same shall apply) that process export goods under direct contract with exporters; provided, this shall not apply where an entrepreneur issues a tax invoice on which value-added tax is itemized under Article 32 of the Act;

4. Export goods processing services supplied based on a local letter of credit or a written verification of purchase determined by Ministerial Decree of the Economy and Finance;

5. Goods or services supplied to a ship, aircraft, or deep-sea fishing vessel that covers a foreign country; provided, this shall not apply where an entrepreneur issues a tax invoice on which value-added tax is itemized under Article 32 of the Act;

6. Goods or services supplied to United Nations Armed Forces or United States Armed Forces that are permanently stationed in the Republic of Korea [including a certified procurement agency referred to in Article 16 (3) of the Agreement under Article Ⅳ of the Mutual Defense Treaty between the Republic of Korea and the United States of America, regarding Facilities and Areas and the Status of United States Armed Forces in the Republic of Korea;

7. Travel agent services provided by general travel business operators for foreign tourists under the Enforcement Decree of the Tourism Promotion Act; provided, this shall apply only where the price is paid as follows:

(a) The price is received in Korean won at a foreign exchange bank;

(b) It is verified that foreign currency cash is generated from transactions with foreign tourists, based on a statement of travel agent service fees and a certificate of purchased foreign currency determined by the Commissioner of the National Tax Service;

8. Deleted; <Feb. 3, 2015>

9. Goods or services supplied in the territory of Korea by any of the following entrepreneurs; provided, this shall apply only where the price is paid in foreign currency and exchanged into Korean won at a foreign exchange bank:

(a) A person who operates a foreigner-only selling place designated under Article 17 (1) of the Individual Consumption Tax Act;

(b) A person who operates an entertainment restaurant exclusive for foreign military personnel stationed in the Republic of Korea and foreign seafarers under Article 115 of the Restriction of Special Taxation Act.

Article 34(Scope of Unprocessed Foodstuffs) #

(1) Unprocessed foodstuffs referred to in Article 26 (1) 1 of the Act (hereafter referred to as "unprocessed foodstuffs" in this Article), mean any of the following stuffs supplied for food unprocessed or primarily processed, to the extent that the inherent nature of the original products remains unchanged, such as threshing, cleaning, polishing, milling, dressing, drying, freezing, salting or packing. In such cases, matters necessary relating to the scope of the following unprocessed foodstuffs, shall be prescribed by Ministerial Decree of the Economy and Finance:

1. Cereals;

2. Potatoes;

3. Special-purpose crops;

4. Fruit;

5. Vegetables;

6. Livestock;

7. Meat;

8. Eggs (including milk and powdered milk);

9. Fishes (including whales);

10. Shellfish;

11. Seaweeds;

12. Other agricultural products, stock farm products, marine products, and forest products, all of which are supplied for human consumption, in addition to those provided for in subparagraphs 1 through 11;

13. Salt (referring to bay salt and re-manufactured salt that meet the food standards and specifications determined by the Minister of Food and Drug Safety under Article 7 (1) of the Food Sanitation Act; hereinafter the same shall apply).

(2) Unprocessed foodstuffs include the following:

1. Simple processed foodstuffs prescribed by Ministerial Decree of the Economy and Finance, such as kimchi and bean curd;

2. By-products generated naturally from primary processing, to the extent that the inherent nature of the original products remains unchanged;

3. Simple mixtures of unprocessed foodstuffs;

4. Foodstuffs produced through adding food additives, etc. to, or coating rice or culturing fungi, which are prescribed by Ministerial Decree of the Economy and Finance.

(3) Agricultural products, stock farm products, marine products, and forest products referred to in Article 26 (1) 1 of the Act, are as follows:

1. Original products;

2. Products produced through original processing, to the extent that the inherent shape of the original products remains unchanged;

3. By-products generated naturally from original processing under subparagraph 2.

Article 35(Scope of Tax-Free Medical and Health Services) #

Medical and health services referred to in Article 26 (1) 5 of the Act mean the following services (including services provided by persons who have opened medical institutions or veterinary hospitals under the Medical Service Act or the Veterinarians Act): <Amended on Jan. 1, 2014; Jan. 28, 2014; Feb. 17, 2016; Aug. 2, 2016; Feb. 13, 2018; Feb. 12, 2019; Dec. 24, 2019; Feb. 11, 2020; Feb. 15, 2022; Sep. 26, 2023; Feb. 29, 2024>

1. Services provided by a physician, dentist, oriental medical doctor, midwife, or nurse under the Medical Service Act; provided, this shall exclude medical services not covered by any of the care benefits under Article 41 (4) of the National Health Insurance Act, as listed below:

(a) Plastic surgery (excluding the treatment of plastic surgery complications, reconstructive surgery of congenital malformations, and reconstructive surgery following tumor removal), such as double eyelid surgery, rhinoplasty, breast augmentation and reduction surgery (excluding breast reconstruction surgery following mastectomy for breast cancer), liposuction, face-lifting, face contouring, and cosmetic dental treatment (referring to tooth whitening, laminate and gingivoplasty), and orthognathic surgery (excluding orthognathic surgery following teeth straightening);

(b) Nevus pigmentosus, freckle, lentigo and chloasma treatment, acne treatment, hair removal, alopecia treatment, hair transplantation, tattooing, tattoo removal, piercing, lipolysis, skin regeneration, skin whitening, anti-aging, and pore tightening;

2. Services provided by a bone-setter, acupuncturist, moxibustionist or massage therapist under the Medical Service Act;

3. Services provided by a clinical pathologist, radiologist, physical therapist, occupational therapist, dental technician or dental hygienists under the Medical Service Technologists Act;

4. Drug dispensing services provided by a pharmacist under the Pharmaceutical Affairs Act;

5. Services provided by a veterinarian under the Veterinarians Act; provided, diagnosing and treating animals shall be limited to each of the following:

(a) Diagnosing and treating livestock under the Livestock Products Sanitary Control Act;

(b) Diagnosing and treating aquatic animals under the Aquatic Life Disease Control Act;

(c) Diagnosing and treating guide dogs for persons with disabilities, which carry the mark of guide dog under Article 40 (2) of the Act on Welfare of Persons with Disabilities;

(d) Diagnosing and treating animals raised by recipients as defined in subparagraph 2 of Article 2 of the National Basic Living Security Act;

(e) In addition to the medical treatment services under items (a) through (d), medical services for animals for the purpose of preventing and treating diseases, which are publicly notified by the Minister of Agriculture, Food and Rural Affairs or the Minister of Oceans and Fisheries in consultation with the Minister of Economy and Finance.

6. Funeral services provided by a funeral service provider;

7. Services related to graveyard subdivision, cremation, burial of remains, sale of natural burial ground, and management business provided by a person who installs, manages, or creates a private cemetery, private crematory facility, private charnel facility, or private natural burial ground under Articles 14 through 16 of the Act on Funeral Services;

8. Services related to cremation and graveyard subdivision and management provided by a person to whom a local government has entrusted the management of a public cemetery, public crematory facility, or public charnel facility;

9. Emergency patient transport services provided by an emergency patient transport service provider as defined in subparagraph 8 of Article 2 of the Emergency Medical Service Act;

10. Services provided by an entrepreneur holding a license for a foul waste collection and transportation business under Article 45 of the Sewerage Act, or permission for a livestock excreta collection and transportation business or livestock excreta disposal business under Article 28 of the Act on the Management and Use of Livestock Excreta;

11. Disinfection services provided by an entrepreneur who has filed a report on his or her disinfection services under Article 52 of the Infectious Disease Control and Prevention Act;

12. Collection, transportation, or disposal of household or medical wastes provided by an entrepreneur holding a license for a business of treating household or medical wastes under Article 25 of the Wastes Control Act, and recycling of household wastes provided by an entrepreneur who has obtained approval for, or filed a report on, installation of a waste disposal facility under Article 29 of that Act;

13. Health management services provided by an entity designated as a specialized health management institution under Article 21 of the Occupational Safety and Health Act, and working environment measurement services provided by a working environment measurement institution designated under Article 126 of that Act;

14. Services, such as aid in physical activities and household chores or nursing, provided by a long-term care institution as defined in subparagraph 4 of Article 2 of the Long-Term Care Insurance Act for those who have obtained approval for long-term care under that Act;

15. Services provided by a person other than the State and local governments in exchange for a welfare service voucher issued to an individual in need of protection under Article 5-2 (2) of the Social Welfare Services Act;

16. Services, such as food and medical care, provided by a postnatal care center under the Mother and Child Health Act for women right after delivery or for newborn babies;

17. Services, such as nursing, postnatal care, and childcare, directly provided by a social enterprise certified under Article 7 of the Social Enterprise Promotion Act or a social cooperative which has obtained authorization for establishment pursuant to Article 85 (1) of the Framework Act on Cooperatives;

18. Medical and health services provided by a person entrusted with medical and health services by the State or local governments in accordance with Article 15 (6) of the Act on the Improvement of Mental Health and the Support for Welfare Services for Mental Patients and other statutes and regulations prescribed by Ordinance of the Ministry of Economy and Finance.

Article 37(Scope of Passenger Transport Services Subject to Taxation) #

"Passenger transport services prescribed by Presidential Decree" in the proviso, with the exception of the items, of Article 26 (1) 7 of the Act mean as follows: <Amended on Mar. 12, 2019; Oct. 7, 2020; Feb. 29, 2024>

1. In the case of passenger transport services by aircraft, expressway buses, chartered buses, taxies, special vehicles, special-type ships, or rapid-transit trains, any of the following:

(a) Passenger transport services by aircraft under the Aviation Business Act;

(b) Passenger transport services by automobiles used for the following passenger transport services among the passenger transport services provided under the Passenger Transport Service Act:

(i) Intercity bus transportation business utilizing intercity premium express buses and intercity deluxe express buses;

(ii) Chartered bus transport services;

(iii) General taxi transport services and owner-driver taxi transport services;

(iv) Car rental services;

(c) Passenger transport services by the following ships; provided, this shall exclude passenger transport services by the passenger and car ferries prescribed by Ministerial Decree of the Economy and Finance:

(i) Hydrofoils;

(ii) Air-cushion vessels;

(iii) Car ferries;

(iv) Passenger ships with a service speed of at least 20 knots;

(d) Passenger transport services by high-speed rail under the Act on Railroad Construction and Railroad Facilities Management;

2. In the case of passenger transport services by means of transportation for tourism or entertainment purposes, such as cableways and excursion ships, any of the following:

(a) Passenger transport services by cableways under the Tramway Transportation Act;

(b) Passenger transport services by means of transportation provided for tourism excursion ship business, circular tour bus business, or tourist tramway business under Article 2 of the Enforcement Decree of the Tourism Promotion Act;

(c) Passenger transport services by general rail operated for tourism purposes under the Act on Railroad Construction and Railroad Facilities Management (limited to where a railroad service provider receives fees for its services in excess of the passenger fares and charges reported to the Minister of Land, Infrastructure and Transport pursuant to Article 9 of the Railroad Service Act).

[This Article Wholly Amended on Feb. 12, 2019]

Article 40(Scope of Tax-Free Financing and Insurance Services) #

(1) Financing and insurance services referred to in Article 26 (1) 11 of the Act mean labor for the following services, business, and work: <Amended on Feb. 21, 2014; Feb. 3, 2015; Oct. 23, 2015; Feb. 17, 2016; Feb. 13, 2018; Feb. 12, 2019; Feb. 11, 2020; Aug. 11, 2020; Feb. 15, 2022; Jun. 30, 2022; Sep. 26, 2023>

1. Banking services and incidental services under the Banking Act, as follows:

(a) Receipt of deposits and savings deposits, and issuance of securities and other debentures;

(b) Loans of funds or discount of notes;

(d) Guarantee of debts or acceptance of notes;

(e) Mutual savings;

(f) Factoring (purchase and recovery of bonds on sales price of a company and affairs related thereto);

(g) Deleted; <Feb. 3, 2015>

(h) Execution of collection and payment as an agent;

(i) A credit depository of a local government as an agent;

(j) Execution of payment related to electronic commercial transactions as an agent;

2. Services provided under the Financial Investment Services and Capital Markets Act, as follows:

(a) Deleted; <Feb. 3, 2015>

(b) Deleted; <Feb. 3, 2015>

(c) Collective investment business; provided, this shall exclude where a collective investment business entity manages funds, etc. pooled from investors, investing them in real estate, commodities and other assets prescribed by Ministerial Decree of the Economy and Finance;

(d) Trust business; provided, this shall be limited to the business affairs classified as follows:

(i) That a trust business entity manages (including keeping and managing as instructed by a collective investment business entity; hereafter the same shall apply in this item) property referred to in Article 103 (1) 1 through 4 or 7 of the Financial Investment Services and Capital Markets Act (including collective investment property as defined in Article 9 (20) of that Act; hereafter the same shall apply in this item) entrusted by a trustor; provided, this shall exclude where a trust business entity manages property entrusted under Article 103 (1) 1 of that Act, investing it in real estate, commodities, and other assets prescribed by Ministerial Decree of the Economy and Finance;

(ii) That a trust business entity manages property referred to in Article 103 (1) 5 or 6 of the Financial Investment Services and Capital Markets Act entrusted by a trustor to guarantee the performance of an obligation to beneficiaries;

(iii) That a trust business entity manages property referred to in Article 103 (1) 5 or 6 of the Financial Investment Services and Capital Markets Act entrusted by a trustor to carry out a real estate development project under paragraph (4) of that Article;

(e) Investment trading business, investment brokerage business, and related business affairs according to the following classifications:

(i) Work of a multilateral-trade contracting company under Article 8-2 (5) of the Financial Investment Services and Capital Markets Act;

(ii) Work of the Korea Financial Investment Association established under Article 283 of the Financial Investment Services and Capital Markets Act concerning over-the-counter transactions of stock certificates that are not listed on the securities market under Article 286 (1) 5 of that Act;

(iii) Work of the Korea Securities Depository established under Article 294 of the Financial Investment Services and Capital Markets Act;

(iv) Work of the Korea Exchange permitted under Article 373-2 (1) of the Financial Investment Services and Capital Markets Act;

(f) Work of a general administration company (limited to services provided to collective investment schemes or collective investment business entities);

(g) Discretionary investment business; provided, this shall exclude where a discretionary investment business entity manages funds, etc. pooled from investors, investing them in real estate, commodities, and other assets prescribed by Ministerial Decree of the Economy and Finance;

(h) Deleted; <Feb. 3, 2015>

(i) Business of providing an institutional private equity fund (including previous private equity funds participating in management that continue to exist as they are deemed institutional private equity funds, private equity funds for corporate financial stability, or private equity funds for start-up and venture business pursuant to Article 8 (1) through (4) of the Addenda of the Financial Investment Services and Capital Markets Act (Act No. 18128); hereinafter the same shall apply) with such services as the management, keeping, and administration of the collective investment property, or sale or redemption of equity, of an institutional private equity fund (limited to services provided by an executive partner of an institutional private equity fund);

(j) Deleted; <Feb. 3, 2015>

(k) Deleted; <Feb. 3, 2015>

(l) Deleted; <Feb. 3, 2015>

(m) Deleted; <Feb. 3, 2015>

(n) Short-term financing business;

(o) Business of a comprehensive financial investment business entity (limited to work offering credit to enterprises);

3. Deleted. <Feb. 3, 2015>

4. Foreign exchange service provided by a specialized foreign exchange dealer under the Foreign Exchange Transactions Act;

5. Mutual savings bank business under the Mutual Savings Banks Act;

6. Credit guarantee fund business under the Credit Guarantee Fund Act;

7. Guarantee business of the Korea Housing and Urban Guarantee Corporation and the operation and management of the Housing and Urban Fund under the Housing and Urban Fund Act;

8. Insurance business under the Insurance Business Act (including serving as an insurance broker or agent and damage adjustment services and insurance investigation and reporting services provided to insurance companies, but excluding both insurance accounting services and pension accounting services under the Act on the Guarantee of Employees' Retirement Benefits);

9. Specialized credit finance business under the Specialized Credit Finance Business Act (including where either of the entrepreneurs jointly operating a specialized credit finance business performs the specialized credit finance services delegated by the other entrepreneur);

10. Asset-backed securitization business conducted by special-purpose companies under subparagraph 5 of Article 2 of the Asset-Backed Securitization Act;

10-2. Asset management business conducted by asset managers under Article 10 (1) of the Asset-Backed Securitization Act;

11. Deleted; <May 16, 2023>

12. Work of the administrator of claims under the Korea Housing Finance Corporation Act concerning the management, operation, and disposal of mortgage-backed claims and student loan-backed claims;

13. Any of the following asset management and operation services; provided, this shall exclude where a person who provides services referred to in the relevant item manages funds by investing in real estate, real assets, and other assets prescribed by Ministerial Decree of the Economy and Finance:

(a) Asset management and operation services that an accelerator under subparagraph 9 of Article 2 of the Support for Small and Medium Enterprise Establishment Act or an individual investment association under paragraph 9 of that Article provides for a small and medium enterprise establishment investment association under that Act or the Korea Venture Fund under the Act on Special Measures for the Promotion of Venture Businesses;

(b) Asset management and operation services that an accelerator under subparagraph 9 of Article 2 of the Venture Investment Promotion Act or a person under Article 50 (1) 2, 4, or 5 of that Act provides to a venture investment association under subparagraph 11 of Article 2 of that Act (excluding associations registered pursuant to Article 63-2 of the same Act);

(c) Asset management and operation services that the Korea Venture Investment Corporation under Article 66 of the Venture Investment Promotion Act provides to the fund of funds for venture investment under Article 70 (1) of that Act;

(d) Asset management and operation services provided by a person referred to in Article 63-2 (1) 1 through 3 of the Venture Investment Promotion Act to a private indirect venture investment association defined in subparagraph 12 of Article 2 of the same Act (hereafter referred to as "private indirect venture investment association" in this subparagraph);

(e) Asset management and operation services provided to a private indirect venture investment association by persons prescribed by Ordinance of the Ministry of Economy and Finance, who jointly become executive members pursuant to Article 63-2 (3) of the Venture Investment Promotion Act: provided, in cases of asset management and operation services provided by a person prescribed by Ordinance of the Ministry of Economy and Finance, it shall be limited to asset management and operation service provided to a private indirect venture investment association in connection with investment in another venture investment association under paragraph (4) of that Article.

14. Deleted; <Feb. 3, 2015>

15. Entrusted asset management and operation services provided by the Korea Investment Corporation established under the Korea Investment Corporation Act pursuant to that Act;

16. Asset management and operation services that an organization specializing in investment management or executive member under the Act on Formation and Operation of Agricultural, Fisheries, and Food Investment Funds, provides for a fund of funds for agriculture and food investments or an agriculture and food investment fund under that Act; provided, this shall exclude where an organization specializing in investment management or executive member manages funds by investing them in real estate, real assets, and other assets prescribed by Ministerial Decree of the Economy and Finance;

17. Payment and settlement system operation services that the Korea Financial Telecommunications and Clearings Institute established under Article 32 of the Civil Act renders as a payment and settlement system operation institution under Article 81 (2) of the Bank of Korea Act;

18. Money lending business (including money lending business performed by means of discounting notes, transferring security, or the like);

19. Services to represent the conclusion of mutual-aid contracts of the Korea Federation of Small and Medium Business under the Small and Medium Enterprise Cooperatives Act;

20. Business affairs regarding guarantee provided by the Korea Ocean Business Corporation established under the Korea Ocean Business Corporation Act under that Act.

(2) Any services equal or similar to financing or insurance services provided in paragraph (1), which are incidental to the work of a person engaging in business, other than those under each subparagraph of that paragraph, shall be deemed included in financing and insurance services referred to in Article 26 (1) 11 of the Act.

(3) Services provided by any of the following institutions, etc. shall be deemed included in the banking services referred to in paragraph (1) 1: <Amended on Mar. 11, 2016; Aug. 19, 2020; Feb. 17, 2022>

1. A bank established under any Act other than the Banking Act;

2. The Korea Asset Management Corporation established under the Act on the Establishment of Korea Asset Management Corporation;

3. The Korea Housing Finance Corporation established under the Korea Housing Finance Corporation Act;

4. The Korea Deposit Insurance Corporation and a financial company authorized to perform liquidation under the Depositor Protection Act;

5. The Agricultural Cooperative Asset Management Corporation and the Mutual Finance Depositor Protection Fund established under the Act on the Structural Improvement of Agricultural Cooperatives;

6. The Mutual Finance Depositor Protection Fund established under the Act on the Structural Improvement of Fisheries Cooperatives;

7. The Mutual Finance Depositor Protection Fund established under the Act on the Structural Improvement of Forestry Cooperatives;

8. Deleted. <Dec. 30, 2014>

(4) Notwithstanding paragraph (1), none of the following services shall be treated as financing and insurance services referred to in Article 26 (1) 11 of the Act:

1. Provision of services concerning lottery tickets, admission tickets, gift certificates, bullion coins, or gold bullions as an agent; provided, this shall exclude the sale of beneficiary certificates or other financial instruments; title transfer of securities; receipt and payment; and services as credit depositories of the State and local governments performed by a financial business operator as an agent;

2. Brokerage, arrangement and agency of corporate merger or acquisition, and sale and lending of a computer system, and software related to credit information services and banking services;

3. Leasing real estate;

4. Services similar to those provided in subparagraphs 1 and 2;

5. Other services prescribed by Ministerial Decree of the Economy and Finance.

Article 41(Scope of Tax-Free Lease of Housing and Land Appurtenant thereto) #

(1) The rental services of housing and land incidental thereto under Article 26 (1) 12 of the Act shall be the following rental services: <Amended on Feb. 29, 2024>

1. Rental services for buildings used for regular residence (excluding residential use for business purposes) (hereafter referred to as "housing" in this Article) and land appurtenant thereto;

2. Rental services for buildings (hereafter referred to as "housing" in this Article) used for regular residence (excluding residential use for business purposes) and land appurtenant thereto;

(2) For the purposes of paragraph (1), where the area of land exceeds the widest of the following areas, rental services of the excess portion shall be excluded from rental services subject to exemption from value-added tax: <Newly Inserted on Feb. 29, 2024>

1. Total floor area of the housing (excluding the area of underground floors, the area of ground-floor parking lots, and the area of common facilities for residents referred to in subparagraph 3 of Article 2 of the Regulations on Standards for Housing Construction);

2. Area that is 5 times (referring to 10 times for land outside the urban areas designated under Article 6 of the National Land Planning and Utilization Act) the area of a site on which a building stands.

(3) Where a commercial building subject to value-added tax (hereinafter referred to as "commercial building") is annexed to housing, the scope of the leased housing and land appurtenant thereto is as specified in each of the following: <Amended on Feb. 29, 2024>

1. Where the area of housing exceeds the area of the commercial building, the entire area shall be deemed the leased housing area. In such cases, the scope of the leased land appurtenant to the housing is as specified in paragraph (1);

2. Where the area of housing is equal to, or smaller than, the area of the commercial building, the area of the commercial building other than the housing shall not be deemed leased housing area. In such cases, the area of the land appurtenant to the housing shall be calculated by multiplying the entire land area by the ratio of the housing area to the entire building area, and the scope thereof is as specified in paragraph (1).

Article 42(Scope of Tax-Free Personal Services, Including Vocational Services of Authors) #

Personal services referred to in Article 26 (1) 15 of the Act mean services that constitute an independent business (including where an entrepreneur concurrently operating more than one business independently supplies services not necessarily incidental to his or her taxable business), as follows: <Amended on Feb. 12, 2019; Feb. 15, 2022; Feb. 29, 2024>

1. Any of the following personal services for which an individual receives consideration after supplying services independently without employing workers (including cases where labor, etc. is provided by another person for the main duties of the relevant services in a form other than employment) without physical facilities prescribed by Decree of the Ministry of Economy and Finance:

(a) Writing, painting and calligraphy, design, sculpture, composition, music, dancing, cartoon, illustration, comic chat, performance, voice acting, vocal performance, or other similar services;

(b) Film directing, dramatization, production, filming, recording, apparatus, lighting, or other similar services;

(d) Music, garment cutting, dance (including social dance), cooking or Go (game) lessons, or other similar services;

(e) Services as a professional athlete, body builder, jockey or sports coach (including referees), or other similar services;

(f) Services as a waiter, waitress or dancer or other similar services;

(g) Solicitation of policyholders, encouragement of saving or collection of money to receive subscription allowances, incentives, collection allowances or other similar payments from an insurance company or financial institution based on the record of performance, and sales of books, records, etc. by door-to-door salespersons to receive pay based on the record of sales;

(h) Authors’ writing services in exchange for consideration to be paid in the form of copyright royalties;

(i) Proofreading, translation, historical research, stenography, stencil-paper writing, typing, music recording, or other similar services;

(j) Lecture services rendered to many people without any employment relationship, for lecture fees, tuition fees, etc.;

(k) Commentary, enlightenment, performance or examination services rendered through radio or television broadcasting, etc. for gratuities or similar fees;

(l) Naming, face reading, fortunetelling, or other similar services;

(m) Services rendered by an individual for allowances or similar payments based on his or her performance;

2. Personal services that are provided by an individual, corporation, unincorporated association or foundation, or other organization in his, her or its independent capacity, in exchange for consideration, as follows:

(a) Defense representation by a public defender under the Criminal Procedure Act, the Military Court Act, etc., public representation by a public representative under the Framework Act on National Taxes, and legal aid prescribed by Ministerial Decree of the Economy and Finance;

(b) Academic research services and technical research services prescribed by Ministerial Decree of the Economy and Finance;

(c) Services provided by a job placement agency and services provided by the manager of a consulting office, etc. as prescribed by Ministerial Decree of the Economy and Finance;

(d) Training of guide dogs for persons with disabilities under Article 40 of the Act on Welfare of Persons with Disabilities;

(e) Services supplied for a domestic business operated by the State or a local government with loans obtained from a foreign public institution or an international financial institution as defined in Article 2 of the Act on the Measures for the Admission to International Financial Institutions (including services supplied by a foreign corporation or nonresident having no domestic place of business);

(f) Services in guardianship affairs provided by a guardian or a supervisor of guardianship under the Civil Act;

(g) Domestic services that the domestic service providers under the Act on the Employment Improvement of Domestic Workers provide to the domestic service users.

