This documentation is for Taxamo v1. If your account is with Taxamo v2 use the documentation at integrate.taxamo.com/doc.
If you are uncertain of your version please contact support@taxamo.com for assistance.

What is the law in relation to the supply of digital services in South Korea?

On July 1, 2015, South Korean tax legislation was changed in respect of overseas digital service suppliers charging, collecting, and remitting VAT on certain supplies.

South Korean VAT applies to the customer at the standard VAT rate of 10%.

Does a registration threshold apply?

No, there is no registration threshold.

If you are an overseas business supplying digital services to South Korean consumers then you need to register with the Korean National Tax Service to become a Simplified Business Operator.

How do I enable South Korean tax in Taxamo?

Assuming your product/services qualify as digital goods/services in South Korea, then complete the following steps:

  • Log into the Taxamo portal and go to My account > Tax regions.
  • Enable in test mode or live mode for the relevant dates.
  • If you have registered as a foreign business (Simplified Business Operator) in South Korea, enter your registration number.

Note: If you are using an integration other than the API, or the Taxamo checkout form, please confirm that your integration type has been upgraded to support South Korea.

If I have customers in South Korea what do I need to do?

You will need to first access the Korean National Tax Service Hometax website (via the Simplified Business Operator link). Then, you can sign up for a membership and apply to be a Simplified Business Operator.

If I sell in currencies other than South Korean Won (KRW) to South Korean residents, how do I convert these for tax payment?

In principal, VAT shall be paid in South Korean Won (KRW). In case of being paid from abroad, taxpayers are allowed to pay VAT in USD by applying the current standard foreign exchange rate. Considering the required time to deliver a remittance, taxpayers should pay their VAT three days earlier from the end date of payment period.

When a provider receives foreign currencies or foreign exchanges as the compensation of his/her e-service, the provider should file the tax base by converting the received currency into KRW based on the standard foreign exchange rates1 as of closing date of the taxable period.

Note: 1. The standard rate noticed by Seoul Money Brokerage Services (www.smbs.biz) is applied.

How are VAT refunds treated?

To receive a VAT refund, you need to open a bank account in a bank, etc., in Korea which enables a tax office to transfer the VAT refund. The bank account shall be opened under the name of the Simplified Business Operator. After opening the bank account, the taxpayer should file a return for opening a bank account to NTS Namdaemun District Office.

Note: The issuance of a certificate of business registration is available at any District Tax Office. A taxpayer is required to submit the certificate of business registration to open a bank account for the purpose of verifying the taxpayer’s name. Also, the refund of a transaction is applied to that transaction’s settlement quarter.

How long should data relating to transactions be stored?

Businesses supplying digital services to consumers based in South Korea should record or collect documentary evidence relating to business transactions and retain them for five years after the filing period has ended.

What information should be on South Korean invoices?

A VAT invoice must contain the following items in order to be valid:

  • Supplier’s business registration number, name, and address
  • Recipient’s business name, name, and address
  • Supplier’s and recipient’s business category and status
  • Amount of the supply and the VAT amount
  • Date of issuance of the invoice
  • Type of the item being supplied, the quantity supplied, and the unit price
  • Date of the supply
  • Transaction type

For entrepreneurs using the Single Business method, the location and business name of the actual place of business that is supplying or receiving the goods or services.

Is a local tax agent required?

Advice from the Korean National Tax Service is that companies can, of course, hire a lawyer, a tax agent, or a certified public accountant to handle their tax affairs in Korea, but it is not necessary.

How do I register for South Korean VAT?

In order to file a VAT return via Hometax, you must first receive a business registration number. Then, you can file your VAT return by log-in (enter ID, Password, and Business Registration Number) on the National Tax Service Hometax (for Simplified Business Operator) website.

The following are some of the details you will need to supply when applying for a business registration number:

  • Business operator’s name
  • Representative person’s name
  • Email address
  • Website address
  • Registered country and business registration number of foreign business operator
  • Commencement date of e-service in Korea
  • Service type
  • Tax agent information

How do I pay South Korean VAT?

Once registered you have to pay (send) taxes to the VAT bank account designated by the Korean National Tax Service (Woori Bank).

A business operator who has his/her business registration number receives the VAT bank account number via e-mail, and the bank account number can be seen on the ‘Basic information of Simplified Business Operator’ screen.

Bank details are as follows:

Once you have sent your VAT payment you can check several items including whether your VAT return is properly filed, what is your tax base, and what is the payable tax amount on the ‘My VAT Returns’ screen.