VAT Korea Refund
In the global economy, international trade in goods & services have expanded to become essential to daily life. It has become common to make purchases and use popular global apps in South Korea.
However, such goods or services from overseas suppliers do not include VAT, which creates an unequal playing field for competitive suppliers in the Republic of Korea who provide the same services with prices that include VAT.
The OECD has thus released international VAT guidelines to address the risk of double taxation and unintended non-taxation. Australia, New Zealand, the EU and Japan have all amended their VAT/GST laws. South Korea also amended and implemented VAT laws on electronic services supplied by overseas players to Korean customers since July 1, 2015.
I. What is Electronic Service (e-Service) under 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 (entered into force on July 1, 2019)
- Cloud place (entered into force on July 1, 2019)
- Brokerage services of renting or consuming goods or places in Korea (entered 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 siyoon@theclacc.com