Article 45(Scope of Tax-Free Goods or Services Supplied by Organizations for Religion, Charity, Scholarship, Relief, or Other Public Interest) #

Goods or services supplied by organizations for religion, charity, scholarship, relief, or other public interest under Article 26 (1) 18 of the Act mean the following goods or services: <Amended on Feb. 21, 2014; Feb. 3, 2015; Feb. 12, 2019; Feb. 17, 2021; Feb. 15, 2022; May 7, 2024>

1. Goods or services that any organization (including affiliated organizations in cases of religious organizations) permitted or authorized by, or registered with, the competent authority, which operates any business referred to in any subparagraph of Article 12 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act or any business prescribed by Ministerial Decree of the Economy and Finance, supplies temporarily for its proper business purposes or supplies at cost or free of charge;

2. Goods or services that any organization mainly performing academic and technical research and presentations for academic and technical development (hereinafter referred to as "academic research society") supplies in relation to its research work at cost or free of charge;

3. Rental services of the premises and buildings and structures within the premises of a religious organization (limited to religious organizations registered with the competent authority, but including organizations belonging thereto) that owns or manages designated cultural heritage under the Act on the Conservation and Utilization of Cultural Heritage or natural monuments, etc. under the Act on Conservation and Utilization of Natural Heritage;

4. Food and accommodation services that a person operating a dormitory prescribed by Ministerial Decree of the Economy and Finance for the public interest supplies to students or workers at cost or free of charge;

5. Trust management services that the operator of a copyright trust management business established with permission from the Minister of Culture, Sports and Tourism under Article 105 (1) of the Copyright Act, as prescribed by Ministerial Decree of the Economy and Finance, supplies to copyright holders at cost or free of charge;

6. Services related to the receipt of compensation for the copyright holder, provided at cost or free of charge by a business entity, which is an organization prescribed by Ministerial Decree of the Economy and Finance and is a compensation recipient organization designated by the Minister of Culture, Sports and Tourism pursuant to Article 25 (7) of the Copyright Act (including cases where it is applied mutatis mutandis under Articles 31 (6), 75 (2), 76 (2), 76-2 (2), 82 (2), 83 (2), and 83-2 (2) of that Act);

7. Services that a non-profit educational foundation referred to in Article 24 (2) 1 (d) (ii) of the Corporate Tax Act supplies to a person establishing and managing a foreigners’ school under Article 60-2 (1) of the Elementary and Secondary Education Act to improve an educational environment, such as the use of school facilities.

Article 46(Scope of Tax-Free Goods or Services Supplied by State, Local Governments, or Local Government Associations) #

Goods or services which are supplied by the State, local governments, or local government associations under Article 26 (1) 19 of the Act mean goods or services, excluding the following: <Amended on Feb. 17, 2016; Feb. 7, 2017; Dec. 19, 2017; Feb. 13, 2018; Mar. 12, 2019; Feb. 15, 2022>

1. The following services provided by an organization for postal services established under the Act on Special Cases concerning the Management of Postal Services:

(a) Door-to-door pickup and delivery services of postal parcels as defined in subparagraph 3 of Article 1-2 of the Postal Service Act;

(b) Agency services of mail order sales prescribed by Ministerial Decree of the Economy and Finance among extra postal services provided in Article 15 (1) of the Postal Service Act;

2. Passenger transport services using high-speed rail under the Act on Railroad Construction and Railroad Facilities Management;

3. Real estate leasing services, wholesale and retail services, food and accommodation services, golf range and ski slope operation services, and other sports facility operation services; provided, this shall exclude the following:

(a) Goods or services related to the retail services, food and accommodation services, and other sports facility operation services (excluding golf range operation services) that the Ministry of National Defense or the national armed forces under the Act on the Organization of National Armed Forces supply to servicepersons under Article 2 of the Military Personnel Management Act, general civilian military employees under Article 3 (1) of the Act on the Management of Civilian Personnel in the Military Service; their lineal ascendants and descendants; or other persons prescribed by Ministerial Decree of the Economy and Finance;

(b) Food services that the State, a local government, or an association of local governments supplies at a cafeteria directly operated by it for employee welfare;

(c) Right to manage and operate infrastructure that the State or a local government grants to a concessionaire under the Act on Public-Private Partnerships in Infrastructure in return for his or her donation of infrastructure or construction services for infrastructure by the method set forth in subparagraph 1 or 2 of Article 4 of that Act;

4. Any of the following medical and health services:

(a) Medical services provided in the proviso of subparagraph 1 of Article 35;

(b) Veterinary services that do not fall under subparagraph 5 of Article 35.

Article 51(Scope of Tax-Free Goods Imported for Scientific Purposes, etc.) #

Goods which are imported ... for scientific, educational, or cultural purposes under subparagraph 3 of Article 27 of the Act, mean any of the following goods. In such cases, the goods referred to in subparagraphs 1 through 5 shall be limited to those eligible for customs reductions or exemptions, which are applicable only to the reduced or exempted portion: <Amended on Feb. 7, 2017>

1. Samples, specimens for reference, exposed educational films, slides, records, tapes or other similar media displayed or goods used at schools (including the Seoul National University Hospital established under the Establishment of Seoul National University Hospital Act, the national university-affiliated hospitals established under the Act on the Establishment of National University-Affiliated Hospitals, the Seoul National University Dental Hospital established under the Establishment of Seoul National University Dental Hospital Act, and the national university-affiliated dental hospitals established under the Act on the Establishment of National University-Affiliated Dental Hospitals), museums or other facilities prescribed by Ministerial Decree of the Economy and Finance;

2. Goods imported by research institutes, research institutions, and other science and technology research and development institutions prescribed by Ministerial Decree of the Economy and Finance for science and technology research and development;

3. Reagents imported by organizations supporting science and technology research and development for science and technology research and development;

4. Goods imported by the Korean Educational Development Institute established under Article 8 of the Act on the Establishment, Operation and Fostering of Government-Funded Research Institutes, Etc. for scientific research;

5. Goods imported by the Korea Educational Broadcasting System established under the Korea Educational Broadcasting System Act for educational broadcasting;

6. Goods donated by foreign countries to video-related organizations for any public interest prescribed by Ministerial Decree of the Economy and Finance for their own use.

Article 56(Scope of Other Duty-Free or Duty-Reducible Goods) #

"Duty-free or duty-reducible goods ... prescribed by Presidential Decree" in the main clause of subparagraph 15 of Article 27 of the Act mean any of the following goods: <Amended on Feb. 3, 2015; Feb. 17, 2016; Jul. 26, 2017; Feb. 12, 2019; Feb. 11, 2020>

1. War supplies imported directly by the Government (including where a person other than the Government imports war supplies on commission by the Government);

2. Goods used for guarding the Head of the State;

3. Decorations, badges, or other similar citations and medals awarded to domestic residents;

4. Record documents and other documents;

5. Goods for public use returned by the Korean army or diplomatic offices abroad;

6. Where a Korean ship or any other means of transportation is wrecked and disassembled, the disassembled components and rigging;

7. Labels placed on Korean exports to indicate that the quality, standards, safety level, etc. of the Korean exports meet the conditions determined by the competent authority of the importing country;

8. Parts necessary to manufacture, repair, or maintain aircraft;

9. Raw materials necessary to manufacture, repair, or maintain aircraft, which the head of the competent central administrative agency finds hard to produce in the Republic of Korea;

10. Sports equipment (including accessories) for sports played in the Olympics and the Asian Games, which is used directly for training of the participating athletes;

11. Goods used to construct or repair bridges, communications facilities, submarine tunnels and other similar facilities between the Republic of Korea and a foreign country;

12. Goods donated by the International Committee of the Red Cross, international organizations, and foreign Red Crosses to promote international peace service or friendship programs;

13. Goods imported by participants in fairs, international sports games, and other similar events for use in such events;

14. Goods for emergency communications and radio wave management imported by the Minister of Science and ICT to meet the need for national security;

15. Goods declared for importation, but already deteriorated or damaged before such declaration is accepted;

16. Goods exempt from customs duties under any statutes or regulations (excluding the Restriction of Special Taxation Act) other than the Customs Act;

17. Maps, design drawings, designs, postage stamps, revenue stamps, currencies, securities, paintings and calligraphic works, prints, sculptures, statues, collections, samples, and other similar goods;

18. Deleted; <Feb. 3, 2015>

19. Goods made or manufactured specifically for persons with visual, hearing, or speech impairments, persons with physical disabilities, patients with chronic renal failure, patients with rare incurable disease, etc., which are prescribed by Ministerial Decree of the Economy and Finance (including goods for which the conventional tariff rate is zero);

20. Goods imported by the Director of the National Intelligence Service or a person delegated by him or her to meet the need for national security;

21. Deleted; <Feb. 3, 2015>

22. Other goods for which the general tariff rate is zero, which are prescribed by Ministerial Decree of the Economy and Finance, and internal combustion engines, diesel locomotives for railway use, and corneas for transplantation for which the conventional tariff rate is zero.

Article 61(Calculation of Value of Supply through Credit Sales) #

(1) "Mileage, etc. prescribed by Presidential Decree" in Article 29 (3) 6 of the Act means those accumulated in mileage, points, or any similar form without additional consideration on the basis of the details of goods or services purchased, which are usable as means of settlement for purchasing other goods or services and gift certificates delivered without additional consideration on the basis of the details of goods or services purchased, which are managed separately from other gift certificates through a computer system, etc. (hereafter referred to as "mileage, etc." in this Article). <Added on Feb. 13, 2018>

(2) "Value prescribed by Presidential Decree" in Article 29 (3) 6 of the Act, means each of the following values: <Amended on Feb. 21, 2014; Feb. 3, 2015; Feb. 7, 2017; Feb. 13, 2018>

1. Where goods or services are supplied through credit sales or installment sales: The total value of the goods or services supplied;

2. Where any of the following is applicable: Each portion of the contract price:

(a) Long-term installment sales;

(b) The supply of goods or services upon milestone payments or interim payments;

3. Where contribution acceptance is made: The value of contribution acceptance under a statute that provides for a basis for the contribution acceptance; provided, when value-added tax is included in the value of contribution acceptance, the value-added tax shall be excluded;

4. Where reclamation services are supplied under the Public Waters Management and Reclamation Act: The total working expenses incurred in performing the reclamation works, which are calculated pursuant to the Public Waters Management and Reclamation Act;

5. Where an entrepreneur supplies goods kept in a bonded area to another entrepreneur and the entrepreneur supplied with the goods removes them from the bonded area: The value of supply of the goods less the value of supply stated in an import tax invoice issued by the head of the customs office in return for collection of value-added tax under Article 58 (2) of the Act; provided, when a bill of lading as a receipt for the goods, is transferred before the head of the customs office collects value-added tax under Article 58 (2) of the Act, the price received from the transferee of the bill of lading may be treated as the value of supply;

6. Where an entrepreneur supplies services over at least two consecutive taxable periods and receives the payment in advance under Article 29 (2) 3: Total amount calculated by dividing the relevant amount by the contracted number of months for each taxable period. In such cases, with respect to calculating the number of months, where the month, in which the date the period of the contract commences falls, is shorter than one month, it shall be deemed one month, and where the month, in which the date the period of the contract ends falls, is shorter than one month, it shall be disregarded;

7. Where an entrepreneur supplies services over at least two consecutive taxable periods under Article 29 (2) 4: A sum of the amount calculated by dividing the payment made during the period of service supply and the value of facility installation by the number of months during which the services are supplied for each taxable period. In such cases, with respect to calculating the number of months, where the month, in which the date of the period of supplying the relevant services commences falls, is shorter than one month, it shall be deemed one month, and where the month, in which the date the period of supplying the relevant services ends, falls is shorter than one month, it shall be disregarded;

8. Where goods are exported through consignment processing trade under Article 31 (1) 4: The value at which the finished products are delivered;

9. Where the payment is settled fully or partly with mileage, etc. (excluding cases falling under subparagraph 10): A sum of the following amounts:

(a) An amount settled by means of payment other than mileage, etc.;

(b) An amount compensated or to be compensated by a person other than the recipient of goods or services, which is settled with mileage, etc. other than self-accumulated mileage, etc. [referring to mileage, etc. used for the original entrepreneur who accumulates (including accumulating through another entrepreneur) mileage, etc. in return for supply of goods or services (for mileage, etc. that can be accumulated by or used for more than one entrepreneur, all of the following requirements must be met); hereafter the same shall apply in this paragraph]:

(i) It is ascertained that the original supplier and the subsequent supplier are the same person in view of the details of the accumulation and use of mileage, etc. that are separately managed for each customer and entrepreneur;

(ii) The entrepreneur is not compensated by a person other than the recipient of goods or services for the portion settled with mileage, etc.;

10. In any of the following cases, where the payment is settled fully or partly with mileage, etc. other than self-accumulated mileage, etc.: The market price (referring to the amount referred to in Article 62) of goods or services supplied:

(a) Where self-produced or acquired goods referred to in Article 10 (1) of the Act are supplied without compensation for the amount pursuant to subparagraph 9 (b);

(b) Where the tax burden is deemed likely to be unfairly reduced because a related person’s compensation pursuant to subparagraph 9 (b) is unreasonably low or not made at all.

(3) Where goods are supplied in an amount less the container price and packing charge on condition that the container or package is ordinarily returned to the relevant entrepreneur, the container price and packing charge shall not be included in the value of supply. <Amended on Feb. 13, 2018>

(4) Where an entrepreneur supplies food and accommodation services or personal services and states the service charges of employees (including free-lancers) received with the price separately from the price on a tax invoice, receipt, credit card sales slip under Article 46 (1) of the Act, etc., if it is verified that the service charges are paid to the employees, the service charges shall not be included in the value of supply; provided, the same shall not apply where the entrepreneur includes the service charges in his or her personal income. <Amended on Feb. 13, 2018>

Article 63(Calculation of Value of Supply of Goods Common to Taxable Business and Tax-Free Business) #

(1) The value of supply to be included in the tax base under Article 29 (8) of the Act, shall be calculated according to the following formula. In such cases, if no value of supply exists for the immediately preceding taxable period due to the suspension, etc. of business, it shall be calculated based on the value of supply for a taxable period nearest to the date of supply of goods:

┌────────────────────────────────────────┐

│ Value of supply = Value of supply of goods × (Taxable value of supplies for the taxable period│

│ (Taxable value of supplies for the taxable period│

│ Total value of supplies for the taxable period│

│ immediately preceding that in which the date of supply of goods falls)│

└────────────────────────────────────────┘

(2) Notwithstanding paragraph (1), where any goods supplied are subject to Article 81 (4) 3 or (5) or subparagraph 2 of Article 82 or recalculation of the amount of tax payable or the amount of tax refundable based on the ratio of usable area under Article 83, as well as being common to a taxable business, a tax-free business, etc. under Article 29 (8) of the Act (hereinafter referred to as "tax-free business, etc."), the value of supply to be included in the tax base shall be calculated according to the following formula. In such cases, if no ratio of usable area exists for the immediately preceding taxable period due to suspension, etc. of business, it shall be calculated based on the ratio of usable area for the taxable period nearest to the date of supply of the goods:

┌────────────────────────────────────────┐

│ Value of supply = Value of supply of goods × (Taxable value of supplies for the taxable period│

│ immediately preceding that in which the date of supply of goods falls│

│ Total value of supplies for the taxable period│

│ immediately preceding that in which the date of supply of goods fall)│

└────────────────────────────────────────┘

(3) Notwithstanding paragraph (1), the total value of supply of goods shall be treated as the tax base if any of the following is applicable:

1. Where, of the total value of supplies in the taxable period immediately preceding that in which the date of supply of goods falls, the value of tax-free supply is less than five percent; provided, this shall exclude where the value of supply of the goods is at least 50 million won;

2. Where the value of supply of goods is less than 500 thousand won;

3. Where no immediately preceding taxable period exists because the relevant business is newly commenced during the taxable period in which the date of supply of goods falls.

Article 64(Calculation of Value of Supply of Buildings Supplied with Land) #

(1) The amount calculated according to proportional distribution under the proviso, with the exception of the subparagraphs, of Article 29 (9) of the Act and the main clause of subparagraph 2 of that paragraph shall be the amount calculated as follows: <Amended on Feb. 3, 2015; Aug. 31, 2016; Feb. 12, 2019; Jan. 21, 2022; Feb. 15, 2022>

1. Where an assessed value calculated under Article 99 of the Income Tax Act (hereafter referred to as "assessed value" in this Article) is available for both land and a building, structure, etc. (hereafter referred to as "building, etc." in this Article): An amount calculated in proportion to the value computed based on the assessed value as at the date of execution of the relevant supply contract; provided, when any appraised value is available (referring to a value appraised and assessed by an appraisal corporation, etc. under the Act on Appraisal and Certified Appraisers for a period from the first day of the taxable period immediately preceding that in which the time of supply prescribed in Article 28 (or the time of initial supply in cases of supply of goods upon interim payments or on condition of long-term installment sales) falls, to the last day of the taxable period in which the time of supply falls; hereafter the same shall apply in this Article), it shall be an amount calculated in proportion to the value;

2. Where no assessed value is available for either land or a building, etc. or both, but an appraised value is available: An amount calculated according to the proportional distribution of the value; provided, when no such appraised value is available, it shall be an amount calculated according to the proportional distribution of the book value (if no book value is available, the acquisition value) subject to the proportional distribution calculation of the total amount of assets, if any, on which an assessed value is applied, based on the assessed value;

3. Where none of subparagraphs 1 and 2 is applicable or practicable, an amount calculated according to proportional distribution, as determined by the Commissioner of the National Tax Service.

(2) Pursuant to the proviso of Article 29 (9) 2 of the Act, the actual transaction value of the building, etc. shall be the supply value in any of the following cases: <Added on Feb. 15, 2022>

1. Where the value of land and buildings, etc. are divided as prescribed by other statutes or regulations;

2. Where land and buildings are supplied together and then the buildings, etc. are demolished and only the land is used.

Article 65(Calculation of Value of Supply of Real Estate Leasing Services) #

(1) Where an entrepreneur receives security money for lease on a deposit basis or for lease under Article 29 (10) 1 of the Act, an amount calculated by the following formula shall be the value of supply, deeming that the entrepreneur has received payments other than money under Article 29 (3) 2 of the Act. In such cases, when a person bearing the total cost of constructing an underground passage that reverts to the State or a local government, leases the underground passage with permission to occupy and use such underground (only within the first free occupation and use period), an amount equivalent to the construction cost prescribed by Ministerial Decree of the Economy and Finance, shall not be deemed security money for lease on a deposit basis or for lease:

┌───────────────────────────────────────────┐

│ Value of supply = Amount of security money for lease on a deposit basis or for lease for the pertinent period × Number of days in the taxable period × [Interest rate for a time deposit with one year maturity (as at the date the relevant preliminary return period or taxable period ends)│

│ ───────────────────│

│ 365 (366 for leap year)]│

└───────────────────────────────────────────┘

(2) Where an entrepreneur renders real estate leasing services after leasing the real estate, "amount of security money for lease on a deposit basis or for lease for the pertinent period" in the formula under paragraph (1), shall be construed as "amount of security money for lease on a deposit basis or for lease for the pertinent period ? amount of security money for lease on a deposit basis or for lease paid at the time of leasing real estate." In such cases, where the leased real estate is partially used directly for the relevant entrepreneur’s own business, the amount of security money for lease on a deposit basis or for lease paid at the time of leasing real estate, shall be an amount less the amount calculated by the following formula: <Amended on Jan. 5, 2021>

┌────────────────────────────────────┐

│ Amount of security money for lease on a deposit basis× × (Area used directly for the relevant entrepreneur’s own business as at the date the preliminary return period or taxable period ends│

│ or for lease paid at the time of leasing real estate│

│ ──────────────────────│

│ Total area of the leased real estate as at the date│

│ the preliminary return period or taxable period ends)│

└────────────────────────────────────┘

(3) In cases falling under paragraphs (1) and (2), where an entrepreneur covers rents with security money for lease on a deposit basis or for lease to the extent provided for in the relevant contract, an amount less those rents shall be the amount of security money for lease on a deposit basis or for lease.

(4) Where the distinction between leases or between rents is unclear because the leasing services involve both a taxable real estate lease and a tax-free housing lease as provided in Article 29 (10) 2 of the Act, the value of supply shall be calculated by the following formulae in order:

┌────────────────────────────────────────┐

│Amount of rents and amount calculated under paragraph (1) × (Value of land or value of a building ÷ Total of the value of land and the value of the building standing thereon) = Amount equivalent to the rent for land or amount equivalent to the rent for the building│

└────────────────────────────────────────┘

┌────────────────────────────────────┐

│ Amount calculated under subparagraph 1 × (Taxable land area leased ÷ Total land area leased) = Value of supply of land lease│

└────────────────────────────────────┘

┌────────────────────────────────────┐

│ Amount calculated under subparagraph 1 × (Taxable building area leased ÷ Total building area leased) = Value of supply of building lease│

└────────────────────────────────────┘

(5) Where an entrepreneur leases real estate over at least two taxable periods on conditions of receiving the rents in advance or later under Article 29 (10) 3 of the Act, the value of supply shall be a sum of amounts calculated by dividing the relevant amount by the contracted number of months for each taxable period. In such cases, the latter part of Article 61 (2) 6 shall apply mutatis mutandis to calculating the number of months. <Amended on Feb. 13, 2018>

(6) Except as provided in paragraphs (1) through (5), matters necessary for calculating the value of supply of real estate leasing services shall be prescribed by Ministerial Decree of the Economy and Finance.

Article 66(Calculation of Value of Self-Supply of Depreciable Assets) #

(1) "Depreciable asset prescribed by Presidential Decree" in Article 29 (11) of the Act, means the depreciable assets provided for in Article 62 of the Enforcement Decree of the Income Tax Act or Article 24 of the Enforcement Decree of the Corporate Tax Act (hereinafter referred to as "depreciable assets").

(2) Where goods supplied for a taxable business are depreciable assets that are deemed supplied pursuant to Article 10 (1), (2) and (4) through (6) of the Act, the value of supply shall be an amount calculated according to each of the following formulae. In such cases, the number of taxable periods elapsed, shall be calculated based on the taxable period prescribed under Article 5 of the Act. If the number of taxable periods elapsed, exceeds 20 for a building or structure, it shall be deemed 20, and if the number of taxable periods elapsed, exceeds 4 for other depreciable assets, it shall be deemed 4:

1. Buildings or structures:

┌──────────────────────────────────────┐

Value of supply = Acquisition value of goods × [1? (5 ÷ 100) × Number of taxable periods elapsed]

└──────────────────────────────────────┘

2. Other depreciable assets:

┌──────────────────────────────────────┐

│ Value of supply = Acquisition value of goods × [1? (25 ÷ 100) × Number of taxable periods elapsed] │

└──────────────────────────────────────┘

(3) Where depreciable assets supplied for a taxable business are partially used for a tax-free business, the value of supply shall be an amount calculated according to each of the following formulae, but if the value of tax-free supplies through the tax-free business is less than five percent of the total value of supplies, the value of supply shall be deemed zero. In such cases, the latter part of paragraph (2) shall apply mutatis mutandis to the number of taxable periods elapsed:

1. Buildings or structures:

┌─────────────────────────────────────────────────┐

│ Value of supply = Acquisition value of goods × [1? (5 ÷ 100) × Number of taxable periods elapsed × (Value of tax-free supplies in the taxable period in which the date the goods are partially used for tax-free business, falls ÷ Total value of supplies in the taxable period in which the date the goods are partially used for tax-free business, falls)] │

└─────────────────────────────────────────────────┘

2. Other depreciable assets:

┌─────────────────────────────────────────────────┐

│ Value of supply = Acquisition value of goods × [1? (25 ÷ 100) × Number of taxable periods elapsed × (Value of tax-free supplies in the taxable period in which the date the goods are partially used for tax-free business, falls ÷ Total value of supplies in the taxable period in which the date the goods are partially used for tax-free business, falls)] │

└─────────────────────────────────────────────────┘

(4) The acquisition value of goods referred to in the subparagraphs of paragraphs (2) and (3) shall be the value of the goods, the input tax amount of which is deducted under Article 38 of the Act.

