VAT filing for electronic services in Korea

With the current global economy, international trades in goods and services have expanded and it became essential to our daily life. It’s common to buy clothes or use global famous apps in Korea from overseas.

However, such goods or services from overseas suppliers do not include VAT and this creates unequal playing filed for competitive suppliers in Korea who are providing the same services with higher price as much as the VAT.

To tackle such trend, OECD released international VAT guidelines, which deals with the risk of double taxation and unintended non-taxation. Australia, New Zealand, EU and Japan have taken part in such movement by amending their VAT/GST laws. Korea has recently amended and implemented its VAT law on electronic services being supplied by overseas suppliers to Korean customers from July 1, 2015.

 

I. What is Electronic Service (e-Service) under the Korean VAT law?

Any of the following services provided by overseas suppliers, which are capable of being executed in a mobile device, computer, etc. through information and communication network in Korea:

  • Game, audio, video file, electronic document, software, etc.
  • Online advertising place (enter into force on July 1, 2019)
  • Cloud place (enter into force on July 1, 2019)
  • Brokerage services of renting or consuming goods or places in Korea (enter into force on July 1, 2019)

 

II. Who are obligated taxpayers with this VAT law in Korea?

Any foreign entities or individuals who provide goods or services via electronic devices to Korean customers are required to file VAT return.

  • A non-resident
  • A foreign business operator
  • An open market
  • An intermediate agent

 

III. VAT filing period

The taxpayer shall be enrolled as a “simplified business taxpayer” in Korea. Filing period for VAT in Korea is on a quarterly basis. For example, VAT period for the 4th quarter is from October to December. Filing due date for the 4th quarter will be the 25th day from the quarter ending, which will be January 25th.

 

For more questions, please contact at [email protected]

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