Korea (Republic of) – indirect tax guide

Korea (Republic of) – indirect tax guide

Explore the requirements and rules that apply to indirect taxes in Korea (Republic of).

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Type of indirect tax:


Standard rate:

10 percent.

What supplies are liable to the standard rate?

The supply of all goods and services and the importation of all goods into Korea.

Are there any reduced rates, zero- rates or exemptions and if so, what do they apply to?

Zero-rated supplies include the export of goods; supply of services outside Korea; supply of international transportation services by vessel or aircraft; supply of certain goods or services; and compensation that is received in foreign exchange (zero-rate application on professional services and business supporting services is subject to a reciprocity rule).

Exempt supplies include various food products; tap water; briquettes and anthracite coal; various medical and health services; educational services; various passenger transportation services; certain postage stamps; revenue stamps; certificate stamps; notary certificates; tobacco for special use or whose selling price is not more than 200 Korean won (KRW) per 20 cigarettes; certain banking and insurance services; certain leases of residential housing and land associated with such housing; land; and the personal services of writers, composers and other persons specified by presidential decree.

VAT/GST registration

Who is required to register and what is the threshold?

Every business person engaged in the business of supplying goods or services, whether or not for profit. Business persons include individuals; corporations; the national and local governments; and unincorporated organizations and associations.

Is voluntary registration possible?

Not applicable.

Is voluntary registration available for an overseas company or a fiscal representative?

Yes, a physical place of business in Korea is required to register for VAT. However, effective from 1 July 2015, non-Korean electronic service providers without a permanent establishment, including application developers and open market operators, are required to register for, and pay VAT on, sales of electronic services to final consumers in Korea (applicable to B2C transactions only).

VAT/GST compliance

What is the typical frequency of returns?


VAT/GST recovery

Are there any items that a registered business cannot recover VAT on?

Items that a registered business cannot recover VAT on include non-business related expenditures; rental and/or maintenance of small passenger vehicles; expenditures that have a similar nature to entertainment expenses or equivalent; purchase of land related to capital expenditures; and input VAT incurred for the period that ended more than 20 days prior to filing an application for VAT registration.

A valid VAT invoice is required in order to claim any input tax.

Can an overseas company recover VAT if it is not registered?

No, with one exception: A foreign corporation that does not have a permanent establishment in Korea is eligible to claim a VAT refund when the foreign corporation purchases goods or receives services from a supplier operating a certain type of business in Korea, as listed below:

  • food and lodging services
  • advertisement services
  • electronic and telecommunication services
  • real estate leasing services
  • goods and services purchased for the operating of an office of a foreign corporation in Korea (i.e. purchases of fixtures and furniture, maintenance services of fixtures and furniture and leasing of fixtures and furniture).

Please note that there is a condition in which the VAT refund is allowable only when the relevant foreign jurisdiction allows Korean companies to recover the local VAT or similar taxes (reciprocity rule).

The foreign corporation should claim a VAT refund for the purchase of goods/services during the period from 1 January to 31 December, by 30 June of the following year. To apply for a VAT refund, the amount of VAT to be refunded for 1 calendar year should be more than KRW300,000.

How long does it typically take to obtain a VAT refund following a return filing?

Typically, within 30 days of the tax return filing due date.


Are there specific requirements for the content of invoices to be considered valid for VAT purposes?

Yes, the tax invoices must contain the supplier’s name and registration number; registration number of the buyer; tax base; VAT amount; and date.

Special indirect tax rules

Does a reverse charge or indirect tax withholding mechanism apply?

Yes, a taxpayer who receives services or intangibles from any one of the following entities and uses those services for its VAT exempt business is required to pay VAT on behalf of the service provider:

  • a non-resident or a foreign corporation that does not have a business place in Korea
  • a non-resident or a foreign corporation that does have a business place in Korea but provides services that are not effectively connected to the business place (as stated by the presidential decree).


Is it possible to apply for formal or informal advance rulings from the tax authority?

Yes, rulings are published in Korean here: http://taxinfo.nts.go.kr/index.jsp.

Other indirect taxes

Are there any other indirect taxes that apply in the jurisdiction?

Other indirect taxes include the following:

  • stamp tax
  • customs duty
  • liquor tax
  • education tax
  • securities transaction tax
  • individual consumption tax.


Kyeong-Mi Kim
KPMG in the Republic of South Korea
T: +82 2 2112 0919
E: kyeongmikim@kr.kpmg.com


All information within this guide is provided by KPMG professionals in Korea and based on information available as of September 2019.

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