(5) When calculating the number of taxable periods elapsed under paragraphs (2) and (3), if depreciable assets are deemed acquired or supplied after the date the taxable period commences, they shall be deemed acquired or supplied on the date the taxable period commences.

Article 68(Issuance of Electronic Tax Invoices) #

(1) "Sole proprietor prescribed by Presidential Decree" in Article 32 (2) of the Act means a sole proprietor in whose case the total value of supply (including the value of tax-free supplies; hereafter the same shall apply in this Article) of goods and services for each place of business in the immediately preceding year is at least 80 million won (including a sole proprietor in whose case the value of supply of goods and services for each place of business for in the immediately preceding year becomes less than 80 million won thereafter; hereafter referred to as "sole proprietor required to issue electronic tax invoices" in this Article). <Amended on Feb. 13, 2018; Feb. 17, 2021; Feb. 15, 2022; Feb. 28, 2023>

(2) A sole proprietor required to issue electronic tax invoices shall issue electronic tax invoices from the commencement date of the second taxable period of the year following the year in which the total value of supply of goods and services for each place of business is at least 80 million won; provided, if the total value of supply of goods and services for each place of business becomes at least 80 million won following a revised return under Article 45 of the Framework Act on National Taxes or a decision or rectification under Article 57 of the Act (hereafter referred to as "revised return, etc." in this paragraph), the sole proprietor shall issue electronic tax invoices from the commencement date of the taxable period following the taxable period that includes the date for filing the revised return, etc. <Amended on Feb. 17, 2021; Feb. 15, 2022; Feb. 28, 2023>

(3) Where a sole proprietor is required to issue electronic tax invoices, the head of the competent tax office shall give notice of such fact to the sole proprietor at least one month before the date the sole proprietor is required to issue electronic tax invoices begins under paragraph (2). <Amended on Feb. 28, 2023>

(4) Notwithstanding paragraph (2), in the event that a sole proprietor fails to receive a notice referred to in paragraph (3) at least one month before the date he or she is required to issue electronic tax invoices begins, he or she shall issue them from the first day of the second month following the month in which the notice is received. <Added on Feb. 13, 2018; Feb. 28, 2023>

(5) "Electronic method ... prescribed by Presidential Decree" in Article 32 (2) of the Act means any of the following methods in which a tax invoice stating the particulars mentioned in the subparagraphs of paragraph (1) of that Article is issued through an information and communications network, using a certification system by which the identity of the invoice issuer, alterations in the invoice, etc. are ascertainable: <Amended on Feb. 13, 2018; Feb. 11, 2020; Dec. 8, 2020>

1. Using facilities for enterprise resource planning referred to in subparagraph 1 of Article 5-2 of the Restriction of Special Taxation Act;

2. Using the electronic tax invoice issuance system of an entrepreneur who issues electronic tax invoices on behalf of an entrepreneur who actually supplies goods or services;

3. Using the electronic tax invoice issuance system built by the Commissioner of the National Tax Service;

4. Using the device to issue cash receipts available for electronic tax invoice issuance and other electronic tax invoice issuance systems designated by the Commissioner of the National Tax Service.

(6) Any person who intends to build and operate any of the facilities or systems referred to in paragraph (5) 1, 2, and 4 shall register it in advance with the Commissioner of the National Tax Service or the head of the competent tax office, as prescribed by Ministerial Decree of the Economy and Finance. <Amended on Feb. 13, 2018>

(7) "Deadline prescribed by Presidential Decree" in Article 32 (3) of the Act means the date following that electronic tax invoices are issued. <Amended on Feb. 13, 2018>

(8) "List of the issued electronic tax invoices prescribed by Presidential Decree" in Article 32 (3) of the Act means a list of the particulars described in the subparagraphs of Article 32 (1) of the Act. <Amended on Feb. 13, 2018>

(9) Where an entrepreneur’s business falls under any of the following subparagraphs, the entrepreneur may, pursuant to Article 32 (4) of the Act, issue an invoice stating the entries referred to in Article 32 (1) 1 through 4 of the Act, other necessary information regarding the relevant business, and the fact that it is an electronic tax invoice reported to the head of the competent tax office, after reporting the invoice to the head of the competent tax office. In such cases, the entrepreneur shall obtain standards certification referred to in the subparagraphs of paragraph (5) and submit an electronic tax invoice file to the Commissioner of the National Tax Service by electronic means, not later than the 11th day of the month following that in which the date of supply falls: <Amended on Feb. 13, 2018>

1. Where an electric utility business operator supplies electric power for industrial use pursuant to the Electric Utility Act;

2. Where a telecommunications business operator under the Telecommunications Business Act supplies common telecommunications services defined in subparagraph 11 of Article 2 of that Act (hereafter referred to as "common telecommunications services" in this subparagraph) and monthly fee-type services among the value-added telecommunications services defined in subparagraph 12 of that Article to entrepreneurs, in which case the cost is charged in a consolidated manner because the time of their supply is the same as that of the common telecommunications services;

3. Where an urban gas business entity supplies urban gas for industrial use pursuant to the Urban Gas Business Act;

4. Where an integrated energy-supply business entity supplies heat or electricity for industrial use pursuant to the Integrated Energy Supply Act;

5. Where a broadcasting business operator as defined in subparagraph 3 of Article 2 of the Broadcasting Act supplies broadcasting services to entrepreneurs;

6. Where a general taxable person supplies machinery and materials for agriculture and fisheries referred to in Article 105-2 of the Restriction of Special Taxation Act to farmers and fishers;

7. Where an Internet multimedia broadcast service provider as defined in subparagraph 5 (a) of Article 2 of the Internet Multimedia Broadcast Services Act supplies broadcasting services to entrepreneurs.

(10) Any corporate entrepreneur and any entrepreneur, other than sole proprietors required to issue electronic tax invoices, may issue and transmit electronic tax invoices as prescribed in paragraphs (5) through (8) pursuant to Article 32 (5) of the Act. <Amended on Feb. 13, 2018>

(11) Where a person supplied with goods or services does not have or designate any message box to receive electronic tax invoices or uses any system inappropriate for message box, such as the system referred to in paragraph (5) 4, he or she shall be deemed to have designated the electronic tax invoice issuance system referred to in paragraph (5) 3 as his or her message box. <Amended on Feb. 13, 2018>

(12) When an electronic tax invoice has been sent to a message box designated by a person supplied with goods or services or to the electronic tax invoice issuance system referred to in paragraph (5) 3, the person supplied with goods or services shall be deemed received the electronic tax invoice. <Amended on Feb. 13, 2018>

(13) Except as provided in paragraphs (1) through (12), matters necessary for the issuance procedures and preservation requirements for electronic tax invoices, the procedures and requirements for registration of entrepreneurs who set up and operate each equipment and system, the documents to be submitted, the grounds for revocation of registration, etc. shall be prescribed by Ministerial Decree of the Economy and Finance. <Amended on Feb. 13, 2018>

Article 69(Issuance of Tax Invoices for Consignment Sales) #

(1) In cases of selling on consignment or through an agent, if a consignee or agent delivers goods, the consignee or agent shall issue a tax invoice in the name of the consignor or principal pursuant to Article 32 (6) of the Act, and if the consignor or principal delivers goods directly, he or she may issue a tax invoice. In such cases, the registration number of the consignee or agent shall be affixed.

(2) In cases of buying on consignment or through an agent, the supplier shall issue a tax invoice on which the consignor or principal is designated as a recipient under Article 32 (6) of the Act. In such cases, the registration number of the consignee or agent shall be affixed.

(3) In cases falling under the proviso of Article 10 (7) of the Act, paragraphs (1) and (2) shall not apply.

(4) If goods are supplied as a consequence of expropriation, the relevant project operator may issue a tax invoice applying mutatis mutandis paragraph (1).

(5) Paragraphs (1) and (2) shall apply mutatis mutandis to the supply of services through good offices or brokerage.

(6) If commodities are supplied under the Government Procurement Act, the supplier or the head of the competent customs office shall issue a tax invoice directly to the end user under Article 32 (6) of the Act; provided, when the end user of the commodities is unidentifiable at the time of procuring the commodities, he or she shall issue a tax invoice to the Administrator of the Public Procurement Service, and when the Administrator of the Public Procurement Service delivers the commodities to the end user, he or she may issue a tax invoice to the end user.

(7) If the Korea Gas Corporation established under the Korea Gas Corporation Act directly imports natural gas (including liquefied gas) on behalf of a gas import and sale business operator prescribed by Ministerial Decree of the Economy and Finance, the head of the competent customs office may issue a tax invoice directly to the gas import and sale business operator under Article 32 (6) of the Act.

(8) If an entrepreneur liable to pay taxes leases facilities, etc. from a facility leasing business operator registered under Article 3 of the Specialized Credit Finance Business Act and receives delivery of the facilities, etc. directly from the supplier or the head of the competent customs office, the supplier or the head of the competent customs office may issue a tax invoice directly to the entrepreneur under Article 32 (6) of the Act.

(9) The proviso of paragraph (6) shall apply mutatis mutandis to issuing a tax invoice where a warehouse receipt issued by the Administrator of the Public Procurement Service is transferred under Article 18 (2) 1, which entails return of the bailed article. In such cases, "end user" in the proviso of paragraph (6) shall be construed as "person receiving the return of the bailed article in exchange for the warehouse receipt".

(10) Where an appraisal corporation, etc. under the Act on Appraisal and Certified Appraisers provides appraisal services, or a newspaper publisher registered under the Act on the Promotion of Newspapers, a periodical publisher registered under the Act on Promotion of Periodicals, including Magazines, or a corporation operating a news communications business under the Act on the Promotion of News Communications provides advertising services in receipt of a court’s request, if the actual recipient of those services is unidentifiable, the appraisal corporation, etc., the newspaper publisher, the periodical publisher, or the corporation operating the news communications business may, pursuant to Article 32 (6) of the Act, issue a tax invoice to the court; if the court collects the price for the appraisal services or advertising services from the actual recipient thereof, the court to the recipient. <Amended on Aug. 31, 2016; Jan. 21, 2022>

(11) If a telecommunications business operator as prescribed in the Telecommunications Business Act provides telecommunications services to a user (referring to a user as defined in Article 2 (1) 9 of the Telecommunications Business Act; hereafter the same shall apply in this Article) of another telecommunications business operator and entrusts the collection of the rate to the other telecommunications business operator, the business operator who provides those telecommunications services may, pursuant to Article 32 (6) of the Act, issue a tax invoice to the other telecommunications business operator, and the other telecommunications business operator to the user.

(12) If the operator of an electricity generation business under the Electric Utility Act supplies electricity to the operator of an electric sales business or a consumer of electricity under that Act through the electricity market and receives the rate through the Korea Power Exchange under that Act, the electricity generation business operator may, pursuant to Article 32 (6) of the Act, issue a tax invoice to the Korea Power Exchange, and the Korea Power Exchange to the electric sales business operator or electricity consumer.

(13) If a satellite mobile multimedia broadcasting business operator and a general satellite broadcasting business operator referred to in subparagraphs 4 and 5 of Article 1-2 of the Enforcement Decree of the Broadcasting Act each supply satellite mobile multimedia broadcasting services or general satellite broadcasting services to a user of a telecommunications business operator under the Telecommunications Business Act and entrust the collection of the rate to the telecommunications business operator, the satellite mobile multimedia broadcasting business operator and the general satellite broadcasting business operator may, pursuant to Article 32 (6) of the Act, issue a tax invoice to the telecommunications business operator, and the telecommunications business operator to the user.

(14) Where, with respect to supply of electricity by the operator of an electric utility business under the Electric Utility Act, a person in whose name electricity is supplied and the actual consumer of electricity are different, if the electric utility business operator issues a tax invoice on which the person in name is designated as a recipient of supply and the person in whose name issues a tax invoice on which the actual consumer of electricity is designated as a recipient of supply within the limits of the value of supply stated in the tax invoice issued (including where a tax invoice is issued although it is not required, as prescribed by Ministerial Decree of the Economy and Finance), the electric utility business operator shall be deemed to have issued a tax invoice on which the actual consumer of electricity is designated as a recipient of supply.

(15) Where a renewable energy electricity supplier under the Electric Utility Act supplies electricity to electricity users after being supplied with electricity from a power generation business entity under the same Act, and pays incidental expenses prescribed by Decree of the Ministry of Economy and Finance to an electricity sales business entity or the Korea Power Exchange under the same Act respectively, the electricity sales business entity or the Korea Power Exchange shall issue a tax invoice for each incidental cost to the renewable energy electricity supplier, and the renewable energy supplier may issue the tax invoices within the scope of the supply value stated in the tax invoices issued in relation to the incidental expenses, to a power generation business entity or electricity users. <Newly Inserted on Feb. 29, 2024>

(16) With respect to cases where an association or similar organization consisting of fellow traders supplies or is supplied with goods or services for a member of the association or organization; where services are supplied under a joint contract concluded under the Act on Contracts to Which the State Is a Party and the representative of the contractor team receives the price; and where an urban gas business entity under the Urban Gas Business Act supplies urban gas, in which case a person in whose name the urban gas is supplied with is different from the actual consumer of urban gas, paragraph (14) shall apply mutatis mutandis. <Amended on Feb. 29, 2024>

(17) Where goods stored in a warehouse of the Public Procurement Service under Article 18 (2) 1 or a warehouse designated by an exchange under subparagraph 2 of the same paragraph are brought into the Republic of Korea, the head of a customs office shall issue an import tax invoice. <Amended on Feb. 29, 2024>

(18) In cases where services, etc. under Article 52 (1) of the Act (hereinafter referred to as "services, etc.") are supplied pursuant to Article 53 (1) of the Act, the trade name and address of a person falling under any subparagraph of Article 52 (1) of the Act who supplies such services, etc. shall be additionally stated when issuing the tax invoice. <Amended on Feb. 29, 2024>

(19) Where a person who has registered an emission trading account pursuant to the Act on the Allocation and Trading of Greenhouse-Gas Emission Permits (hereinafter referred to as "business entities, etc. eligible for allocation") supplies emission permits under subparagraph 3 of Article 2 of the same Act (including offset emission permits under Article 29 (3) of the same Act) to another business entities, etc. eligible for allocation through an emission trading market established by an emission permits exchange under the same Act, and receives the price therefor through the emission permits exchange, the business entities, etc. eligible for allocation may issue a tax invoice to the emission permits exchanges pursuant to Article 32 (6) of the Act and the emission permits exchange may issue a tax invoice to the business entities, etc. eligible for allocation supplied with the emission permits. <Newly Inserted on Feb. 3, 2015; Feb. 29, 2024>

(20) Where a corporation which ceases to exist due to a merger supplies or is supplied with goods or services during the period from the date of merger stated in the merger contract to the date of registration of the merger, the corporation surviving the merger or newly established in the course of the merger may issue or be issued a tax invoice. <Newly Inserted on Feb. 11, 2020; Feb. 29, 2024>

Article 70(Grounds and Procedures for Issuance of Corrected Tax Invoices and Corrected Electronic Tax Invoices) #

(1) Any corrected tax invoice or corrected electronic tax invoice may be issued under Article 32 (7) of the Act, on any of the following grounds and procedures: <Amended on Feb. 21, 2014; Feb. 3, 2015; Feb. 17, 2016; Feb. 15, 2022; Feb. 28, 2023>

1. Where the original goods supplied are returned: It shall be prepared by writing the amount in red or adding a negative thereto after entering the return date of goods as the date the tax invoice is prepared and affixing the date the original tax invoice was prepared in its reference column;

2. Where no goods or services are supplied, due to cancellation of a contract: It shall be prepared by writing the amount in red or adding a negative thereto after entering the date of contract cancellation as the date tax invoice is prepared and affixing the date the original tax invoice was prepared in its reference column;

3. Where a certain amount is added to, or subtracted from, the value of supply, due to the termination, etc. of a contract: It shall be prepared by writing the added amount in black and writing the subtracted amount in red or adding a negative thereto after entering the date of occurrence of the grounds for addition or subtraction as the date tax invoice is prepared;

4. Where a local letter of credit is opened or a written verification of purchase is issued within 25 days after the end of the taxable period (if the 25th day after the end of the taxable period is a day falling under the subparagraphs of Article 5 (1) of the Framework Act on National Taxes, referring to the business day immediately following such day) in which the time of supply of goods or services falls: It shall be prepared by writing the zero-tax rated portion in black and writing the amount described in the original tax invoice in red or adding a negative thereto, after entering the date the original tax invoice was prepared as the date tax invoice is prepared and affixing the opening date, etc. of the local letter of credit in its reference column;

5. Where any requisite entry item, etc. is wrongly stated in error (excluding where it is known in advance that the tax base or the amount of tax will be rectified, as specified in any of the following items): It shall be prepared by writing the amount described in the original tax invoice in red or adding a negative thereto and other portions in black:

(a) Where a notice of tax investigation is issued;

(b) Where a tax official has commenced an on-site inspection or inquiry to gather tax data or process civil petitions, etc.;

(d) Where there are any grounds similar to any of items (a) through (c);

6. Where any requisite entry item, etc. is wrongly stated except in error (excluding where it is known in advance that the tax base or the amount of tax will be rectified, as specified in any of the items of subparagraph 5): It shall be prepared within one year from the day following the final return deadline for the taxable period in which the date of supply of goods or services falls, by writing the amount described in the original tax invoice in red or adding a negative thereto and other portions in black;

7. Where a duplicate electronic tax invoice is issued in error: It shall be prepared by adding a negative to the amount described in the original tax invoice;

8. Where a tax invoice is issued for tax-free or other transactions exempt from issuance thereof: It shall be prepared by writing the amount described in the original tax invoice in red or adding a negative thereto;

9. Where a tax invoice is issued with the wrongly applied tax rate (excluding where it is known in advance that the tax base or the amount of tax will be rectified, as specified in any of the items of subparagraph 5): It shall be prepared by writing the amount described in the original tax invoice in red or adding a negative thereto and writing other portions in black.

(2) Where any goods or services supplied before the taxable type of a taxpayer is converted from a general taxable person to a simplified taxable person is found to be subject to any of the paragraph (1) 1 through 3 after such conversion, a corrected tax invoice or corrected electronic tax invoice may be issued by writing an added amount in black and writing a subtracted amount in red or adding a negative thereto after entering the date the original tax invoice was prepared as the date the corrected tax invoice or corrected electronic tax invoice is prepared and affixing the date of occurrence of the grounds in its reference column, notwithstanding the procedures provided for in paragraph (1) 1 through3 . <Amended on Feb. 17, 2021>

(3) Where any goods or services supplied before the taxable type of a taxpayer is converted from a simplified taxable person to a general taxable person is found to be subject to any of the subparagraphs 1 through 3 of paragraph (1) after such conversion and thus a corrected tax invoice or corrected electronic tax invoice is issued, such invoice shall be issued by writing an added amount in black and writing a subtracted amount in red or adding a negative thereto after entering the date the original tax invoice was prepared as the date the corrected tax invoice or corrected electronic tax invoice is prepared and affixing the date of occurrence of the grounds in its reference column, notwithstanding the procedures provided in subparagraphs 1 through 3 of paragraph (1). <Added on Feb. 17, 2021>

Article 71(Exemption from Duty to Issue Tax Invoices) #

(1) "If the issuance of a tax invoice is impracticable or unnecessary, or in any other cases prescribed by Presidential Decree" in Article 33 (1) of the Act means the supply of any of the following goods or services: <Amended on Feb. 21, 2014; Feb. 3, 2015; Feb. 17, 2016; Mar. 29, 2017; Dec. 8, 2020; Feb. 17, 2021; Mar. 23, 2021; Feb. 28, 2023>

1. Goods or services supplied by a taxi service business operator, street vendor or hawker, or other entrepreneur prescribed by Ministerial Decree of the Economy and Finance;

2. Goods or services supplied by a person who operates any retail trade, beauty salon, bathhouse, or other similar service business; provided, in the case of retail trade, the same shall be limited to where a recipient of supply does not require a tax invoice;

3. Goods referred to in Article 10 (1), (2) and (4) through (6) of the Act;

4. Goods or services referred to in Articles 21 (excluding any raw materials referred to in Article 31 (1) 5 of this Decree, any goods supplied using a local letter of credit or a written verification of purchase under paragraph (2) 1 of that Article, and any goods supplied by the Korea International Cooperation Agency, the Korean Foundation for International Healthcare or the Korean National Red Cross under subparagraphs 2 through 4 of that paragraph), 22, and 23 (limited to where a recipient of supply is a nonresident or foreign corporation that has no domestic place of business, to overseas navigation services by aircraft under Article 23 (2) of the Act and to commercial document delivery services under the Aviation Business Act) of the Act;

5. Goods or services referred to in Article 33 (2) 1, 2, 5 (limited to where a recipient of supply is a nonresident or foreign corporation that has no domestic place of business), 6, or 7, and goods or services supplied to diplomatic offices, etc. under Article 24 (1) 1 of the Act;

6. Real estate leasing services subject to Article 65 (1) and (2);

7. Authorized certificate issuance services under subparagraph 6 Article 2 of the Digital Signature Act by a licensed certification authority as defined in subparagraph 8 of that Article; provided, this shall exclude where a recipient of supply requires a tax invoice in the capacity of entrepreneur;

8. Electronic services supplied in the Republic of Korea by an entrepreneur who has made a simplified business registration under Article 53-2 (1) or (2) of the Act;

9. Other goods or services supplied to a nonresident or foreign corporation having no domestic place of business; provided, any of the following cases shall be excluded:

(a) Where a nonresident or a foreign corporation having no domestic place of business requires the issuance of a tax invoice, presenting a document evidencing that he or she is a sole proprietor or corporate entrepreneur in the relevant foreign country;

(b) Where goods or services are supplied to the foreign corporation liaison office under Article 94-2 of the Corporate Tax Act.

(2) "Entrepreneur prescribed by Presidential Decree" in Article 33 (2) of the Act means a general taxable person provided for in Article 88 (5). <Amended on Feb. 17, 2016; Feb. 17, 2021>

Article 71-2(Entrepreneurs Subject to Issuance of Purchaser-Issued Tax Invoices, and Procedures for Deducting Input Tax Amounts) #

(1) "Entrepreneur prescribed by Presidential Decree" in Article 34-2 (1) of the Act means an entrepreneur obligated to issue a tax invoice under Article 32 of the Act (including an entrepreneur obligated to issue a tax invoice under Article 73 (3) and (4)). <Amended on Feb. 17, 2021>

(2) "Where a cause prescribed by Presidential Decree occurs" in Article 34-2 (1) of the Act means any of the following cases where a person who has supplied goods or services falls under any of the following subparagraphs: <Newly Inserted on Feb. 29, 2024>

1. Where the whereabouts are unknown or the contact is lost;

2. Where the Commissioner of the National Tax Service deems the issuance of a tax invoice is impractical due to the suspension of business or other unavoidable reasons.

(3) A person who intends to issue a purchaser-issued tax invoice under Article 34-2 (2) of the Act (hereafter referred to as "applicant" in this Article) shall file an application for transaction confirmation prescribed by Decree of the Ministry of Economy and Finance with the head of the competent tax office having jurisdiction over the applicant, along with a document objectively evidencing the fact of transaction, within 1 year after the end of the taxable period during which the relevant goods or services are supplied. <Amended on Feb. 12, 2019; Feb. 29, 2024>

(4) A transaction subject to an application for confirmation of the fact of transaction under paragraph (3) shall be a transaction where the price for supply per transaction is 50,000 won or more.<Amended on Feb. 28, 2023; Feb. 29, 2024>

(5) The head of the competent tax office in receipt of an application pursuant to paragraph (3) may request the applicant to correct the application, specifying a deadline within 7 days from the date of filing an application, if the personal information of a person who has supplied goods or services (hereafter referred to as "supplier" in this Article) or if there are any flaws in the manner in which the application is filled out. <Amended on Feb. 29, 2024>

(6) If the applicant fails to comply with the request for correction within a period of time specified under paragraph (5) or any of the following subparagraphs is applicable, the head of the competent tax office having jurisdiction over the applicant shall make a decision to refuse to confirm the fact of transaction: <Amended on Feb. 29, 2024>

1. Where it is clear that the deadline for application specified under paragraph (3) has passed;

2. Where the application clearly reveals that the transaction has been made with an entrepreneur whose business was unregistered, suspended, or closed at the time of transaction.

(7) If the head of the tax office having jurisdiction over the applicant does not refuse the confirmation pursuant to paragraph (6), he or she shall forward the application and the documentary evidence submitted, to the head of the competent tax office having jurisdiction over the supplier, within seven days from the date the application for transaction confirmation is filed (if a request for correction is made under paragraph (5), the date such correction is made). <Amended on Feb. 29, 2024>

(8) The head of the tax office having jurisdiction over the supplier in receipt of an application forwarded under paragraph (7) shall verify the fact of transaction based on the details of the application and the documentary evidence submitted. In such cases, the burden of proving the fact and details of transaction shall rest on the applicant. <Amended on Feb. 29, 2024>

(9) The head of the competent tax office having jurisdiction over the supplier shall verify the fact of transaction by the end of the month following the month in which the application date falls and then give notice to the heads of the competent tax offices having jurisdiction over the supplier and the applicant according to each of the following subparagraphs: provided, if there is any unavoidable reason prescribed by Decree of the Ministry of Economy and Finance, such as the supplier's default or temporary absence, the period of verifying the fact of transaction may be extended by up to 20 days: <Amended on Feb. 29, 2024>

1. Where the fact of transaction is verified: Notice of confirmation of transaction between the supplier and the recipient, including their business registration numbers, the date of preparation, the value of supply, and the amount of value-added tax;

2. Where the fact of transaction is not verified: Notice of non-confirmation of transaction.

(10) The head of the competent tax office having jurisdiction over an applicant shall immediately notify the applicant of the result of confirmation after receiving the notification under paragraph (9) from the head of the competent tax office having jurisdiction over the supplier. <Amended on Feb. 29, 2024>

(11) An applicant in receipt of the notice of confirmation of transaction under paragraph (9) 1 from the head of the tax office having jurisdiction over the applicant under paragraph (10) shall issue a purchaser-issued tax invoice and deliver it to the supplier with the transaction date confirmed by the head of the tax office having jurisdiction over the supplier as the date of preparation. <Amended on Feb. 29, 2024>

(12) Notwithstanding paragraph (11), if the applicant and the supplier receive notice provided for in paragraph (9) 1 from the heads of the competent tax offices, the applicant shall be deemed to have issued a purchaser-issued tax invoice to the supplier. <Amended on Feb. 29, 2024>

(13) Where a purchaser-issued tax invoice is issued or is deemed to have been issued to the supplier pursuant to paragraph (11) or (12), if the applicant submits a list of total purchaser-issued tax invoices prescribed by Decree of the Ministry of Economy and Finance when filing a preliminary return under Article 48 of the Act, a final return provided for in Article 49 of the Act, or a request for correction provided for in Article 45-2 (1) of the Framework Act on National Taxes, he or she may be entitled to deduction of the input tax amount stated on the purchaser-issued tax invoice from the output tax amount or the amount of tax payable for the taxable period during which relevant goods or services are supplied, pursuant to Articles 37, 38, and 63 (3) of the Act. <Amended on Feb. 29, 2024>

[This Article Added on Feb. 7, 2017]

Article 72(Import Tax Invoices) #

(1) Import tax invoices referred to in Article 35 (1) of the Act shall be issued applying mutatis mutandis the provisions concerning the issuance of tax invoices under Article 32 (1) of the Act. In such cases, where the payment of value-added tax is deferred under Article 50-2 (1) of the Act, an import tax invoice shall be issued specifying that the payment of value-added tax is deferred. <Amended on Feb. 17, 2016>

(2) When receiving the payment of value-added tax or collecting or refunding it under Articles 28 (2), 38-2 (1) and (2), 38-3 (1) through (3), 38-4 (1), 46, 47, 106, and 106-2 of the Customs Act before deciding or rectifying the tax base or the amount of tax under that Act, the head of the competent customs office shall issue a corrected import tax invoice to the importer under Article 35 (2) of the Act. <Amended on Feb. 21, 2014; Feb. 28, 2023>

(3) "Act prescribed by Presidential Decree such as a customs duty investigation, etc. by a customs officer" in Article 35 (2) 3 of the Act means any of the following acts: <Amended on Feb. 21, 2014; Feb. 28, 2023>

1. Where a notice of customs investigation or investigation into a customs offense is issued;

2. Where a customs inspector commences an on-site inspection or inquiry to gather tax data or to process civil petitions, etc.;

3. Other acts similar to subparagraph 1 or 2.

(4) "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" in Article 35 (2) 2 (c) of the Act means any of the following cases: <Amended on Feb. 28, 2023>

1. Where the head of a customs office has requested an importer to submit data and evidentiary data related to the determination of a customs value under Article 37-4 (1) and (2) of the Customs Act but the importer fails to submit such data by the deadline specified in paragraph (3) of that Article or submits false data;

2. Where even after receiving a notice on the under-stated duty base or the amount of duties through any of the following reviews or investigations, the importer repeats the errors at the time of filing the next return on the value-added tax under Article 50 of the Act:

(a) A review under Article 38 (2) of the Customs Act;

(b) An investigation prescribed in Article 110 (2) 1 or 2 of the Customs Act to determine or rectify the duty base or the amount of duties;

(c) A review under Article 255-2 of the Customs Act (limited to review in connection with decision or rectification of the duty base or the amount of duties in accordance with the criteria under Article 259-2 (1) 1 of the Enforcement Decree of that Act);

(d) An investigation under Article 17 (1) of the Act on Special Cases of the Customs Act for the Implementation of Free Trade Agreements;

3. Where an importer fails to file an application prescribed in Article 38-2 (1) of the Customs Act or to file an amended declaration prescribed in Article 38-3 (1) of that Act, without good cause, even after receiving a notice requiring an application for revision under Article 38-2 (2) of that Act;

4. A document stating the matters prescribed in Article 15 (1) 1 of the Enforcement Decree of the Customs Act or any content of taxation data referred to in subparagraphs of paragraph (5) of that Article is manifestly different from an objective fact (excluding cases where such difference is caused by mistake or slight negligence of an importer).

(5) To issue a corrected import tax invoice under paragraphs (2) and (3), the head of a customs office shall prepare it by writing an added amount in black and writing a subtracted amount in red or adding a negative thereto after entering the date of receiving, collecting, or refunding the value-added tax as the date the corrected import tax invoice is prepared and affixing the date, etc. the original import tax invoice was prepared in its reference column.

(6) A person intending to be issued a corrected import tax invoice pursuant to Article 35 (5) of the Act shall file an application with the head of the customs office that has collected the relevant value-added tax for issuance of the corrected import tax invoice. <Added on Feb. 13, 2018; Feb. 28, 2023>

(7) The head of the customs office in receipt of an application under paragraph (6) shall issue, within two months from the date of receipt of the application, a corrected import tax invoice or notify the applicant of the purport that there is no ground to issue it. <Added on Feb. 13, 2018>

(8) Where an import tax invoice corrected pursuant to paragraph (7) is to be issued by the head of a customs office, it shall be prepared by writing the added amount in black or writing the deducted amount in red or adding a negative sign thereto, after additionally entering the issue date, etc. of the original import tax invoice in its reference column. <Added on Feb. 13, 2018>

(9) Except as provided in paragraphs (1) through (8), matters necessary for the preparation, issuance, etc. of import tax invoices or corrected import tax invoices, shall be prescribed by Ministerial Decree of the Economy and Finance. <Amended on Feb. 13, 2018>

Article 73(Receipts) #

(1) "Entrepreneur prescribed by Presidential Decree" in Article 36 (1) 1 of the Act means an entrepreneur who engages in any of the following: <Amended on Feb. 3, 2015; Dec. 8, 2020; Feb. 17, 2021>

1. Retail trade;

2. Food service activities (including beverage service activities);

3. Accommodation;

4. Beauty salon, bathhouse, and similar service business;

5. Passenger transportation business;

6. Business that issues admission tickets;

7. Business referred to in Article 109 (2) 7 and licensed administrative agent business (excluding the business of supply for an entrepreneur under Article 3 of the Act and a business operator referred to in Article 160-2 (2) of the Income Tax Act);

8. Business in which an organization for postal services established under the Act on Special Cases concerning the Management of Postal Services provides door-to-door pickup and delivery services of postal parcels among the extra postal services provided for in Article 15 (1) of the Postal Service Act;

9. Business supplying services provided for in the proviso of subparagraph 1 of Article 35;

10. Animal diagnosis and treatment services provided by a veterinarian, which do not fall under the proviso of subparagraph 5 of Article 35;

11. Business of supplying services provided for in Article 36 (2) 1 and 2;

12. Authorized certificate issuance services provided for in Article 71 (1) 7;

13. Business of supplying electronic services in the Republic of Korea by an entrepreneur who has made a simplified business registration under Article 53-2 (1) and (2) of the Act;

14. Business that mainly supplies goods or services to consumers other than entrepreneurs, as prescribed by Ministerial Decree of the Economy and Finance.

(2) "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" in Article 36 (2) of the Act means any of the following: <Amended on Jun. 25, 2019>

1. If a person who has established a temporary place of business under Article 10 supplies goods or services to consumers, other than entrepreneurs, in the temporary place of business;

2. If an operator of the electric utility business under the Electric Utility Act supplies electricity for non-industrial use;

3. If a telecommunications business operator under the Telecommunications Business Act supplies telecommunications services; provided, this shall exclude where a value-added telecommunications business operator supplies value-added telecommunications services under Article 5 (3) of the Telecommunications Business Act to mail order business operators;

4. If an urban gas business entity under the Urban Gas Business Act supplies urban gas for non-industrial use;

5. If an integrated energy-supply business entity licensed under the Integrated Energy Supply Act supplies heat or electricity for non-industrial use;

6. If a broadcasting business operator as defined in subparagraph 3 of Article 2 of the Broadcasting Act supplies broadcasting services to those other than entrepreneurs;

7. If an Internet multimedia broadcast service provider as defined in subparagraph 5 (a) of Article 2 of the Internet Multimedia Broadcast Services Act supplies broadcasting services to those other than entrepreneurs.

(3) Where an entrepreneur receives a supply of goods or services from another entrepreneur who engages in business under paragraph (1) 1 through 3, 5 (limited to chartered bus transport services under subparagraph 2 (a) of Article 3 of the Enforcement Decree of the Passenger Transport Service Act), 7, 8, 12, and 14 and any subparagraph of paragraph (2), if the former request for the issuance of a tax invoice under Article 36 (3) of the Act, the latter shall issue the invoice. <Amended on Feb. 17, 2021>

(4) Where an entrepreneur receives a supply of goods or services from another entrepreneur who engages in any business referred to in paragraph (1) 4, 5 (excluding chartered bus transport services under subparagraph 2 (a) of Article 3 of the Enforcement Decree of the Passenger Transport Service Act), 6, or 9 through 11, supplies any depreciable asset or any service other than those provided for in paragraphs (1) and (2), if the former request for the issuance of a tax invoice under Article 36 (3) of the Act, the latter shall issue the invoice. <Amended on Feb. 17, 2021>

(5) Where an entrepreneur who operates an automobile manufacturing business or automobile sales business, among entrepreneurs engaged in a business referred to in paragraph (1) 14, issues a receipt under paragraph 36 (1) of the Act, but an entrepreneur in receipt of the relevant supply requests for the issuance of a tax invoice under Article 36 (3) of the Act, by the 10th day of the month following the taxable period in which the date of supply the goods falls, the supplier shall issue the tax invoice. In such cases, the receipt already issued shall be construed as if unissued. <Amended on Feb. 3, 2015; Feb. 17, 2021>

(6) Where an entrepreneur referred to in the subparagraphs of Article 36 (1) of the Act supplies goods or services prescribed in Article 71 (1), no receipt shall be required; provided, when a person referred to in Article 71 (1) 2 supplies goods or services, the same shall be applicable only where a person in receipt of such supply does not require a receipt.

(7) A receipt issued under Article 36 of the Act shall specify the following particulars. In such cases, a receipt form and other necessary matters shall be determined by the Commissioner of the National Tax Service:

1. The registration number, trade name, and name (for a corporation, the name of the representative thereof) of the supplier;

2. The supply price;

3. Date of preparation;

4. Other necessary information.

(8) Where an entrepreneur engaged in any business referred to in paragraphs (1) and an entrepreneur who falls under any subparagraph of paragraph (2) issue a receipt using a mechanical device (excluding cash registers), such as a credit card terminal or debit card terminal, he or she shall specify the amount of tax on the receipt, separately from the value of supply, notwithstanding paragraph (7). <Amended on Feb. 17, 2021>

(9) Receipts referred to in Article 36 of the Act may be issued in any of the following methods: <Added on Feb. 11, 2020>

1. Printing out a credit card sales slip, etc. under Article 46 (1) of the Act through a credit card terminal, a device to issue cash receipts, etc. and then issuing such sales slip, etc. to the recipient of supply;

2. Transmitting settlement details stating the matters referred to in the subparagraphs of paragraph (7) (hereinafter referred to as "settlement details") to the recipient of supply in the form of an electronic document under subparagraph 1 of Article 2 of the Framework Act on Electronic Documents and Transactions (limited to where the recipient of supply gives consent thereto).I In such cases, where the settlement details created and stored by an electronic method are verifiable through an information and communications network, etc. under subparagraph 18 of Article 2 of the Framework Act on National Taxes, they shall be deemed to be transmitted to the recipient of supply.

(10) Paragraphs (3) through (5) and (8) shall not apply where an entrepreneur who is a simplified taxable person supplies goods or services during the period applicable to the issuance of a receipt under Article 36-2 (1) or (2). <Added on Feb. 17, 2021>

Article 75(Deduction of Input Tax Amounts in Cases of Erroneous Entry of Requisite Entry Items on Tax Invoices) #

"Cases prescribed by Presidential Decree" in the proviso of Article 39 (1) 2 of the Act means any of the following cases: <Amended on Feb. 17, 2016; Feb. 12, 2019; Feb. 17, 2021; Feb. 15, 2022; Feb. 28, 2023>

1. Where an entrepreneur who has filed an application for business registration under Article 11 (1) or (2) is issued with a tax invoice or import tax invoice, entering his or her own or his or her representative’s resident registration number, regarding transactions made until the date the business registration certificate is issued under Article 11 (5);

2. Where some of the requisite entry items on a tax invoice issued under Article 32 of the Act are wrongly stated, but transactions are verified from the other requisite or optional entry items on the tax invoice;

3. Where a tax invoice is issued after the time of supply of goods or services but not later than the final return deadline for the taxable period during which the goods or services are supplied;

4. Where an electronic tax invoice issued under Article 32 (2) of the Act is not transmitted to the Commissioner of the National Tax Service, but the issuance thereof is verified;

5. Where a tax invoice, other than electronic tax invoices issued under Article 32 (2) of the Act, is issued not later than the final return deadline for the taxable period during which goods or services are supplied, and the relevant transactions are verified;

6. Where even though a tax invoice is issued stating a place of business other than that which has actually supplied or received goods or services, the place of business is eligible for lump-sum payment under Article 51 (1) of the Act, or has been registered as a per-business unit taxable entrepreneur, and the entrepreneur who has actually supplied the goods or services files a return and pays the amount of tax payable for the pertinent taxable period to the head of the tax office having jurisdiction over the place of tax payment under Articles 48 and 49 or 66 and 67 of the Act;

7. Where even though a tax invoice is issued after the expiration of the final return deadline for the taxable period during which goods or services are supplied, the date of issuance of the tax invoice is within six months from the day following the final return deadline, and where any of the following is applicable:

(a) Where the tax invoice is submitted along with a return of the revised tax base under Article 25 (1) of the Enforcement Decree of the Framework Act on National Taxes and a written request for rectification under Article 25-3 of that Decree;

(b) Where the relevant transaction is verified, and thus, the head of the tax office or the commissioner of the regional tax office having jurisdiction over the place of tax payment or the Commissioner of the National Tax Service (hereafter referred to as the "head of the tax office having jurisdiction over the place of tax payment, etc." in this Article) makes a decision or rectification pursuant to Article 57 of the Act;

8. Where, even though a tax invoice has been issued before the time of supply of goods or services, the time of such supply arrives within six months from the date of issuance of the tax invoice, and where the relevant transaction is verified and thus the head of the tax office having jurisdiction over the place of tax payment, etc. makes a decision or rectification pursuant to Article 57 of the Act;

9. In any of the following cases, where the transaction is confirmed and the parties to the transaction report and pay the relevant tax amount to the head of the tax office having jurisdiction over the place of tax payment pursuant to Articles 48, 49, 66, or 67 of the Act:

(a) Where a tax invoice is issued on a transaction other than a consignment sale or a sale by an agent based on the contract between the parties to the transaction, despite the fact that the substance of the transaction corresponds to a consignment sale or a sale by an agent;

(b) Where a tax invoice is issued on a consignment sale or a sale by an agent based on the contract between the parties to the transaction, despite the fact that the substance of the transaction does not correspond to a consignment sale or a sale by an agent;

(c) Where a tax invoice is issued on a transaction other than arrangement or brokerage for the supply of services based on the contract between the parties to the transaction, despite the fact that the substance of the transaction corresponds to arrangement or brokerage for the supply of services;

(d) Where a tax invoice is issued on arrangement or brokerage for the supply of services based on the contract between the parties to the transaction, despite the fact that the substance of the transaction does not correspond to arrangement or brokerage for the supply of services;

(e) Where an entrepreneur entrusted with business (limited to the business of supplying services; hereafter in this subparagraph the same shall apply) from another entrepreneur receives funds necessary for the execution of the entrusted business from the entrepreneur that entrusted the business and disburses such funds, and a tax invoice is issued with such expenses excluded from the value of supply based on the contract between the parties to the transaction, despite the fact that such expenses must be included in the value of supply;

(f) Where a business entity entrusted with business from another entrepreneur receives funds necessary for the execution of the entrusted business from the entrepreneur that entrusted the business and disburses such funds, and a tax invoice is issued with such expenses included in the value of supply based on the contract between the parties to the transaction, despite the fact that such expenses must be excluded from the value of supply;

(g) Where a tax invoice is issued while including the amount provided in Article 29 (5) 1 of the Act in the price of supply by treating the relevant amount as an incentive or other amount similar thereto under paragraph (6) of that Article and including it in the price of supply under a contract between the parties to a transaction, although the amount shall not be included in the price of supply under that subparagraph;

10. Deleted; <Feb. 15, 2022>

11. Where a trustee obliged to pay value-added tax pursuant to Article 3 (2) of the Act intends to have the value-added tax of the tax invoice, in which the trustor is the recipient of goods or services, deducted from output tax; the transaction has been confirmed; and the person who supplied the goods or services makes a return and payment of the relevant amount of tax payable to the head of the tax office having jurisdiction over the place of tax payment pursuant to Articles 48, 49, 66, or 67 of the Act;

12. Where a trustor obliged to pay value-added tax pursuant to Article 3 (2) of the Act intends to have the value-added tax of the tax invoice, in which the trustee is the recipient of goods or services, deducted from output tax; the transaction has been confirmed; and the person who supplied the goods or services makes a return and payment of the relevant amount of tax payable to the head of the tax office having jurisdiction over the place of tax payment pursuant to Articles 48, 49, 66, or 67 of the Act.

Article 81(Pro Rata Calculation of Common Input Tax Amounts) #

(1) Where an entrepreneur concurrently operates both a taxable business and a tax-free business, etc. under Article 40 of the Act and where an input tax amount has unclear actual attribution (hereinafter referred to as "common input tax amount"), an input tax amount related to the tax-free business, etc. shall be calculated pro rata by the following formula, except as prescribed by Ministerial Decree of the Economy and Finance such as calculation made based on the number of persons; provided, when a preliminary return is filed, it shall be calculated in proportion to the ratio of the value of tax-free supplies (referring to the aggregate amount of the value of supply to tax-free business, etc. and the government subsidies, public subsidies and similar amounts received by the entrepreneur in relation to the relevant tax-free business, etc. but not included in the tax base provided in Article 29 of the Act; hereafter the same shall apply in this Article through Article 83) to the total value of supplies in the preliminary return period, and then adjusted when a final return is filed: <Amended on Feb. 17, 2016; Feb. 13, 2018; Feb. 12, 2019>

┌─────────────────────────────────┐

│ Input tax amount related to tax-free business, etc. = Common input tax amount × (Value of tax-free supplies│

│ ────────│

│ Total value of supplies) │

└─────────────────────────────────┘

(2) Notwithstanding paragraph (1), any of the following input tax amounts relating to goods or services shall be deemed a deductible input tax amount:

1. A common input tax amount where the value of tax-free supplies is less than five percent of the total value of supplies in the taxable period; provided, this shall exclude where the common input tax amount is at least five million won;

2. An input tax amount where the common input tax amount is less than 50,000 won in the taxable period;

3. An input tax amount for goods subject to which Article 63 (3) 3.

(3) In applying paragraph (1), a telecommunications business operator under the Telecommunications Business Act or the Korea Railroad Corporation established under the Korea Railroad Corporation Act may calculate a common input tax amount pro rata according to the following formula only for goods or services that have unclear actual attribution:

┌────────────────────────────────────┐

│ Input tax amount related to tax-free business, etc. = Common input tax amount × (Value of tax-free supplies in all places of business│

│ ──────────────│

│ Total value of supplies in all places of business)│

└────────────────────────────────────┘

(4) In applying paragraph (1), where the value of supply for both or either of a taxable business and a tax-free business, etc. is nonexistent in the pertinent taxable period, the pro rata calculation for the taxable period shall be made in the following order; provided, when the area of a building or structure newly built or acquired is divisible by size predetermined for each of a taxable business and a tax-free business, etc., subparagraph 3 shall prevail over subparagraphs 1 and 2:

1. The ratio of the value of purchase related to the tax-free business, etc. to the total value of purchase (excluding the common value of purchase);

2. The ratio of the estimated value of supplies related to the tax-free business, etc. to the total estimated value of supplies;

3. The ratio of the predetermined area of use for the tax-free business, etc. to the total predetermined area of use.

(5) Where a common input tax amount regarding a building or structure under the proviso of paragraph (4), excluding land, is calculated pro rata under subparagraph 3 of that paragraph, even though it becomes possible to calculate the common input tax amount according to the formula set forth in paragraph (1) as the values of supplies for both the taxable business and the tax-free business, etc. later become known, paragraph (4) 3 shall apply to the taxable period before the areas of use for the taxable business and the tax-free business, etc. are determined and then the common input tax amount shall be adjusted pursuant to subparagraph 2 of Article 82 for the taxable period during which the areas of use for the taxable business and the tax-free business, etc. are determined.

(6) Except as provided in paragraphs (1) through (5), matters necessary for calculating common input tax amounts pro rata, shall be prescribed by Ministerial Decree of the Economy and Finance.

Article 82(Adjustment of Common Input Tax Amounts) #

Where an entrepreneur calculates his or her input tax amount pro rata under Article 81 (4), he or she shall adjust the amount of tax payable for the taxable period during which the values of supplies or the areas of use for the taxable business and the tax-free business, etc. are determined following acquisition of the relevant goods, at the time of filing the final return, according to each of the following formulae; provided, when the entrepreneur files a preliminary return, he or she shall calculate the amount in proportion to the ratio of the value of tax-free supplies to the total value of supplies, and the ratio of the tax-free or nontaxable area of use to the total area of use, in the preliminary return period, and then adjust it when filing a final return:

1. Where an input tax amount is calculated pro rata under Article 81 (4) 1 and 2:

┌──────────────────────────────────────────────────┐

│ Amount of tax to be added or deducted = Total common input tax amount × [1? (Value of tax-free supplies for the taxable period during which the values of supplies for taxable business and tax-free business, etc. are determined ÷ Total value of supplies for the taxable period during which the values of supplies for taxable business and tax-free business, etc. are determined)? Amount of tax already deducted]│

└──────────────────────────────────────────────────┘

2. Where an input tax amount is calculated pro rata under Article 81 (4) 3:

┌─────────────────────────────────────────────────┐

│ [1? (Tax-free area of use for the taxable period during which the areas of use for taxable business and tax-free business, etc. are determined ÷ Total area of use for the taxable period during which the areas of use for taxable business and tax-free business, etc. are determined)? Amount of tax already deducted]│

└─────────────────────────────────────────────────┘

Article 83(Recalculation of Amounts of Tax Payable or Amounts of Tax Refundable) #

(1) The amount of tax payable or the amount of tax refundable under Article 41 of the Act, shall be recalculated only where there is at least five percent difference between both the ratio of the value of tax-free supplies to the total value of supplies, or the ratio of the tax-free area of use to the total area of use, and the ratio applied to the taxable period (if it is recalculated in a subsequent taxable period, the recalculated period) in which the acquisition date of depreciable assets is included, after an input tax amount for the depreciable assets are deducted pursuant to Article 38 (1) of the Act and Articles 81 and 82 of this Decree.

(2) The amount of tax to be added to, or deducted from, the amount of tax payable, or to be added to, or deducted from, the amount of tax refundable following the recalculation of the amount of tax payable or the amount of tax refundable under paragraph (1), shall be an amount calculated according to each of the following formulae. In such cases, the latter part of Article 66 (2) shall apply mutatis mutandis to the number of the taxable periods elapsed:

1. Buildings or structures:

┌─────────────────────────────────────────────────────┐

│ Amount of tax to be added or deducted = Input tax amount for goods × [1? (5 ÷ 100) × Number of taxable periods elapsed] × Ratio of the value of tax-free supplies increased or decreased or the ratio of the tax-free area of use increased or decreased│

└─────────────────────────────────────────────────────┘

2. Other depreciable assets:

┌─────────────────────────────────────────────────────┐

│ Amount of tax to be added or deducted = Input tax amount for goods × [1? (25 ÷ 100) × Number of taxable periods elapsed] × Ratio of the value of tax-free supplies increased or decreased or the ratio of the tax-free area of use increased or decreased│

└─────────────────────────────────────────────────────┘

(3) In applying paragraphs (1) and (2), if the relevant amount is calculated pro rata according to the ratio of the value of tax-free supplies to the total value of supplies for the taxable period in which the acquisition date falls, it shall be recalculated according to the ratio of the value of tax-free supplies increased or decreased; while if the relevant amount is calculated pro rata according to the ratio of the tax-free area of use to the total area of use for the taxable period in which the acquisition date falls, it shall be recalculated according to the ratio of the tax-free area of use increased or decreased.

(4) Paragraphs (1) and (2) shall not apply where Article 66 is applicable.

(5) When calculating the number of taxable periods elapsed under paragraph (2), if depreciable assets are acquired or subject to paragraph (1) after the date the taxable period commences, they shall be deemed acquired or subject to paragraph (1) on the date the taxable period commences.

(6) Except as provided in paragraphs (1) through (5), matters necessary for recalculating the amounts of tax payable or the amounts of tax refundable shall be prescribed by Ministerial Decree of the Economy and Finance.

Article 84(Calculation of Fictitious Input Tax Amounts) #

(1) Tax-free agricultural products, etc. eligible for deduction as an input tax amount under Article 42 (1) of the Act (hereinafter referred to as "tax-free agricultural products, etc.") shall be the agricultural products, stock farm products, marine products, or forest products supplied free of value-added tax (including those which have primarily processed under Article 34 (1), those listed in the subparagraphs of paragraph (2) of that Article, and salt): <Amended on Feb. 13, 2018>

(2) "Amount prescribed by Presidential Decree" in Article 42 (1), with the exception of its table, of the Act means an amount calculated by multiplying a tax base for supply of tax-free agricultural products, etc. by the relevant entrepreneur during the relevant taxable period (hereafter referred to as "tax base" in this paragraph) by 30/100 (for a sole proprietor, 50/100 for a tax base not exceeding 200 million won and 40/100 for a tax base exceeding 200 million won); provided, the maximum amount deductible as an input tax amount for each entrepreneur until December 31, 2025 shall be an amount calculated according to the following classifications: <Added on Feb. 3, 2015; Feb. 17, 2016; Feb. 7, 2017; Feb. 13, 2018; Sep. 28, 2018; Feb. 11, 2020; Feb. 15, 2022; Jun. 30, 2022; Dec. 26, 2023>

1. A corporate entrepreneur: An amount computed by multiplying a tax base by 50/100 and then multiplied by a deduction rate;

2. A sole proprietor operating an eating establishment: An amount computed by multiplying an amount calculated according to the following classification by a deduction rate:

(a) Where a tax base does not exceed 100 million won: An amount computed by multiplying the tax base by 75/100;

(b) Where a tax base is between 100 million won and 200 million won: An amount computed by multiplying the tax base by 70/100;

3. A sole proprietor operating any business other than the one referred to in subparagraph 2: An amount computed by multiplying an amount calculated according to the following classification by a deduction rate:

(a) Where a tax base does not exceed 200 million won: An amount computed by multiplying the tax base by 65/100;

(b) Where a tax base exceeds 200 million won: An amount computed by multiplying the tax base by 55/100.

(3) Notwithstanding paragraphs (1) and (2), an entrepreneur who satisfies both of the following requirements may deduct, as an input tax amount, an amount computed by subtracting an amount deducted as an input tax amount under paragraphs (1) and (2) for the first taxable period from an amount calculated by multiplying the value of tax-free agricultural products, etc. supplied from January 1 to December 31 of the relevant year by a deduction rate, when filing a final return on the amount of tax payable for the second taxable period. In such cases, the maximum amount deductible as an input tax amount from January 1 to December 31 of the relevant year shall be an amount computed by multiplying the total amount of tax bases for supply of tax-free agricultural products, etc. from January 1 to December 31 of the relevant year (hereinafter referred to as "total tax base amount") by 30/100 [for a sole proprietor, 50/100 for a total tax base amount not exceeding 400 million won and 40/100 for a total tax base amount exceeding 400 million won (65/100 for a total tax base amount not exceeding 400 million won and 55/100 for a total tax base amount exceeding 400 million won until December 31, 2025); and for a corporate entrepreneur, 50/100 until December 31, 2025], which is then multiplied by a deduction rate: <Added on Feb. 3, 2015; Feb. 17, 2016; Feb. 7, 2017; Sep. 28, 2018; Feb. 11, 2020; Feb. 15, 2022; Jun. 30, 2022; Dec. 26, 2023; Feb. 29, 2024>

1. The ratio calculated by dividing the value of tax-free agricultural products, etc. supplied for the first taxable period by the value of tax-free agricultural products, etc. supplied from January 1 to December 31 of the relevant year is at least 75/100 or less than 25/100;

2. It shall have been continuously engaged in manufacturing business from January 1 to December 31 of the year to which the relevant taxable period belongs.

(4) Where tax-free agricultural products, etc. for which an input tax amount is deducted under paragraphs (1) through (3) are transferred or delivered as they are, or used or consumed for any business that supplies goods or services exempt from value-added tax or for other purposes, the deducted amount shall be added to the amount of tax payable or deducted from the amount of tax refundable. <Amended on Feb. 3, 2015>

(5) Any entrepreneur who wishes to qualify for the deduction of an input tax amount under Article 42 (1) of the Act shall file (including via the national tax information and communications network) a return on the deduction of fictitious input tax amount in the form prescribed by Ministerial Decree of the Economy and Finance with the head of the competent tax office, along with any of the following documents; provided, when an entrepreneur who operates a manufacturing business is supplied with tax-free agricultural products, etc. directly from a farmer or fisherman, only a return on the deduction of fictitious input tax amount shall be required: <Amended on Feb. 3, 2015; Feb. 28, 2023>

1. A sum table of tax invoices by seller under Article 163 of the Income Tax Act or under Article 121 of the Corporate Tax Act;

2. A statement on the receipts of credit card sales slips, etc. prescribed by Ministerial Decree of the Economy and Finance.

3. A sum table of purchaser-issued invoices under Article 212-4 of the Enforcement Decree of the Income Tax Act or Article 164-2 of the Enforcement Decree of the Corporate Tax Act.

(6) A farmer or fisherman referred to in the proviso of paragraph (5) refers to an individual engaged in agriculture, such as growing crops, farming animals, and growing crops combined with farming animals, forestry, fishing, or extraction of salt under the Korean Standard Industrial Classification publicly notified by the Commissioner of the Korea National Statistical Office. <Amended on Feb. 3, 2015; Feb. 17, 2016>

(7) Articles 74 and 75 shall apply mutatis mutandis to the deduction of input tax amounts under paragraph (5). <Amended on Feb. 3, 2015>

(8) Except as provided in paragraphs (1) through (7), matters necessary for calculating fictitious input tax amounts shall be prescribed by Ministerial Decree of the Economy and Finance. <Amended on Feb. 3, 2015>

Article 85(Special Cases concerning Deductions of Input Tax Amounts in Cases of Converting Depreciable Assets from Tax-Free Business to Taxable Business Use) #

(1) Where an entrepreneur uses or consumes any depreciable asset, for which the input tax amount is not deducted under Article 39 (1) 7 of the Act, for a taxable business, an amount of tax to be deducted pursuant to Article 43 of the Act, shall be an amount calculated according to each of the following formulae. In such cases, the latter part of Article 66 (2) shall apply mutatis mutandis to the number of taxable periods elapsed:

1. Buildings or structures:

┌─────────────────────────────────────────────┐

└─────────────────────────────────────────────┘

2. Other depreciable assets:

┌─────────────────────────────────────────────┐

│ Amount of tax to be deducted = Input tax amount not deducted in relation to the tax-free business, etc. as at the time of acquiring goods × [1? (25 ÷ 100) × Number of taxable periods elapsed]│

└─────────────────────────────────────────────┘

(2) Where an entrepreneur uses or consumes any depreciable asset, for which the input tax amount is not deducted under Article 43 of the Act, for both a taxable business and a tax-free business, etc., an amount of tax to be deducted shall be an amount calculated according to each of the following formulae, but if the value of taxable supplies through the taxable business is less than five percent of the total value of supplies, the amount of tax to be deducted shall be deemed zero. In such cases, the latter part of Article 66 (2) shall apply mutatis mutandis to the number of taxable periods elapsed:

1. Buildings or structures:

┌───────────────────────────────────────────────────────┐

│ Amount of tax to be deducted = Input tax amount not deducted in relation to the tax-free business, etc. as at the time of acquiring goods × [1? (5 ÷ 100) × Number of taxable periods elapsed] × (Value of taxable supplies in the taxable period in which the date goods are used or consumed for the taxable business, falls ÷ Total value of supplies in the taxable period in which the date goods are used or consumed for the taxable business, falls)│

└───────────────────────────────────────────────────────┘

2. Other depreciable assets:

┌───────────────────────────────────────────────────────┐

│ Amount of tax to be added or deducted = Input tax amount not deducted in relation to the tax-free business, etc. as at the time of acquiring goods × [1? (25 ÷ 100) × Number of taxable periods elapsed] × (Value of taxable supplies in the taxable period during which the values of supplies for the taxable business and the tax-free business, etc. are determined ÷ Total value of supplies in the taxable period during which the values of supplies for the taxable business and the tax-free business, etc. are determined) ? Input tax amount already deducted│

└───────────────────────────────────────────────────────┘

(3) In applying paragraph (2), if the value of supply for both or either of a taxable business and a tax-free business, etc. is nonexistent in the pertinent taxable period, the pro rata calculation for the taxable period shall be made according to the following order; provided, when the area of a building for which the input tax amount is not deducted in relation to a tax-free business, etc. as at the time of acquisition thereof is divisible by a size predetermined for each of a taxable business and a tax-free business, etc., subparagraph 3 shall prevail over subparagraphs 1 and 2:

1. The ratio of the value of purchase related to the taxable business, to the total value of purchase;

2. The ratio of the estimated value of supplies related to the taxable business, to the total estimated value of supplies;

3. The ratio of the predetermined area of use for the taxable business, to the total predetermined area of use.

(4) Where an input tax amount calculated pro rata under paragraph (3) is deducted, if a final return is filed on the amount of tax payable for the taxable period during which the values of supplies for a taxable business and a tax-free business, etc. or the areas of use for a taxable business and a tax-free business are determined following use or consumption for the taxable business of depreciable assets for the tax-free business, it shall be adjusted according to each of the following formulae: <Amended on Feb. 3, 2015>

1. Where an input tax amount to be deducted, is calculated pro rata under paragraph (3) 1 and 2:

(a) Buildings or structures:

┌──────────────────────────────────────────────────────────────┐

│ Amount of tax to be added or deducted = Input tax amount not deducted in relation to the tax-free business, etc. as at the time of acquiring goods × [1? (5 ÷ 100) × Number of taxable periods elapsed] × (Taxable usable area in the taxable period during which the areas of use for the taxable business and the tax-free business, etc. are determined ÷ Total area of use in the taxable period during which the areas of use for the taxable business and the tax-free business, etc. are determined) ? Input tax amount already deducted.│

└──────────────────────────────────────────────────────────────┘

(b) Other depreciable assets:

┌──────────────────────────────────────────────────────────────┐

│ Amount of tax to be added or deducted = Input tax amount not deducted in relation to the tax-free business, etc. as at the time of acquiring goods × [1? (5 ÷ 100) × Number of taxable periods elapsed] × (Value of taxable supplies in the taxable period during which the values of supplies for the taxable business and the tax-free business, etc. are determined ÷ Total value of supplies in the taxable period during which the values of supplies for the taxable business and the tax-free business, etc. are determined) ? Input tax amount already deducted│

└──────────────────────────────────────────────────────────────┘

2. Where an input tax amount to be deducted, is calculated pro rata under paragraph (3) 3:

┌──────────────────────────────────────────────────────────────┐

└──────────────────────────────────────────────────────────────┘

(5) Where an entrepreneur uses or consumes any depreciable asset, for which the input tax amount is not deducted under Article 43 of the Act, for a taxable business, he or she shall file a return on depreciable assets converted to taxable business use in the form prescribed by Ministerial Decree of the Economy and Finance and a final return for the taxable period in which the date of use or consumption for the taxable business falls, with the head of the tax office having jurisdiction over the pertinent place of tax payment.

(6) When calculating the number of taxable periods elapsed under paragraphs (1) through (4), if depreciable assets are acquired after the date the taxable period commences, they shall be deemed acquired on the date the taxable period commences.

(7) Where, after an input tax amount is deducted under paragraphs (1) through (6), there is at least five percent difference between both the ratio of the value of tax-free supplies to the total value of supplies or the ratio of the tax-free area of use to the total area of use and the ratio applied to the taxable period (if it is recalculated in a subsequent taxable period, the recalculated period) in which the acquisition date of relevant depreciable assets falls, the input tax amount shall be recalculated applying mutatis mutandisArticle 83.

(8) Except as provided in paragraphs (1) through (7), matters necessary for special cases concerning deductions of input tax amounts in cases of converting depreciable assets from a tax-free business, etc. to a taxable business, shall be prescribed by Ministerial Decree of the Economy and Finance.

Article 86(Special Cases concerning Deductions of Input Tax Amounts for Goods in Stock in Cases of being Conversion to General Taxable Persons) #

(1) Where a simplified taxable person is converted to a general taxable person under Article 44 (1) of the Act, he or she shall, as regards any of the following goods in stock, construction in progress, and depreciable assets (limited to those qualifying for the deduction of input tax amount under Articles 38 through 43 of the Act; hereafter referred to as "goods in stock, etc." in this Article) as at the date of such conversion, prepare a return on the goods in stock, etc. as at the time of conversion to general taxation and file (including via the national tax information and communications network) it, along with a return for the taxable period immediately preceding that in which the date of conversion falls, with the head of the tax office having jurisdiction over the pertinent place of tax payment:

1. Commodities;

2. Products (including semi-finished goods and work-in-process);

3. Materials (including sub-materials);

4. Construction in progress;

5. Depreciable assets (for buildings or structures, limited to those within 10 years after being acquired, constructed, or newly built; and for other depreciable assets, limited to those within two years after being acquired or manufactured).

(2) The amount of goods in stock, etc. referred to in paragraph (1) shall be the value of acquisition (including value-added tax) of the goods in stock, etc. verified from the book of account or tax invoice.

(3) Any person who files a return under paragraph (1) is entitled to deduct an amount calculated according to each of the following, as an input tax amount (hereinafter referred to as "inventory input tax"). In such cases, the latter part of Article 66 (2) and paragraph (5) of that Article shall apply mutatis mutandis to the number of taxable periods elapsed under subparagraphs 3 and 4: <Amended on Feb. 17, 2021>

1. Goods in stock referred to in paragraph (1) 1 through 3:

┌─────────────────────────────────────┐

│ Inventory input tax = Amount of inventory │

│ │

│ (10 ÷ 110) ×│

│ (1 ? 0.5%×110/10))│

└─────────────────────────────────────┘

2. Construction in progress referred to in paragraph (1) 4:

┌───────────────────────────────────────┐

│ Inventory input tax = │

│ Input tax amount to be deducted in relation to assets under construction│

│ × (1 ? 0.5%×110/10)│

│ │

└───────────────────────────────────────┘

3. Assets referred to in paragraph (1) 5, which are purchased from a third person:

(a) Buildings or structures:

┌───────────────────────────────────────────────────┐

│ Inventory input tax =│

│ Value of acquisition × [1 ? (10 ÷ 100) × Number of taxable periods elapsed│

│ × (10 ÷ 110) × │

│ (1 ? 0.5% × (10 ÷ 110)│

└───────────────────────────────────────────────────┘

(b) Other depreciable assets:

┌──────────────────────────────────────────────────┐

│ Inventory input tax =│

│ Value of acquisition × [1 ? (50 ÷ 100) × Number of taxable periods elapsed│

│ × (10 ÷ 110) × │

│ (1 ? 0.5% × (10 ÷ 110)│

└──────────────────────────────────────────────────┘

4. Assets referred to in paragraph (1) 5, which are manufactured, constructed, or newly built directly by the entrepreneur:

(a) Buildings or structures:

┌─────────────────────────────────────────────────────┐

│ Inventory input tax = │

│ Amount to be deducted in relation to construction or new building of relevant assets│

│ × [1 ? (10 ÷ 100) × Number of taxable periods elapsed] │

│ (1 ? 0.5% × (10 ÷ 110)│

└─────────────────────────────────────────────────────┘

(b) Other depreciable assets:

┌──────────────────────────────────────────────────────┐

│ Inventory input tax = │

│ Input tax amount to be deducted in relation to manufacturing thereof│

│ × [1 ? (50 ÷ 100) × Number of taxable periods elapsed]│

│ (1 ? 0.5%×(10 ÷ 110))│

└──────────────────────────────────────────────────────┘

(4) Deleted. <Feb. 17, 2021>

(5) Where a general taxable person is converted to a simplified taxable person and then back to a general taxable person, paragraphs (1) through (3) shall not apply to goods in stock, etc. exempt from Article 112 (7) as at the time of conversion to the simplified taxable person. <Amended on Feb. 17, 2021>

(6) Upon receipt of a return filed under paragraph (1), the head of a tax office shall investigate and approve an amount of inventory deductible as inventory input tax; and give notice to the relevant entrepreneur of the inventory input tax to be deducted within one month after the deadline under paragraph (1) expires. In such cases, if no notice is given by the deadline, the amount of inventory returned by the entrepreneur shall be deemed approved.

(7) The inventory input tax decided under paragraph (6) shall be deducted from the output tax amount for the preliminary return period or taxable period in which the date of approval falls.

(8) If any error or omission exists in the amount of inventory input tax approved or deemed approved under paragraph (6), the inventory input tax shall be investigated and rectified pursuant to Article 57 of the Act.

Article 87(Scope of Tax Deductions for Bad Debts) #

(1) "Bankruptcy or compulsory execution ... or any other cause prescribed by Presidential Decree" in the main clause of Article 45 (1) of the Act means any of the following cases: <Amended on Feb. 12, 2019>

1. Where bad debts are recognized under Article 55 (2) of the Enforcement Decree of the Income Tax Act and Article 19-2 (1) of the Enforcement Decree of the Corporate Tax Act;

2. Where debt is converted to equity according to a court’s decision to authorize a rehabilitation plan under the Debtor Rehabilitation and Bankruptcy Act; in such cases, the amount irrecoverable as a bad debt shall be the difference between the book value of the converted accounts receivable as at the time of the debt-equity swap and the market value of shares or investment shares acquired through the debt-equity swap.

(2) An amount of bad debt tax to be deducted under Article 45 of the Act shall be an amount of bad debt tax (if value-added tax is paid on a tax base increased due to a decision or rectification under Article 57 of the Act, including the amount of the relevant bad debt tax) that is decided on any grounds provided for in paragraph (1) by the deadline for filing a final return for the taxable period in which the 10th anniversary falls after an entrepreneur supplies goods or services subject to value-added tax. <Amended on Feb. 3, 2015; Feb. 11, 2020>

(3) Where a supplier deducts an amount of bad debt tax from the output tax amount under the main clause of Article 45 (1) of the Act, the head of the tax office having jurisdiction over the supplier shall give notice of the deduction of the amount of bad debt tax to the head of the tax office having jurisdiction over the recipient of supply; where the recipient of supply fails to file a return on the amount of bad debt tax minus the input tax amount under the main clause of Article 45 (3) of the Act, a decision or rectification shall be made pursuant to the proviso of that paragraph.

(4) Any entrepreneur who wishes to qualify for the deduction of an amount of bad debt tax under Article 45 (1) of the Act or to add an amount of bad debt tax to the input tax amount under Article 45 (4) of the Act shall file (including via the national tax information and communications network), with the head of the competent tax office, a final return on value-added tax under Article 91 (1) accompanied by a return on the deduction (settlement) of amount of bad debt tax in the form prescribed by Ministerial Decree of the Economy and Finance and a document evidencing the fact of bad debt or settlement.

Article 88(Tax Deductions Subsequent to Use of Credit Cards) #

(1) "Where payment is made by any electronic means of settlement prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 46 (1) of the Act means any of the following cases: <Newly Inserted on Feb. 11, 2020; Feb. 29, 2024>

1. Where the payment is made by means of electronic payment that meets all of the following requirements:

(a) It shall be a payment method that stores the value of money on cards or in electronic media, such as computers, and pays it when purchasing goods or services (hereafter referred to as "electronic currency" in this Article);

(b) It shall be a means of settlement managed by a business entity that issues electronic currency manages payment details by classifying them by franchise business operator.

2. Where a mail order distributor supplies goods or services through a value-added telecommunications business operator who vicariously provides or brokers sales, and receives payment electronically from a value-added telecommunications business operator (applicable only where the details of payment are verified through the monthly transaction statement submitted by the value-added telecommunications business operator pursuant to Article 75 (1) of the Act and Article 121 (1) of this Decree).

(2) "Entrepreneur running a business prescribed by Presidential Decree" in Article 46 (1) 1 (a) of the Act means an entrepreneur running any business referred to in Article 73 (1) and (2). <Amended on Feb. 17, 2016; Feb. 11, 2020>

(3) "Amount prescribed by Presidential Decree" in Article 46 (1) 1 (a) of the Act means one billion won per place of business. <Added on Feb. 17, 2016; Feb. 11, 2020>

(4) "Other ... documents prescribed by Presidential Decree" in Article 46 (1) 2 (c) of the Act means any of the following: <Amended on Feb. 17, 2016; Feb. 12, 2019; Feb. 11, 2020>

1. Any of the following, issued under the Specialized Credit Finance Business Act:

(a) Debit card receipts;

(b) Credit card sales slips issued through an agency for settlements;

2. Cash receipts issued under Article 126-3 of the Restriction of Special Taxation Act (including cash receipts issued by a value-added telecommunications business operator on behalf of mail order business operators);

3. Any of the following, issued under the Electronic Financial Transactions Act:

(a) Receipts for electronic debit payment means;

(b) Receipts for electronic prepayment means (limited to those by which real names are identifiable);

(c) Credit card sales slips issued through a financial company providing electronic payment settlement agency services or an electronic financial business entity.

(5) "Entrepreneur prescribed by Presidential Decree" in Article 46 (3) of the Act means an entrepreneur who operates a business other than the following, but not falling under Article 36 (1) 2: <Amended on Feb. 17, 2016; Feb. 17, 2021>

1. Public bath, and hair and beauty salon business;

2. Passenger transport business (excluding chartered bus transport services under Article 3 of the Enforcement Decree of the Passenger Transport Service Act);

3. Business that issues admission tickets;

4. Business that supplies services provided for in the proviso of subparagraph 1 of Article 35;

5. Animal diagnosis and treatment services provided by a veterinarian, which do not fall under the proviso of subparagraph 5 of Article 35;

6. Business that supplies services provided for in Article 36 (2) 1 and 2.

(6) "Statement on the receipts of the credit card sales slip, etc. prescribed by Presidential Decree" in Article 46 (3) 1 of the Act means a statement on the receipts of credit card sales slips, etc. referred to in subparagraph 1 of Article 74. <Amended on Feb. 17, 2016>

(7) "Method prescribed by Presidential Decree" in Article 46 (3) 2 of the Act means a method determined under Article 160-2 (4) of the Income Tax Act or Article 116 (4) of the Corporate Tax Act. <Amended on Feb. 17, 2016>

(8) "Entrepreneur prescribed by Presidential Decree" in Article 46 (4) of the Act means an entrepreneur engaged in retail trade, food service activities, accommodation services, or other business that mainly supplies goods or services to consumers other than entrepreneurs, who is determined by the Commissioner of the National Tax Service in consideration of the size of business, area, etc. <Amended on Feb. 17, 2016>

(9) The Commissioner of the National Tax Service may determine the following matters, to the extent necessary for tax perpetuation: <Amended on Feb. 17, 2016>

1. Issuance and popularization of credit card sales slips and cash receipts;

2. Procedures for designation of persons eligible for credit card merchants and cash receipt merchants;

3. Other matters necessary for performing tax perpetuation-related work.

Article 90(Preliminary Returns and Payments) #

(1) With respect to the preliminary return and payment of value-added tax under Article 48 (1), (2), and (4) of the Act, Article 60 of the Act and Articles 47-2 through 47-4 of the Framework Act on National Taxes concerning penalties shall not apply, while Articles 46 (1) and (2) and 47 (1) of the Act concerning the amount of tax to be deducted shall apply.

(2) To file a preliminary return of value-added tax under Article 48 (1) and (4) of the Act, an entrepreneur shall submit (including via the national tax information and communications network) a preliminary return of value-added tax in the form prescribed by Ministerial Decree of Economy and Finance, specifying the following particulars, to the head of the tax office having jurisdiction over each place of tax payment: Provided, That the particulars already included in a return filed under Article 107 (4) shall be excluded from a preliminary return:

1. The entrepreneur’s personal details;

2. The amount of tax payable and the basis for calculation thereof;

3. The amount of tax deducted and the basis for calculation thereof;

4. The details of a sum table of tax invoices by customer and by seller, submitted under Article 54 (1) of the Act (hereinafter referred to as "a sum table of tax invoices by customer and by seller");

5. Other reference information.

(3) Any preliminary return of value-added tax filed under paragraph (2) shall accompany the documents as follows, as prescribed by Ministerial Decree of Economy and Finance:

┌────────────────────┬───────────────────┐

│Classification │Documents Required │

├────────────────────┼───────────────────┤

│ │ │

│1. Where an input tax amount to be│A statement of non-deductible input tax amount│

│ deducted under Article 39 of the Act│ │

│ │ │

├────────────────────┼───────────────────┤

│ │ │

│2. Where an entrepreneur has issued credit card│A summary sheet of the amount of credit card sales slips, etc. issued │

│sales slips, etc. under Article 46 (1) of the Act│ │

│ │ │

├────────────────────┼───────────────────┤

│ │ │

│3. Where a deduction is made in regard to sales made│A statement of electronic money settlements │

│by means of electronic settlement under Article 46 (1) of the Act│ │

│ │ │

├────────────────────┼───────────────────┤

│ │ │

│4. Where an input tax amount is deducted│A statement on the receipts of credit card sales slips, etc. │

│under Article 46 (3) of the Act│ │

│ │ │

├────────────────────┼───────────────────┤

│ │ │

│5. Where an entrepreneur is engaged in leasing real estate│A statement of supply prices│

│ │in real estate lease contracts under Article 55 (2) of the Act│

│ │and copies of lease contracts (limited to where lease contracts are │

│ │renewed for leased places of business) │

│ │ │

├────────────────────┼───────────────────┤

│ │ │

│6. In the case of a business referred to in Article 55 (1) of the Act│A statement of cash sales │

│ │ │

├────────────────────┼───────────────────┤

│ │ │

│7. Where any building, mechanical apparatus, etc. is acquired│A statement of acquisition of buildings or other depreciable assets│

│ │ │

├────────────────────┼───────────────────┤

│ │ │

│8. Where an entrepreneur is a per-business unit taxable entrepreneur│A statement of the tax base and the amount of tax payable│

│ │(the amount of tax refundable) for value-added tax returned │

│ │by each place of business subject to per-business unit taxation │

│ │ │

├────────────────────┼───────────────────┤

│ │ │

│9. Where the supply of goods or services│A statement of zero-tax rated sales │

│is zero-tax rated under Articles 21 through 24│ │

│of the Act or Articles 105 (1), 107 and 121-13│ │

│of the Restriction of Special Taxation Act│ │

│ │ │

└────────────────────┴───────────────────┘

(4) "Corporate entrepreneur prescribed by Presidential Decree" in Article 48 (3) of the Act means a corporate entrepreneur in whose case the total value of supply in the immediately preceding taxable period is less than 150 million won. <Added on Feb. 11, 2020>

(5) The head of the competent tax office shall issue a notice of payment of the value-added tax assessed under the main clause of Article 48 (3) of the Act within a period classified as follows: <Amended on Feb. 11, 2020; Feb. 17, 2021>

┌─────────────┬─────────────┐

│Classification │Period │

├─────────────┼─────────────┤

│1. Preliminary return for the first half period│From April 1 until April 10│

├─────────────┼─────────────┤

│2. Preliminary return for the second half period│From October 1 until October 10│

└─────────────┴─────────────┘

(6) "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" in Article 48 (4) of the Act means any of the following: <Amended on Feb. 11, 2020>

1. If the value of supply or the amount of tax payable for each preliminary return period is less than 1/3 of either the value of supply in the immediately preceding taxable period or the amount of tax payable under Article 48 (3) of the Act due to the suspension of, or a slump in, business operations, the relevant entrepreneur;

2. If an early refund is sought under Article 107 for the portion of each preliminary return period, the relevant entrepreneur.

(7) The agent of a nonresident or of a foreign corporation shall make a preliminary return and payment, and a final return and payment; and submit a sum table of tax invoices by customer and by seller under Articles 48, 49, and 54 of the Act on behalf of the nonresident or foreign corporation. <Amended on Feb. 11, 2020>

(8) A preliminary return filed under paragraph (2) unaccompanied by a document classified in the following shall not be deemed a return filed under paragraph (2): <Amended on Feb. 11, 2020>

1. For a tax base, which is zero-tax rated under Articles 21 through 24 of the Act: Documents referred to in Article 101;

2. For a tax base, which is zero-tax rated under Article 105 (1) of the Restriction of Special Taxation Act: Documents referred to in Article 106 (12) of the Enforcement Decree of the Restriction of Special Taxation Act and Article 4 of the Regulations on Special Cases concerning Application of Zero Rate of, or Exemption from, Value Added Tax on Materials and Petroleum Products for Agriculture, Livestock Industry, Forestry, and Fisheries.

(9) Any entrepreneur who supplies services referred to in any item of subparagraph 5 of Article 35 shall file a preliminary return or final return under Article 48 or 49 of the Act (if he or she supplies only services exempt from value-added tax, when filing a report on the status of the place of business under Article 78 of the Income Tax Act), which shall be accompanied by a statement of sales in the form prescribed by Ministerial Decree of Economy and Finance. <Amended on Feb. 11, 2020>

Article 91(Final Returns and Payments) #

(1) To file a final return on value-added tax under Article 49 (1) of the Act, an entrepreneur shall submit a final return on value-added tax in the form prescribed by Ministerial Decree of the Economy and Finance, specifying the following particulars, to the head of the tax office having jurisdiction over each place of tax payment:

1. The entrepreneur’s personal details;

2. The amount of tax payable and the basis for calculation thereof;

3. The amount of additional taxes, the amount of tax deducted, and the basis for calculation thereof;

4. The details of a submitted sum table of tax invoices by customer or by seller;

5. Other reference information.

(2) Any final return of value-added tax filed under paragraph (1) shall accompany the documents classified as follows, as prescribed by Ministerial Decree of the Economy and Finance: <Amended on Feb. 11, 2020>

┌─────────────────────┬──────────────────┐

│Classification │Documents Required │

├─────────────────────┼──────────────────┤

│ │ │

│1. Where a business is transferred│A report of business transfer │

│under Article 10 (9) 2 of the Act │ │

│ │ │

├─────────────────────┼──────────────────┤

│ │ │

│2. Where an input tax amount is not to be│A statement of non-deductible input tax amount│

│ deducted under Article 39 of the Act│ │

│ │ │

├─────────────────────┼──────────────────┤

│ │ │

│3. Where an entrepreneur has issued credit card sales slips, etc.│A summary sheet of the amount of credit card sales slips, etc. issued│

│under Article 46 (1) of the Act│ │

│ │ │

├─────────────────────┼──────────────────┤

│ │ │

│4. Where a deduction is made in regard to sales made│A statement of electronic money settlements │

│by means of electronic settlement under Article 46 (1) of the Act│ │

│ │ │

├─────────────────────┼──────────────────┤

│ │ │

│5. Where an input tax amount is deducted│A statement on the receipts of credit card sales slips, etc. │

│under Article 46 (3) of the Act │ │

│ │ │

├─────────────────────┼──────────────────┤

│ │ │

│6. Where an entrepreneur is engaged in leasing real estate │A statement of supply prices in real estate lease contracts│

│ │under Article 55 (2) of the Act│

│ │and copies of lease contracts (required only│

│ │when lease contracts are renewed for leased places of business) │

│ │ │

├─────────────────────┼──────────────────┤

│ │ │

│7. Where an entrepreneur operates a real estate management business,│A building management statement │

│except for residential building management │ │

│ │ │

├─────────────────────┼──────────────────┤

│ │ │

│8. Where an entrepreneur is engaged in a service business,│A statement of the status of the place of business │

│such as a food or accommodation service business │ │

│ │ │

├─────────────────────┼──────────────────┤

│ │ │

│9. In the case of a business referred to│A statement of cash sales │

│ in Article 55 (1) of the Act│ │

│ │ │

├─────────────────────┼──────────────────┤

│ │ │

│10. Where any building, mechanical apparatus, etc. is acquired│A statement of acquisition of buildings or other depreciable assets│

│ │ │

├─────────────────────┼──────────────────┤

│ │ │

│11. Where an entrepreneur is a per-business unit│A statement of the tax base│

│ taxable entrepreneur │and the amount of tax payable (the amount of tax refundable)│

│ │for value-added tax returned by each place of business subject to per-business unit taxation │

│ │ │

├─────────────────────┼──────────────────┤

│ │ │

│12. Where the supply of goods or services is│A statement of zero-tax rated sales│

│zero-tax rated under Articles 21 through 24│ │

│of the Act or Articles 105 (1), 107 and 121-13 of│ │

│the Restriction of Special Taxation Act│ │

│ │ │

└─────────────────────┴──────────────────┘

(3) A final return filed under paragraph (1) unaccompanied by a document classified as follows shall not be deemed a final return filed under paragraph (1):

1. For a tax base, which is zero-tax rated under Articles 21 through 24 of the Act: Documents referred to in Article 101;

Article 91-2(Deferred Payment of Value-Added Tax on Imported Goods) #

(1) "Small or medium business owner or middle-standing business owner who meets the requirements prescribed by Presidential Decree ... such as the ratio of exports to sales" in Article 50-2 (1) of the Act means a small or medium business owner or middle-standing business owner who satisfies all of the following requirements (hereafter referred to as "small or medium business owner or middle-standing business owner" in this Article): <Amended on Feb. 7, 2017; Feb. 11, 2020; Feb. 17, 2021; Feb. 29, 2024>

1. A corporation constituting a small or medium enterprise provided for in Article 2 of the Enforcement Decree of the Restriction of Special Taxation Act or a middle-standing enterprise provided for in Article 6-4 (1) of that Decree (limited to an enterprise mainly engaged in the manufacturing business provided for in Article 6 (3) 2 of the Restriction of Special Taxation Act) in the immediately preceding business year;

2. The total value of supply of zero-tax rated goods under Article 21 of the Act (hereafter referred to as "exports" in this subparagraph) in the immediately preceding business year shall satisfy the following:

(a) A small or medium enterprise provided for in Article 2 of the Enforcement Decree of the Restriction of Special Taxation Act in the immediately preceding business year: The ratio of exports to the total value of goods or services supplied in the immediately preceding business year is at least 30 percent or the amount of such exports is at least five billion won;

(b) A middle-standing enterprise provided for in Article 6-4 (1) of the Enforcement Decree of the Restriction of Special Taxation Act in the immediately preceding business year: The ratio of exports to the total value of goods or services supplied in the immediately preceding business year is at least 30 percent;

3. All of the following requirements shall be satisfied as at the date a request for verification is made under paragraph (3):

(a) He or she has continuously operated his or her business for the last three years;

(b) He or she has not failed to pay any national tax (including customs duties; hereafter the same shall apply in this Article) for the last two years (excluding where he or she fully pays delinquent national taxes within 15 days from the day following the deadline for payment under the relevant notice of payment);

(c) He or she has not been punished for violating the Punishment of Tax Offenses Act or the Customs Act for the last 2 years;

(d) He or she has not been subjected to revocation of deferred payment under Article 50-2 (3) of the Act for the last two years.

(2) "Raw materials and other goods prescribed by Presidential Decree" in Article 50-2 (1) of the Act means goods used by a small or medium business owner or middle-standing business owner for his or her own taxable business; provided, this shall exclude goods related to an input tax amount that is not deducted from an output tax amount under Article 39 (1) of the Act. <Amended on Feb. 7, 2017>

(3) A small or medium business owner or middle-standing business owner may request the head of the competent tax office to verify whether the requirements provided for in the subparagraphs of paragraph (1) are satisfied, within three months from the expiry date of a filing deadline referred to in the following, whichever comes later: <Amended on Feb. 7, 2017; Feb. 11, 2020>

1. The filing deadline of reports under Article 60 or 76-17 of the Corporate Tax Act for the immediately preceding business year;

2. The filing deadline of returns under Article 49 of the Act for the immediately preceding business year.

(4) Upon receipt of a small or medium business owner’s or middle-standing business owner’s request for verification under paragraph (3), the head of a tax office shall verify whether the small or medium business owner or middle-standing business owner satisfies the requirements provided for in the subparagraphs of paragraph (1) and then issue him or her a written verification in the form prescribed by Ministerial Decree of the Economy and Finance within one month from the date of the request. <Amended on Feb. 7, 2017>

(5) Any small or medium business owner or middle-standing business owner who wishes to defer payment of his or her value-added tax under Article 50-2 (1) of the Act shall file an application for deferred payment of value-added tax, in the form prescribed by Ministerial Decree of the Economy and Finance, with the head of the competent customs office, along with a written verification issued under paragraph (4). <Amended on Feb. 7, 2017>

(6) Deferral of payment under Article 50-2 (1) of the Act shall apply only to the value-added tax to be paid when filing a duty return under Article 38 of the Customs Act.

(7) Upon receipt of an application filed under paragraph (5), the head of a customs office shall determine whether to approve deferred payment and give notice of the determination to the relevant small or medium business owner or middle-standing business owner within one month from the date the application is filed. <Amended on Feb. 7, 2017>

(8) Where deferred payment is approved under paragraph (7), the period of deferred payment shall be one year.

(9) When filing a return under Article 48 (1), 49 (1), or 59 (2) of the Act, a small or medium business owner or middle-standing business owner shall adjust and pay the input tax amount deducted under Article 38 (1) 2 of the Act and the deferred amount of tax regarding the relevant goods. <Amended on Feb. 7, 2017>

(10) "Grounds prescribed by Presidential Decree, such as failing to pay national taxes" in Article 50-2 (3) of the Act means where a small or medium business owner or middle-standing business owner falls under any of the following cases after obtaining approval for deferred payment: <Amended on Feb. 7, 2017>

1. Where the small or medium business owner or middle-standing business owner fails to pay national taxes;

2. Where the Commissioner of the National Tax Service, the commissioner of a regional tax office, the head of a tax office, the Commissioner of the Korea Customs Service, or the head of a customs office charges the small or medium business owner or middle-standing business owner with a violation of the Punishment of Tax Offenses Act or the Customs Act;

3. Where the head of the competent customs office becomes aware that deferred payment is approved for the small or medium business owner or middle-standing business owner who does not satisfy all of the requirements provided for in the subparagraphs of paragraph (1).

(11) Where the Commissioner of the National Tax Service, the commissioner of a regional tax office, or the head of a tax office becomes aware that a small or medium business owner or middle-standing business owner falls under any subparagraph of paragraph (10), he or she shall, without delay, give notice thereof to the Commissioner of the Korea Customs Service. <Amended on Feb. 7, 2017>

(12) No revocation of deferred payment under Article 50-2 (3) of the Act shall affect any goods that a small or medium business owner or middle-standing business owner imports with the payment of value-added tax deferred. <Amended on Feb. 7, 2017>

(13) The Customs Act shall apply to any revised return, etc. to correct the amount of tax, the payment of which is deferred under Article 50-2 (1) of the Act.

[This Article Added on Feb. 17, 2016]

Article 92(Lump-Sum Payments at Principal Places of Business) #

(1) The principal place of business referred to in Article 51 of the Act means the main office (including the principal office; hereinafter the same shall apply) of a corporation or the principal office of an individual; provided, a corporation may treat a branch (including a sub-branch) as its principal place of business.

(2) Any person who wishes to qualify as an entrepreneur making lump-sum payment at his or her principal place of business under Article 51 of the Act (hereinafter referred to as "entrepreneur making lump-sum payment at his or her principal place of business") shall file (including via the national tax information and communications network) an application for lump-sum payment at the principal place of business with the head of the tax office having jurisdiction over his or her principal place of business, at least 20 days before the taxable period concerned commences, specifying the following:

1. The entrepreneur’s personal details;

2. Grounds for applying for lump-sum payment;

3. Other reference information.

(3) Notwithstanding paragraph (2), where any of the following entrepreneurs wishes to make a lump-sum payment at his or her principal place of business, he or she shall file (including via the national tax information and communications network) an application for lump-sum payment at the principal place of business under paragraph (2) with the head of the tax office having jurisdiction over his or her principal place of business, by the deadline classified as follows: <Amended on Feb. 12, 2019>

1. For a person who newly starts a business: 20 days from the date of receipt of the business registration certificate of his or her principal place of business;

2. For a person who has one place of business and opens an additional place of business: 20 days from the date of commencement of business at the additional place of business (limited to within the taxable period in which the date of commencement of business at the additional place of business falls).

(4) A person who files an application for lump-sum payment at the principal place of business under paragraph (3) shall make a lump-sum payment from the taxable period in which the date for filing the application falls. <Amended on Feb. 12, 2019>

Article 93(Change in Lump-Sum Payments at Principal Places of Business) #

(1) Upon occurrence of any of the following grounds, an entrepreneur making lump-sum payment at his or her principal place of business shall, pursuant to Article 51 (2) of the Act, file (including via the national tax information and communications network) an application for change in lump-sum payment at the principal place of business with the head of the competent tax office as classified below, specifying his or her personal details, grounds for change, etc. In such cases, upon receipt of an application filed under subparagraphs 1 and 3, the head of the tax office having jurisdiction over an ancillary place of business shall promptly forward the application to the head of the tax office having jurisdiction over the principal place of business:

1. Where the entrepreneur establishes an ancillary place of business: The head of the tax office having jurisdiction over the ancillary place of business;

2. Where the entrepreneur seeks to change an ancillary place of business to his or her principal place of business: The head of the tax office having jurisdiction over the place of business to be changed to the principal place of business;

3. Where any of the subparagraphs of Article 14 (1) is applicable: The head of the tax office having jurisdiction over the place of business requiring correction (if subparagraph 2 of that paragraph is applicable, the head of the tax office having jurisdiction over the principal place of business);

4. Where the entrepreneur seeks to exclude an ancillary place of business from the places of business subject to lump-sum payment: The head of the tax office having jurisdiction over the principal place of business;

5. Where the entrepreneur seeks to add an existing place of business as a place of business subject to lump-sum payment: The head of the tax office having jurisdiction over the principal place of business.

(2) Where an application for change in lump-sum payment at the principal place of business is filed under paragraph (1), lump-sum payment shall be made from the taxable period in which the date for filing the application for change falls.

Article 94(Exclusion from, and Waiver of, Application of Lump-Sum Payments at Principal Places of Business) #

(1) Where an entrepreneur making lump-sum payment at his or her principal place of business, falls under any of the following, the head of the tax office having jurisdiction over the principal place of business may exclude the entrepreneur from application of lump-sum payment at the principal place of business:

1. Where lump-sum payment is deemed inappropriate due to a change in business items;

2. Where the principal place of business is frequently changed;

3. Where lump-sum payment is found to be inappropriate due to any change in circumstances.

(2) Where an entrepreneur making lump-sum payment at his or her principal place of business, waives lump-sum payment at the principal place of business under Article 51 of the Act, he or she shall file (including via the national tax information and communications network) a report on waiver of lump-sum payment at the principal place of business with the head of the tax office having jurisdiction over his or her principal place of business, at least 20 days before commencement of the taxable period for which payment is to be made at each place of business, specifying the following:

1. The entrepreneur’s personal details;

2. Grounds for waiving lump-sum payment;

3. Other reference information.

(3) Where lump-sum payment at the principal place of business is not applied or is waived under paragraphs (1) and (2), the head of the tax office having jurisdiction over the principal place of business shall without delay give notice thereof to both the relevant entrepreneur and the head of the tax office having jurisdiction over a place of business other than the principal place of business.

(4) Where lump-sum payment at the principal place of business is not applied or is waived under paragraphs (1) and (2), payment shall be made at each place of business from the taxable period following that in which the date of exclusion from application or the date of waiver falls.

Article 95(Payments by Proxy) #

(1) The value-added tax collected under Article 52 (1) of the Act shall be paid to the head of the tax office having jurisdiction over the place of business or the address at which the value-added tax is collected, with a return of payment of value-added tax by proxy, specifying the following particulars, or to the Bank of Korea (including agencies thereof; hereinafter the same shall apply) or a postal agency with a statement of payment prepared under the National Tax Collection Act:

1. The trade name, address, and name of the supplier of services, etc.;

2. Personal details of the entrepreneur making payment by proxy;

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

4. Other reference information.

(2) In applying Article 52 (1) of the Act, if the actual attribution of services, etc. supplied by a nonresident or foreign corporation is unclear due to the use thereof for both a taxable business and a tax-free business, etc., the tax base for the services, etc. used for the tax-free business, etc. shall be an amount calculated according to the following formula; provided, when the value of supply for both or either of the taxable business and the tax-free business, etc. is nonexistent in the taxable period, a pro rata calculation for the taxable period shall be made applying mutatis mutandisArticles 81 (4) and 82:

┌────────────────────────────────────┐

│ Tax base = Total value of supply of relevant services, etc. × │

│ (Value of tax-free supplies for the taxable period│

│ in which the payment date of the price falls│

│ ÷ Total value of supplies for the taxable period │

│ in which the payment date of the price falls)│

└────────────────────────────────────┘

(3) In applying Article 52 (1) of the Act, if the price is paid in foreign currency, it shall be an amount classified as follows: <Amended on Feb. 17, 2021>

1. Where it is paid in foreign currency purchased with Korean currency: An amount calculated according to the sale rate of foreign exchange for customers as at the date of payment;

2. Where it is paid in foreign currency held: An amount calculated according to the basic exchange rate or the arbitrated rate of exchange under the Foreign Exchange Transactions Act as at the date of payment.

(4) "As prescribed by Presidential Decree" in Article 52 (1) 2 of the Act means any of the following: <Amended on Feb. 12, 2019>

1. Where Article 156 (1), with the exception of its subparagraphs, of the Income Tax Act or Article 98 (1), with the exception of its subparagraphs, of the Corporate Tax Act is applicable;

2. In cases other than those falling under subparagraph 1, where the offering of relevant services, etc. is not attributable to the domestic place of business.

(5) The value-added tax that the transferee of a business under Article 52 (4) of the Act collects from the recipient of the transfer price shall be paid to the head of the tax office having jurisdiction over the place of business, with a return of payment of value-added tax by proxy, specifying the following particulars, or to the Bank of Korea or a postal agency with a statement of payment prepared under the National Tax Collection Act: <Added on Feb. 21, 2014>

1. The business transferee’s personal details;

2. Personal details of the recipient of the transfer price;

3. The amount of the business transfer price and the amount of the value-added tax thereon;

4. Other reference information.

Article 96-2(Special Cases concerning Supply of Services and Business Registration by Foreign Entrepreneurs Providing Electronic Services) #

(1) "Game, audio or video file, software, or other services prescribed by Presidential Decree" in Article 53-2 (1) 1 of the Act means any of the following that is capable of being stored and executed, or is capable of being operated in real time without being stored, in a mobile communications terminal device, computer, etc.: <Amended on Feb. 12, 2019>

1. A game, audio or video file, electronic document, software or other works, which are manufactured or processed in the form of code, letters, voice, sounds, images, etc. after optical or electronic processing;

2. Services to improve electronic services under subparagraph 1.

(2) "Services ... prescribed by Presidential Decree" in Article 53-2 (1) 4 of the Act means any of the following; provided, this shall exclude where a person liable to pay tax under Article 3 of the Act makes a return and payment of value-added tax because the price for brokerage services is included in that for the supply of goods or services: <Added on Feb. 12, 2019>

1. Brokering to make goods, places, etc. leased, used, or consumed in the Republic of Korea;

2. Brokering to supply goods or services, or make them supplied, in the Republic of Korea.

(3) Any entrepreneur who intends to file for simplified business registration under Article 53-2 (1) or (2) of the Act shall do so with the Commissioner of the National Tax Service by entering the following information via the national tax information and communications network: <Amended on Feb. 12, 2019; Feb. 17, 2021>

1. The names, telephone numbers, mail addresses, e-mail addresses, website addresses, and other contact information of the entrepreneur and the representative; in such cases, if a corporate entrepreneur uses a name, other than the corporate name, in transactions, such name shall be included;

2. The country of registration, address, registration number, and other information on registration of the entrepreneur in a country in which the place of business supplying services is located;

3. The types of electronic services provided, the date the entrepreneur commences a business supplying electronic services in the Republic of Korea, and other information necessary for simplified business registration, as prescribed by Ministerial Decree of the Economy and Finance.

(4) The Commissioner of the National Tax Service shall allocate a simplified business registration number to an entrepreneur who has filed for simplified business registration under paragraph (3) (hereinafter referred to as "entrepreneur who has filed for simplified business registration") and give notice (including via an information and communications network) thereof to the entrepreneur (including his or her tax manager, if any). <Amended on Feb. 12, 2019; Feb. 15, 2022>

(5) Any entrepreneur who intends to file a value-added tax return under Article 53-2 (4) of the Act shall file a preliminary return and a final return of value-added tax by entering the following information via the national tax information and communications network: <Amended on Feb. 12, 2019>

1. The entrepreneur’s name and simplified business registration number;

2. The total value of supply of electronic services in the Republic of Korea for the filing period of return, the input tax amount to be deducted, and the amount of tax payable;

3. Other necessary information prescribed by Ministerial Decree of the Economy and Finance.

(6) The payment under Article 53-2 (4) of the Act shall be made by depositing into a foreign exchange bank account, as determined by the Commissioner of the National Tax Service. <Amended on Feb. 12, 2019>

(7) Notwithstanding Article 59, if an entrepreneur who has filed for simplified business registration receives any foreign currency or other foreign exchange in exchange for the supply of electronic services in the Republic of Korea, he or she may use, as a tax base, an amount converted applying the basic exchange rate as at the last day of the taxable period (for a preliminary return and payment, referring to the last day of the preliminary return period). In such cases, the Commissioner of the National Tax Service shall give notice to the entrepreneur (including his or her tax manager, if any) of the basic exchange rate via an information and communications network or announce it via the national tax information and communications network. <Amended on Feb. 12, 2019>

(8) The transaction details for the supply of electronic services under Article 53-2 (6) of the Act shall include the following matters: <Inserted on Feb. 15, 2022>

1. Types of electronic services supplied;

2. The value of supply and value-added tax;

3. Timing under the subparagraphs of paragraph (11);

4. Registration number (limited to entrepreneurs), name, and trade name of the recipient;

5. Other matters prescribed by Ministerial Decree of the Economy and Finance.

(9) The entrepreneur who has filed for simplified business registration may keep the transaction details for the supply of electronic services under Article 53-2 (6) of the Act in an electronic form, such as an information processing system. <Added on Feb. 15, 2022>

(10) "Cases prescribed by Presidential Decree" in Article 53-2 (9) of the Act means the following: <Added on Feb. 15, 2022>

1. Where the whereabouts of the entrepreneur who has filed for simplified business registration are unknown due to insolvency, a large amount of arrears, etc.;

2. Where the entrepreneur who has filed for simplified business registration is unable to conduct business in the Republic of Korea or the country of registration under paragraph (3) 2 due to reasons such as the revocation of authorization, permission, etc. necessary for conducting business;

3. Where the entrepreneur who has filed for simplified business registration closes the Internet website (including places opened in virtual space through applications used in mobile communications terminal devices or through other similar application programs) used for supplying electronic services;

4. Where the entrepreneur who has filed for simplified business registration fails to file a return of value-added tax for at least two consecutive taxable periods without good cause;

5. Other cases similar to those referred to in subparagraphs 1 through 4, where the Commissioner of the National Tax Service deems that the entrepreneur who has filed for simplified business registration is practically out of business.

(11) The time to supply electronic services that are supplied domestically under Article 53-2 (10) of the Act shall be the earlier of the following: <Amended on Feb. 12, 2019; Feb. 15, 2022>

1. When the purchaser receives electronic services from the supplier;

2. When the purchaser completes the payment for the purchase of electronic services.

(12) The place of tax payment of the entrepreneur who has filed for simplified business registration pursuant to Article 53-2 (10) of the Act shall be designated by the Commissioner of the National Tax Service taking into consideration the efficiency and convenience of returns and payments by the entrepreneur. <Amended on Feb. 12, 2019; Feb. 15, 2022>

[This Article Added on Feb. 3, 2015]

Article 101(Submission of Accompanying Documents for Zero Tax Rate) #

(1) Where the supply of goods or services is zero-tax rated pursuant to Articles 21 through 24 of the Act, a preliminary return of value-added tax shall be submitted along with the documents as follows; provided, when such documents cannot be submitted due to any unavoidable causes, the documents determined by the Commissioner of the National Tax Service may be submitted in lieu thereof: <Amended on Feb. 3, 2015; Feb. 17, 2016; Feb. 15, 2022; Feb. 28, 2023>

┌───────────────────┬─────────────────────┐

│Classification │Documents Required │

├───────────────────┼─────────────────────┤

│ │ │

│1. Where Article 21 (2) 1 of the Act is applicable│An export performance statement prescribed│

│ │by Ordinance of the Ministry of Economy and Finance│

│ │(including a tape or diskette processed through the electronic data processing system)│

│ │: Provided, That when exports are shipped by parcel post,│

│ │a parcel post receipt issued by the postmaster shall be submitted in lieu thereof.│

│ │ │

├───────────────────┼─────────────────────┤

│ │ │

│2. Where Article 21 (2) 2 of the Act is applicable│A copy of an export contract or a certificate of receipt of foreign currency│

│ │issued by a foreign exchange bank. In such cases, │

│ │if an entrepreneur subject to Article 31 (1) 3 purchases goods, etc. │

│ │from another entrepreneur subject to subparagraph 4 of the same paragraph,│

│ │a purchase contract shall be additionally submitted.│

│ │ │

├──────┬────────────┼─────────────────────┤

│ │ │ │

│3. Where Articles │(a) Where a local letter of credit│A statement of the electronic issuance│

│31 (2) 1 │or a written verification of│ of a local letter of credit│

│and 33 (2) 4 │purchase is opened │or a written verification of purchase │

│are applicable │purchase is opened or issued│prescribed by Ordinance of │

│ │or issued through the electronic│ the Ministry of Economy and Finance│

│ │trade infrastructure under Article│ │

│ │12 (1) 3 and 5 of the │ │

│ │Electronic Trade Facilitation Act│ │

│ │ │ │

│ ├────────────┼─────────────────────┤

│ │ │ │

│ │(b) In cases of other than item (a) │A copy of a local letter of credit│

│ │ │ │

├──────┴────────────┼─────────────────────┤

│ │ │

│4. Where Article 31 (2) 2 is applicable│A document attesting to the fact of supply,│

│ │issued by the Korea International Cooperation Agency │

│ │ │

├───────────────────┼─────────────────────┤

│ │ │

│5. Where Article 31 (2) 3 is applicable│A document attesting to the fact of supply,│

│ │issued by the Korea Foundation for International Healthcare│

│ │ │

├───────────────────┼─────────────────────┤

│ │ │

│6. Where Article 31 (2) 4 is applicable│A document attesting to the fact of supply,│

│ │issued by the Korean Red Cross │

│ │ │

├───────────────────┼─────────────────────┤

│ │ │

│7. Where Article 31 (2) 5 is applicable│(a) A document attesting to the fact│

│ │of Article 31 (2) 5 (d); │

│ │(b) A certificate of receipt of foreign currency │

│ │issued by a foreign exchange bank. │

│ │ │

├───────────────────┼─────────────────────┤

│ │ │

│8. Where Article 22 of the Act is applicable│A certificate of receipt of foreign currency issued│

│ │by a foreign exchange bank or a contract for services supplied overseas│

│ │서 │

│ │ │

├───────────────────┼─────────────────────┤

│ │ │

│9. Where Article 23 of the Act is applicable│A certificate of receipt of foreign│

│ │currency issued by a foreign exchange bank: Provided, That in the case of overseas navigation services│

│ │by aircraft, a statement of fixed supply price shall be submitted in lieu thereof.│

│ │ │

├───────────────────┼─────────────────────┤

│ │ │

│10.Where Article 33 (2) 1 and 2 is applicable│(a) A certificate of receipt of foreign currency│

│ │issued by a foreign exchange bank;│

│ │(b) A document evidencing that any operative Act, subordinate statute, etc. │

│ │of a foreign country grant the identical tax exemption│

│ │to Korean residents or corporations in the foreign country │

│ │(only applicable to the professional activities│

│ │referred to in Article 33 (2) 1 (b) and the services │

│ │referred to in item (h) of that subparagraph).│

│ │다. 정보통신망을 통해 제33조제2항제1호 │

│ │바목에 해당하는 용역을 법 제52조제1 │

│ │항 각 호의 어느 하나에 해당하는 자에 │

│ │게 제공하였음을 증명하는 서류(제33조 │

│ │제2항제1호바목의 경우만 해당한다) │

│ │ │

├───────────────────┼─────────────────────┤

│ │ │

│11. Where Article 33 (2) 3 is applicable│(a) A copy of a processing contract│

│ │(excluding where export goods processing services are│

│ │provided at the same place as the exporter’s place of business);│

│ │(b) A document evidencing the delivery of goods│

│ │(limited to the delivery of goods under direct contract │

│ │with the exporter) or a certificate of receipt of│

│ │export amount issued by the exporter. │

│ │ │

├───────────────────┼─────────────────────┤

│ │ │

│12. Where Article 33 (2) 5 is applicable│A certificate of completion of shipment (loading) issued │

│ │by the head of the competent customs house:Provided, That in the case of│

│ │a telecommunications business under the Telecommunications Business Act, │

│ │a service supply record shall be submitted in lieu thereof; and in the case of │

│ │tax-exempt oil under Article 20 (2) 3 of the Enforcement Decree│

│ │the Individual Consumption Tax Act and Article 17 (2) 2 of the Enforcement Decree│

│ │of the Traffic, Energy and Environment Tax Act, a statement of supply of oil shall be submitted in lieu thereof.│

│ │ │

├───────────────────┼─────────────────────┤

│ │ │

│13. Where Article 24 (1) 1 of the Act│A certificate of receipt of export (military supply) amount│

│and Article 33 (2) 6 are applicable │issued by a foreign exchange bank, a certificate of completion of│

│ │military supply issued by the head of the competent tax office, or document attesting│

│ │to the delivery of goods or the supply of services issued by a diplomatic office, etc.│

│ │under Article 24 (1) 1 of the Act: Provided, That in the case of a business│

│ │of continuously supplying electric power, gas or other goods, via an inseparable supply unit,│

│ │a goods supply record shall be submitted in lieu thereof; and│

│ │in the case of a telecommunications business under the Telecommunications Business Act,│

│ │a service supply record shall be submitted in lieu thereof.│

│ │ │

├───────────────────┼─────────────────────┤

│ │ │

│14. Where Article 33 (2) 7 is applicable│A certificate of receipt of foreign currency│

│ │issued by a foreign exchange bank: Provided, That │

│ │when foreign currency cash is received, a statement of travel agent│

│ │service fees and a certificate of purchased foreign currency shall be submitted in │

│ │ │

├───────────────────┼─────────────────────┤

│ │ │

│15. Deleted < Feb 28, 2023 > │ │

│ │ │

├───────────────────┼─────────────────────┤

│ │ │

│16. Where Article 33 (2) 9 is applicable│A certificate of receipt of foreign currency or a │

│ │certificate of purchased foreign currency issued by a foreign exchange bank │

│ │ │

├───────────────────┼─────────────────────┤

│ │ │

│17. Where Article 24 (1) 2 of the Act and Article 108 of │A record of tax-exempt sales to diplomats │

│the Enforcement Decree of the Restriction of Special Taxation Act are applicable│ │

│ │ │

└───────────────────┴─────────────────────┘

(2) Where the supply of goods or services is zero-tax rated pursuant to Articles 21 through 24 of the Act and Article 33 of this Decree, a final return of value-added tax shall be submitted along with the documents referred to in paragraph (1); provided, no documents already submitted when a preliminary return of value-added tax and a return under Article 107 (4) are filed, are required.

(3) Where the documents referred to in each of the subparagraphs of paragraph (1) are already submitted to the head of the competent tax office to qualify for tax exemption for exportation pursuant to the Individual Consumption Tax Act, a list of accompanying documents for zero tax rate prescribed by Ministerial Decree of the Economy and Finance may be submitted in lieu of the documents referred to in each of the subparagraphs of Appendix in paragraph (1).

(4) Where an entrepreneur has submitted a parcel post receipt referred to in the proviso of subparagraph 1 (the ‘documents required’ column) of Appendix in paragraph (1) and a tape or diskette on which the photocopied documents referred to in subparagraphs 2 through 17 of Appendix in that paragraph are stored, along with the list of accompanying documents for zero tax rate under paragraph (3) (including a tape or diskette processed through the electronic data processing system), as determined by the Commissioner of the National Tax Service, the documents referred to in the subparagraphs of Appendix in paragraph (1), shall be deemed to have been submitted.

Article 104(Methods of Estimation in Making Decisions and Rectifications) #

(1) Any estimation under the proviso of Article 57 (2) of the Act shall be made according to any of the following: <Amended on Jan. 5, 2021>

1. The method of calculation by reference to another entrepreneur in the same category of business and the same status of operations who has not been subject to rectification under Article 57 (1) of the Act on the assumption that entries in the book of account are right and a return is filed truthfully;

2. Where a production rate of input raw materials by category of business has been surveyed by the Commissioner of the National Tax Service, the method of calculation applying the market price of the quantity supplied during the taxable period to an output calculated applying the production rate;

3. Where there is a utility factor of operating determined by the Commissioner of the National Tax Service regarding the relationship between sales and the quantity or value of human and physical facilities related to business, such as employees, guest rooms, place of business, vehicles, waterworks and electric power, in consideration of the type of business, area, etc., the method of calculation applying the utility factor of operating;

4. The method of calculation based on the following criteria determined by the Commissioner of the National Tax Service by type of business and by area:

(a) Input unit that indicates the relationship between all or part of the input of raw materials and sub-materials used for production and the output;

(b) Expense-related rate that indicates the relationship between all or some of the labor costs, rents, material costs, water, lighting and heating costs, and other operating expenses and the sales;

(c) Merchandise turnover ratio that indicates the relationship between the mean amount of inventory and the sales or the cost of goods sold over a period;

(d) Total profit margin of purchase and sale that indicates the ratio of gross profit to sales over a period;

(e) Value-added rate that indicates the ratio of value-added amount to sales over a period;

5. Where the ratio referred to in subparagraphs 2 through 4 can be calculated for an entrepreneur subject to rectification or decision by estimation, the method of calculation applying such ratio;

6. For food and accommodation business and service business aimed mainly at end consumers, the method of calculation based on the attendance inspection criteria determined by the Commissioner of the National Tax Service.

(2) The input tax amount to be deducted when calculating the amount of tax payable under paragraph (1) shall be limited to the portion for which the tax invoices issued under Article 32 of the Act are submitted to the head of the competent tax office and the entries therein are clearly understandable; provided, when it is impossible to submit some of such tax invoices due to any disaster or force majeure, the input tax amount to be deducted from the amount of tax payable, shall be an amount verified through the tax invoices submitted by the other parties to transactions involved.

Article 107(Early Refunds) #

(1) The head of the competent tax office shall refund the amount of tax refundable under Article 59 (2) of the Act for each preliminary return period to the entrepreneur who has filed the preliminary return, within 15 days after the expiration of the deadline for filing such preliminary return.

(2) "Business facilities prescribed by Presidential Decree" in Article 59 (2) 2 of the Act, means the depreciable assets referred to in Article 62 of the Enforcement Decree of the Income Tax Act or Article 24 of the Enforcement Decree of the Corporate Tax Act.

(3) A return filed under Article 90 (2) or 91 (1) by an entrepreneur who seeks to obtain an early refund pursuant to paragraph (1) shall be deemed a return of early refund filed under Article 59 (2) of the Act; provided, the return shall be accompanied by a statement of acquisition of buildings or other depreciable assets, specifying matters provided for in the following, in cases falling under Article 59 (2) 2 of the Act, or by a financial restructuring plan prescribed by Ministerial Decree of the Economy and Finance in cases falling under subparagraph 3 of that paragraph: <Amended on Feb. 7, 2017>

1. The type and use of business facilities, the scheduled date of installation, and the date of completion thereof;

2. Goods or services supplied, and the input tax amount;

3. Other reference information.

(4) Where an entrepreneur qualifying for Article 59 (2) of the Act files, within 25 days after the expiration of an early refund period fixed on a monthly or bimonthly basis (hereinafter referred to as "early refund period") in the preliminary return period or in the last three months of the taxable period (hereafter referred to as "deadline for filing an early refund return" in this paragraph), a return on the tax base and the amount of tax refundable for the early refund period with the head of the competent tax office, the head of the competent tax office shall refund the amount of tax refundable for each early refund period to the entrepreneur, within 15 days after the expiration of the deadline for filing early refund return, notwithstanding paragraph (1).

(5) In filing an early refund under paragraph (4), a return of early refund on zero tax rate, etc., specifying the following particulars, shall be filed, along with the documents classified in Appendix in Article 101 (1) and the sum tables of tax invoices by customer and by seller regarding the tax base; provided, in case falling under Article 59 (2) 2 or 3 of the Act, the return shall be accompanied by a statement of acquisition of buildings or other depreciable assets or a financial restructuring plan referred to in the proviso of paragraph (3): <Amended on Feb. 7, 2017>

1. The entrepreneur’s personal details;

2. The tax base and the amount of tax refundable and the basis for calculation thereof;

3. The details of a sum table of tax invoices by customer and by seller submitted;

4. Other reference information.

(6) Where the sum tables of tax invoices by customer and by seller are submitted under paragraph (5), they shall be deemed submitted under Article 54 (1) of the Act.

(7) "Where the entrepreneur is in the process of implementing a financial restructuring plan prescribed by Presidential Decree" in Article 59 (2) 3 of the Act means where the entrepreneur is in the implementation process of a plan referred to in Article 34 (6) 1, 2 or 4 of the Enforcement Decree of the Restriction of Special Taxation Act that is approved by the approval authority of a financial restructuring plan provided for in paragraph (7) of that Article as at the end of the early refund period, preliminary return period, or taxable period. <Added on Feb. 7, 2017>

Article 108(Additional Taxes) #

(1) "Another person specified by Presidential Decree" in Article 60 (1) 2 of the Act means a person other than those who operate their businesses on their own account and responsibility; provided, this shall exclude any of the following persons and those prescribed by Ministerial Decree of the Economy and Finance: <Amended on Feb. 7, 2017>

1. An entrepreneur’s spouse;

2. An ancestor if the ancestor’s business is inherited due to inheritance pursuant to subparagraph 1 of Article 2 of the Inheritance Tax and Gift Tax Act (limited to where his or her heir runs the business based on business registration made in the ancestor’s name during the period between the commencement date of inheritance provided for in subparagraph 2 of that Article and the deadline for reporting the tax basis of inherited property provided for in Article 67 of that Act).

(2) Deleted. <Feb. 12, 2019>

(3) Where some of the requisite entry items on a tax invoice issued under Article 32 of the Act are wrongly stated in error or by negligence, but transactions are verified from the other requisite or optional entry items on the tax invoice, the tax invoice shall not be treated as an erroneous tax invoice under Article 60 (2) 5 of the Act.

(4) "Grounds prescribed by Presidential Decree" in Article 60 (5) 1 of the Act means cases falling under subparagraph 5 of Article 74, where, in making a rectification under Article 57 of the Act, an entrepreneur submits credit card sales slips, etc. issued under Article 46 (3) of the Act to the relevant rectifying agency after its verification under Article 102. <Amended on Feb. 11, 2020; Feb. 15, 2022>

(5) "As prescribed by Presidential Decree" in Article 60 (7) 1 of the Act means cases falling under subparagraph 3, 7, or 8 of Article 75. <Amended on Feb. 17, 2016; Feb. 12, 2019>

(6) "Cases prescribed by Presidential Decree" in the proviso of Article 60 (7) 2 of the Act means where any of subparagraphs 1 through 4 of Article 74 is applicable regarding the deduction of input tax amount in the case of a failure to submit a sum table of tax invoices by seller.

Article 109(Scope of Application of Simplified Taxation) #

(1) "Amount prescribed by Presidential Decree" in the main clause of Article 61 (1) and Article 62 (1) of the Act means 104 million won. <Amended on Feb. 17, 2021; Feb. 29, 2024>

(2) "Entrepreneur who is prescribed by Presidential Decree" in Article 61 (1) 2 of the Act means a person who operates any of the following businesses: <Amended on Feb. 21, 2014; Feb. 3, 2015; Feb. 12, 2019; Feb. 17, 2021; Feb. 28, 2023>

1. Mining;

2. Manufacturing; provided, this shall exclude any business that mainly supplies goods directly to end consumers, as prescribed by Ministerial Decree of the Economy and Finance;

3. Wholesale trade (including where it is operated with retail trade, but excluding the business of collecting and selling renewable materials) and commodities brokerage service;

4. Real estate transaction business;

5. Business in a taxable entertainment venue referred to in Article 1 (4) of the Individual Consumption Tax Act (hereinafter referred to as "taxable entertainment venue"), as prescribed by Ministerial Decree of the Economy and Finance;

6. Real estate leasing business prescribed by Ministerial Decree of the Economy and Finance;

7. Service business operated by an attorney-at-law, an appeal counsel, a patent attorney, a certified judicial scrivener, a certified public accountant, a certified tax accountant, a certified management consultant, a certified technology consultant, a certified public appraiser, a certified loss adjuster, a customs clearance agent, a professional engineer, a certified architect, a pilot, a professional surveyor, a certified labor consultant, a medical doctor, an oriental medical doctor, a pharmacist, an oriental pharmacist, a veterinarian, or similar service business prescribed by Ministerial Decree of the Economy and Finance;

8. Business transferred from a general taxable person under Article 23; provided, this shall exclude a business not falling under any of subparagraphs 1 through 7 and 9 through 14, in which the sum total of proceeds from supply under subparagraph 4 of Article 2 of the Act (hereinafter referred to as "proceeds from supply") falls short of an amount prescribed in paragraph (1) after the business transfer;

9. Business that meets the standards determined by the Commissioner of the National Tax Service in consideration of the place of business, the type and scale of business, etc.;

10. Business operated by a sole proprietor who does not fall under Article 208 (5) of the Enforcement Decree of the Income Tax Act (hereafter referred to as "person subject to double-entry bookkeeping as of the year before the preceding year" in this subparagraph); in such cases, for the purpose of Article 208 (5) of the Enforcement Decree of the Income Tax Act, "relevant taxable period" in subparagraph 1 of that paragraph shall be construed as "relevant taxable period or immediately preceding taxable period", and in subparagraph 2 of that paragraph with the exception of its items, "preceding taxable period" as "taxable period before the preceding taxable period", and "total revenue (including the revenue increased by determination or correction)" as "total revenue (including the revenue increased by determination or correction, but excluding the revenue of the place of business permanently closed as at the date the taxable type is changed)"; and where a person is subject to double-entry bookkeeping as at the year before the preceding year as his or her total revenue is increased by a decision, rectification or revised return, he or she shall not be deemed a person subject to double-entry bookkeeping as of the year before the preceding year until the taxable period in which the date when the decision, rectification or revised return is made falls;

11. Deleted. <Feb. 17, 2021>

12. Electric, gas, steam, and water supply;

13. Construction business; provided, any business that mainly supplies goods or services directly to end users shall be excluded, as prescribed by Ministerial Decree of the Economy and Finance;

14. Professional, scientific, and technical services, and management or business support of business facilities, and lease services; Provided, That any business that mainly supplies services directly to end users shall be excluded, as prescribed by Ministerial Decree of the Economy and Finance.

(3) In calculating an amount referred to in paragraph (1) and the proviso of paragraph (2) 8, where an entrepreneur suspends his or her business or newly commences or acquires a business by transfer during the period from January 1 to December 31 of the immediately preceding year, the amount shall be based on an amount computed by converting the sum total of proceeds from supply of goods or services for the period minus either the period of business suspension or the period before the commencement or acquisition of the business into a 12-month period; and where a sole proprietor has suspended his or her business and has no record of proceeds from supply during the immediately preceding calendar year, he or she shall be deemed to have newly commenced his or her business; in such cases, any fraction of less than one month shall be deemed one month. <Amended on Feb. 21, 2014; Sep. 28, 2018; Feb. 29, 2024>

(4) Any entrepreneur who wishes to qualify for Chapter VII of the Act under Article 61 (3) of the Act shall file (including via the national tax information and communications network) a report on application of simplified taxation, along with an application for business registration under Article 11 (1), with the head of the competent tax office, specifying the following particulars; provided, when he or she files an application for business registration stating an estimated annual amount of proceeds from supply and other reference information, the report on application of simplified taxation shall be deemed submitted:

1. The entrepreneur’s personal details;

2. The date the entrepreneur starts business facility works or the date the entrepreneur commences a business;

3. The estimated annual amount of proceeds from supply;

4. Other reference information.

Article 110(Time of Application of Simplified Taxation and General Taxation) #

(1) In cases falling under Article 62 (1) and (2) of the Act, the head of the tax office having jurisdiction over the relevant entrepreneur shall give notice as to whether provisions concerning simplified taxable persons apply or as to whether he or she is excluded therefrom under Article 61 of the Act, at least 20 days before the pertinent taxable period begins; correct the business registration certificate; and issue it by the date on which the taxable period begins.

(2) The provisions concerning simplified taxable persons under Article 61 of the Act shall apply, during the period prescribed under Article 62 (1) of the Act, to an entrepreneur subject to application of the provisions concerning simplified taxable persons under Article 61 of the Act during the period under Article 62 (1) and (2) of the Act, regardless of the notice given under paragraph (1); provided, provisions concerning general taxable persons shall apply to an entrepreneur who operates a real estate leasing business, until the taxable period in which the date of receipt of the notice given under paragraph (1) falls, notwithstanding Article 62 (1) of the Act.

(3) The provisions concerning simplified taxable persons under Article 61 of the Act shall apply to an entrepreneur excluded from application of Article 61 of the Act during the period prescribed under Article 62 (1) and (2) of the Act, until the taxable period in which the date of receipt of the notice given under paragraph (1) falls, notwithstanding Article 62 (1) of the Act.

(4) Where a simplified taxable person newly operates any of the businesses referred to in Article 109 (2) concurrently with his or her original business, the provisions concerning simplified taxable persons shall not apply to the simplified taxable person, starting from the taxable period following that in which the date he or she commences the new business falls.

(5) Where an entrepreneur converted to a general taxable person pursuant to paragraph (4), in whose case the total sum of proceeds from supply in the relevant year is less than an amount specified in Article 109 (1), discontinues any business under paragraph (2) of that Article, the provisions concerning simplified taxable persons shall apply to the entrepreneur, beginning on July 1 of the year following that in which the date the relevant business is discontinued falls. <Added on Feb. 11, 2020>

(6) Where the sum total of proceeds from supply in another place of business excluded from application of simplified taxation under Article 61 (1) 1 of the Act (hereafter referred to as "reference place of business" in this Article) from January 1 to December 31 falls short of an amount specified in Article 109 (1), the provisions concerning simplified taxation shall apply during the period specified in Article 62 (1) of the Act, to both the reference place of business and the place of business converted into one subject to general taxation under Article 61 (1) 1 of the Act; provided, the same shall not apply where the sum total of proceeds from supply in the place of business converted into one subject to general taxation under Article 61 (1) 1 of the Act from January 1 to December 31 is not less than an amount specified in Article 109 (1) or where Article 61 (1) 2 of the Act is applicable. <Amended on Feb. 11, 2020; Feb. 29, 2024>

(7) Where a simplified taxable person reports the waiver of simplified taxation under Article 70 of the Act, the provisions concerning simplified taxable persons shall not apply to the places of business other than the relevant place of business, from the taxable period following that in which the month the date he or she intends to be subject to the provisions concerning general taxable persons falls. <Amended on Feb. 11, 2020>

(8) Where a simplified taxable person newly opens a place of business subject to application of the provisions concerning general taxable persons, he or she shall become ineligible for application of the provisions concerning simplified taxable persons, from the taxable period following that in which the date he or she starts the relevant business falls. <Amended on Feb. 11, 2020>

(9) Where a reference place of business is permanently closed, the provisions concerning simplified taxable persons shall apply to a place of business converted into one subject to general taxation under Article 61 (1) 1 of the Act, beginning on July 1 of the year following that in which the date the reference place of business is permanently closed falls; provided, the same shall not apply where the sum total of proceeds from supply in the place of business converted into one subject to general taxation under Article 61 (1) 1 of the Act from January 1 to December 31 is not less than an amount specified in Article 109 (1) or where Article 61 (1) 2 of the Act is applicable. <Amended on Feb. 11, 2020; Feb. 29, 2024>

Article 111(Calculation of Tax Bases and Tax Amounts for Simplified Taxable Persons) #

(1) Articles 59 through 66 shall apply mutatis mutandis to the calculation of tax base for a simplified taxable person. In such cases, "value of supply" shall be construed as "proceeds from supply".

(2) "Value-added rate for the relevant business type prescribed by Presidential Decree" in Article 63 (2) of the Act means a value-added rate as follows: <Amended on Feb. 17, 2021>

┌──────────────────────────────┬─────┐

│Classification │Value-Added Rate│

├──────────────────────────────┼─────┤

│ │ │

│1. 1. Electric power, gas, steam, and waterworks business│15 percent │

│ │ │

├──────────────────────────────┼─────┤

│ │ │

│2. Manufacturing business, agriculture, forestry and fisheries, and parcel transportation business│20 percent │

│ │ │

├──────────────────────────────┼─────┤

│ │ │

│3. Accommodation services │25percent │

│ │ │

├──────────────────────────────┼─────┤

│ │ │

│4. Construction, transportation and warehousing business │30 percent │

│(excepting parcel transportation), and information and communication services │ │

│ │ │

├──────────────────────────────┼─────┤

│ │ │

│5. Services related to finance and insurance, professional, scientific, and technical services│40 percent │

│(excluding business of portrait photography and event video recording), business facilities management│ │

│and business support and leasing services, real estate related services, real estate leasing services │ │

│ │ │

├──────────────────────────────┼─────┤

│ │ │

│6. Other service business│30 percent │

│ │ │

└──────────────────────────────┴─────┘

(3) Where a simplified taxable person submits any of the following documents pursuant to Article 63 (3) of the Act or any of such documents retained by him or her, to the head of the competent tax office subject to verification by a deciding or rectifying agency under Article 102 when making a decision or rectification under Article 68 of the Act, an amount calculated under the subparagraphs of Article 63 (3) of the Act shall be deducted from the amount of tax payable; provided, the same shall not apply where it is deducted as an input tax amount under Article 63 (6) of the Act:

1. A sum table of tax invoices by seller under Article 54 (1) and (3) of the Act;

2. A statement on the receipts of credit card sales slips, etc.

(4) "Statement on the receipts of credit card sales slips, etc. prescribed by Presidential Decree" in the main clause of Article 63 (3) of the Act means a statement on the receipts of credit card sales slips, etc.

(5) Where the actual attribution of goods supplied by a simplified taxable person is unclear by business category due to the common use thereof in two or more business categories, a value-added rate applicable shall be a sum of the rates calculated according to the following formula. In such cases, if no proceeds from supply exist for the relevant taxable period due to business suspension, etc., it shall be calculated based on the proceeds from supply for the taxable period nearest to the date of supply of goods:

┌─────────────────────────────────────┐

│ Value-added rate of goods by relevant business category ×│

│ (Proceeds from supply of goods by a relevant business category for the taxable period│

│ in which the date of supply of goods falls ÷│

│ Total proceeds from supply of goods by a relevant business category for│

│ the taxable period in which the date of supply of goods falls)│

└─────────────────────────────────────┘

(6) Deleted. <Feb. 17, 2021>

(7) When calculating an amount to be deducted under Article 63 (3) 3 of the Act, if a simplified taxable person concurrently operates both a taxable business and a tax-free business, etc., it shall be calculated based upon actual attribution of the taxable business and the tax-free business, etc., while any portion that has unclear actual attribution of the taxable business and the tax-free business, etc. shall be calculated according to the following formula; in such cases, "tax invoices, etc." in the following formula means tax invoices, etc. referred to in Article 60 (3) 1 of the Act: <Amended on Feb. 17, 2021>

┌─────────────────────────────────────────┐

│ Amount of tax to be deducted from the amount of tax payable =│

│ Input tax amount stated in tax invoices, etc. issued during the taxable period│

│ × (Proceeds from taxable supplies for the taxable period │

│ ÷ Total proceeds from supplies for the taxable period)│

│ × Value-added rate of the relevant business category│

└─────────────────────────────────────────┘

(8) "Taxable period prescribed by Presidential Decree" in the former part of Article 63 (7) of the Act means the taxable period following that during which a decision or rectification is made; provided, when the taxable period during which the decision or rectification is made is an initial taxable period for a person who has newly commenced a business, it means the taxable period following the initial taxable period. <Amended on Feb. 11, 2020; Feb. 29, 2024>

Article 112(Special Cases concerning Goods in Stock in Cases of Conversion to Simplified Taxable Persons) #

(1) Where a general taxable person is converted to a simplified taxable person under Article 64 of the Act, as regards any of the following goods in stock, construction in progress, and depreciable assets (limited to those qualifying for deductions under Articles 38 through 43 of the Act, but including those which are acquired by a business transferee through the business transfer under the main clause of Article 10 (9) 2 of the Act and for which the business transferor is entitled to deduct the input tax amount; hereafter referred to as "goods in stock, etc." in this Article) as at the date of such conversion, he or she shall prepare a return on the goods in stock, etc. as at the time of conversion to simplified taxation and shall file (including via the national tax information and communications network) it, along with a final return for the taxable period immediately preceding that in which the date of conversion falls, with the head of the tax office having jurisdiction over the pertinent place of tax payment: <Amended on Feb. 21, 2014; Feb. 13, 2018>

1. Commodities;

2. Products (including semi-finished goods and work-in-process);

3. Materials (including sub-materials);

4. Construction in progress;

(2) The amount of goods in stock, etc. referred to in paragraph (1) shall be the value of acquisition of the goods in stock, etc. verified from the book of account or tax invoice; provided, in the absence of the book of account or tax invoice or where the value of acquisition is omitted from the book of account, the value of the goods in stock, etc. shall be determined based on the market price thereof.

(3) Where a general taxable person is converted to a simplified taxable person, he or she shall pay an amount computed by each of the following formulae (hereinafter referred to as "inventory tax payable") in addition to the amount of tax payable. In such cases, the latter part of Article 66 (2) and paragraph (5) of that Article shall apply mutatis mutandis to the number of taxable periods elapsed under subparagraphs 3 and 4: <Amended on Feb. 17, 2021>

1. Goods in stock referred to in paragraph (1) 1 through 3:

┌─────────────────────────────────────┐

│ Inventory tax payable = Amount of inventory │

│ │

│ × (10 ÷ 100) × │

│ (1 ? 0.5%×(10 ÷ 110))│

└─────────────────────────────────────┘

2. Construction in progress referred to in paragraph (1) 4:

┌───────────────────────────────────────┐

│ Inventory tax payable = Input tax amount deducted in relation to│

│ the assets under construction × │

│ (1 ? 0.5%×(10 ÷ 110) │

│ │

└───────────────────────────────────────┘

3. Assets referred to in paragraph (1) 5, which are purchased from a third person:

(a) Buildings or structures:

┌───────────────────────────────────────────────────┐

│ Inventory tax payable = Value of acquisition ×│

│ [1 ? (5 ÷ 100) × Number of taxable periods elapsed]│

│ × (10 ÷ 100) × │

│ (1 ? 0.5%×(10 ÷ 110) │

└───────────────────────────────────────────────────┘

(b) Other depreciable assets:

┌───────────────────────────────────────────────────┐

│ Inventory tax payable = Value of acquisition × │

│ [1 ? (25 ÷ 100) × Number of taxable periods elapsed]│

│ × (10 ÷ 100) × │

│ (1 ? 0.5%×(10 ÷ 110) │

└───────────────────────────────────────────────────┘

4. Assets referred to in paragraph (1) 5, which are manufactured, constructed, or newly built directly by the entrepreneur:

(a) Buildings or structures:

┌───────────────────────────────────────────────────────┐

│ Inventory tax payable = Input tax amount deducted│

│ in relation to construction or new building of relevant assets│

│ (where the proviso of paragraph (2) is applicable,│

│ an amount of tax equivalent to 10 percent of the market price thereof)│

│ × [1 ? (5 ÷ 100) × Number of taxable periods elapsed]│

│ × (1 ? 0.5%×(10 ÷ 110) │

│ │

└───────────────────────────────────────────────────────┘

(b) Other depreciable assets:

┌───────────────────────────────────────────────────────┐

│ Inventory tax payable = Input tax amount deducted│

│ in relation to manufacturing of relevant assets│

│ (where the proviso of paragraph (2) is applicable,│

│ an amount of tax equivalent to 10 percent of the market price thereof)│

│ × [1 ? (25 ÷ 100) × Number of taxable periods elapsed]│

│ × (1 ? 0.5%×(10 ÷ 110) │

│ │

└───────────────────────────────────────────────────────┘

(4) Deleted. <Feb. 17, 2021>

(5) Upon receipt of a return filed under paragraph (1), the head of a tax office shall investigate and approve an amount of inventory and give notice to the relevant entrepreneur of the inventory tax payable, within 90 days from the date such entrepreneur is converted to a simplified taxable person. In such cases, where no notice is given within the aforesaid period, the amount of inventory returned by the entrepreneur shall be deemed approved.

(6) Where an entrepreneur fails to file a return under paragraph (1) or makes an understatement on such a return, the head of the competent tax office shall investigate the amount of inventory and determine and give notice of the inventory tax payable.

(7) The inventory tax payable, which is determined under paragraphs (5) and (6) shall be paid, in addition to the amount of tax payable when filing a final return for the taxable period in which the date of conversion to a simplified taxable person, falls. <Amended on Feb. 21, 2014>

(8) Where any error or omission exists in the amount of inventory tax payable that is approved or deemed approved under paragraph (5), the inventory tax payable shall be investigated and rectified pursuant to Article 57 of the Act.

Article 114(Returns and Payments by Simplified Taxable Persons) #

(1) The head of the competent tax office shall issue a notice of payment of the value-added tax under the main clause of Article 66 (1) of the Act during the period between July 1 and July 10. <Amended on Feb. 17, 2021>

(2) "Simplified taxable person prescribed by Presidential Decree" in Article 66 (2) of the Act means a person whose total proceeds from supplies or amount of tax payable for the preliminary imposition period under Article 66 (1) of the Act (hereafter referred to as "preliminary imposition period" in this Article) falls short of 1/3 of either the total proceeds from supplies or the amount of tax payable under Article 66 (1) of the Act in the immediately preceding taxable period due to the suspension of, or a decline in, business operations.

(3) To file a return on value-added tax under Articles 66 (2) and (3) and 67 (1) of the Act, a simplified taxable person shall submit (including via the national tax information and communications network) a return on value-added tax of simplified taxable person, specifying the following particulars, and the documents prescribed by Ministerial Decree of the Economy and Finance, to the head of the competent tax office: <Amended on Feb. 17, 2021>

1. The entrepreneur’s personal details;

2. The amount of tax payable and the basis for calculation thereof;

3. The amount of additional taxes and the basis for calculation thereof;

4. The details of a submitted sum table of tax invoices by customer or by seller;

5. Other reference information.

(4) To pay value-added tax under Articles 66 (5) and 67 (1) of the Act, a simplified taxable person shall pay to the head of the competent tax office an amount computed by adding additional taxes calculated under Article 68-(2) of the Act and Articles 47-2 through 47-4 of the Framework Act on National Taxes to the amount of tax payable for the relevant preliminary imposition period or taxable period; and subtracting the following amounts therefrom, with a return on value-added tax of simplified taxable person, or pay it to the Bank of Korea or a postal agency with a statement of payment prepared under the National Tax Collection Act: <Amended on Feb. 17, 2021; Feb. 28, 2023>

1. An amount computed under Article 46 (1) of the Act;

2. An amount computed under Article 63 (3) of the Act;

3. An amount computed under Article 63 (4) of the Act.

(5) The deduction under Article 63 (3) of the Act shall not apply where all or any of registration numbers or supply values by transaction party, among the items to be stated on a sum table of tax invoices by seller issued to a simplified taxable person by another entrepreneur and submitted to the head of the competent tax office under Articles 66 (6) and 67 (3) of the Act, is omitted or wrongly stated. <Amended on Feb. 17, 2021>

(6) A simplified taxable person shall file a return under Article 67 (1) of the Act, which is accompanied by the documents classified in Appendix in Article 101 (1), to be zero-tax rated under Articles 21 through 24 of the Act.

(7) A return unaccompanied by the document referred to in paragraph (6) shall not be deemed a return filed under Article 67 (1) of the Act.

Article 116(Waiver and Re-Application of Simplified Taxation) #

(1) Where a simplified taxable person or a general taxable person qualifying for application of provisions concerning simplified taxable persons under Article 62 of the Act, intends to waive the application of those provisions, or where a person intends to waive the application of those provisions when filing an application for business registration under Article 70 (2) of the Act, he or she shall file (including via the national tax information and communications network) with the head of the competent tax office a report on waiver of simplified taxation to meet the reporting requirements under Article 70 (1) and (2) of the Act, specifying the following particulars: <Amended on Feb. 21, 2014>

1. The entrepreneur’s personal details;

2. The taxable period for which he or she intends to waive the application of simplified taxation;

3. Other reference information.

(2) Where an individual entrepreneur who has filed a report under paragraph (1) intends to qualify for Chapter VII of the Act upon expiration of the period prescribed under Article 70 (3) of the Act, he or she shall file a report under Article 109 (4) with the head of the competent tax office at least 10 days before the intended taxable period begins. In such cases, the entrepreneur qualifying for application of such provisions shall be a sole proprietor whose total proceeds from supply of goods or services from January 1 to December 31 of the year immediately preceding the relevant taxable period, meet Article 61 (1) of the Act. <Amended on Feb. 21, 2014; Feb. 29, 2024>

(3) A person eligible for the reapplication of the provisions concerning simplified taxable persons under Article 70 (4) of the Act shall be a sole proprietor whose aggregate amount of proceeds from supply in the year immediately preceding the year to which the date of filing a return under Article 70 (5) of the Act belongs is 48 million won or more but less than 14 million won, and who has fallen under Article 36 (1) 2 (a) or (b) of the Act at the time of waiving the application of the provisions concerning the simplified taxable persons. <Added on Feb. 29, 2024>

(4) A sole proprietor who intends to be subject to the provisions of simplified taxable persons pursuant to Article 70 (4) of the Act shall submit a simplified taxable reapplication report stating the following matters to the head of the competent tax office having jurisdiction over the place of tax payment pursuant to paragraph (5) of the same Article (including submission via the national tax information and communications network). <Added on Feb. 29, 2024>

1. The entrepreneur’s personal details;

2. Taxable period for which simplified taxation is applicable;

3. Other reference information.

[Title Amended on Feb. 29, 2024]

ENFORCEMENT DECREE OF THE VALUE-ADDED TAX ACT

Article 1(Purpose) #

Article 2(Scope of Goods) #

Article 3(Scope of Services) #

Article 4(Classification of Business Activities) #

Article 5(Scope of Simplified Taxable Persons) #

Article 5-2(Trustees’ Liability for Tax Payment in Kind) #

Article 5-3(Secondary Tax Liability Related to Trust) #

Article 6(Standards for Commencement Date of Business) #

Article 7(Standards for Closure Date of Business) #

Article 8(Places of Business) #

Article 9(Storage Spaces) #

Article 10(Temporary Places of Business) #

Article 11(Filing Applications for Business Registration and Issuance of Business Registration Certificates) #

Article 12(Registration Number) #

Article 13(Reporting on Business Suspension or Closure) #

Article 14(Modification of Business Registration) #

Article 15(Cancellation of Registration) #

Article 16(Renewal of Business Registration Certificates) #

Article 17(Waiver of Per-Business Unit Taxation) #

Article 18(Scope of Supply of Goods) #

Article 19(Scope of Automobile-Related Business Types in which Use of Self-Produced or Acquired Goods for Other than Business Purposes Is Deemed Supply of Goods) #

Article 19-2(Cases Not Deemed Supply of Goods Because Goods Are Supplied to Reimburse Actual Expenses or Provide Welfare Benefits) #

Article 20(Scope of Donations for Business Not Deemed Supply of Goods) #

Article 21(Cases Deemed that Consignees or Agents Supply or are Supplied with Goods in Consignment Sales) #

Article 21-2(Cases Where Transfer of Trustor's Status Is Not Regarded as Supply of Trust Property) #

Article 22(Offering of Security Not Deemed Supply of Goods) #

Article 23(Transfer of Business Not Deemed Supply of Goods) #

Article 24(Tax Payment in Kind Not Deemed Supply of Goods) #

Article 25(Scope of Supply of Services) #

Article 26(Leasing Real Estate for Business Use to Related Persons Deemed Supply of Services) #

Article 27(Bonded Areas) #

Article 28(Time of Supply of Goods by Specific Types of Transactions) #

Article 29(Time of Supply of Services Supplied in Installments or on a Conditional Basis) #

Article 30(Special Cases concerning Time of Supply of Goods and Services Subject to Issuance of Tax Invoices for Installment Payments) #

Article 31(Scope of Exportation) #

Article 32(Scope of Overseas Navigation Services by Ship or Aircraft) #

Article 33(Scope of Goods or Services Supplied for Acquisition of Foreign Currencies) #

Article 34(Scope of Unprocessed Foodstuffs) #

Article 35(Scope of Tax-Free Medical and Health Services) #

Article 36(Scope of Tax-Free Educational Services) #

Article 37(Scope of Passenger Transport Services Subject to Taxation) #

Article 38(Scope of Tax-Free Books, Newspapers and Magazines) #

Article 39(Scope of Tax-Free Tobacco for Special Use) #

Article 40(Scope of Tax-Free Financing and Insurance Services) #

Article 41(Scope of Tax-Free Lease of Housing and Land Appurtenant thereto) #

Article 42(Scope of Tax-Free Personal Services, Including Vocational Services of Authors) #

Article 43(Scope of Tax-Free Creative Works of Art) #

Article 44(Scope of Admission to Tax-Free Places) #

Article 45(Scope of Tax-Free Goods or Services Supplied by Organizations for Religion, Charity, Scholarship, Relief, or Other Public Interest) #

Article 46(Scope of Tax-Free Goods or Services Supplied by State, Local Governments, or Local Government Associations) #

Article 47(Scope of Organizations for Public Interest) #

Article 48(Scope of Nonprofit Publications-Related Services) #

Article 49(Scope of Tax-Free, Imported Unprocessed Foodstuffs) #

Article 50(Scope of Tax-Free Imported Books, Newspapers, and Magazines) #

Article 51(Scope of Tax-Free Goods Imported for Scientific Purposes, etc.) #

Article 52(Scope of Tax-Free Goods Donated to Religious Organizations) #

Article 53(Scope of Goods Exempt from Customs Duties in Accordance with Treaties) #

Article 54(Scope of Re-Imported Goods Qualifying for Customs Reductions and Exemptions) #

Article 55(Scope of Temporarily Imported Goods Qualifying for Customs Reductions and Exemptions) #

Article 56(Scope of Other Duty-Free or Duty-Reducible Goods) #

Article 57(Reporting on Waiver of Tax Exemption) #

Article 58(Procedures for Filing Reports on Reapplication of Tax Exemption) #

Article 59(Conversion of Foreign Currencies) #

Article 60(Value of Supply Based on Acquisition Value) #

Article 61(Calculation of Value of Supply through Credit Sales) #

Article 62(Criteria for Market Price) #

Article 63(Calculation of Value of Supply of Goods Common to Taxable Business and Tax-Free Business) #

Article 64(Calculation of Value of Supply of Buildings Supplied with Land) #

Article 65(Calculation of Value of Supply of Real Estate Leasing Services) #

Article 66(Calculation of Value of Self-Supply of Depreciable Assets) #

Article 67(Tax Invoices) #

Article 68(Issuance of Electronic Tax Invoices) #

Article 69(Issuance of Tax Invoices for Consignment Sales) #

Article 70(Grounds and Procedures for Issuance of Corrected Tax Invoices and Corrected Electronic Tax Invoices) #

Article 71(Exemption from Duty to Issue Tax Invoices) #

Article 71-2(Entrepreneurs Subject to Issuance of Purchaser-Issued Tax Invoices, and Procedures for Deducting Input Tax Amounts) #

Article 72(Import Tax Invoices) #

Article 73(Receipts) #

Article 73-2(Notification of Period Applicable to Issuance of Receipts by Simplified Taxable Persons) #