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Writer's pictureJ&J Korea

VAT Rate 2022: Are Korea VAT rates increasing this year?

Updated: Sep 5, 2023


Value Added Tax (VAT) is a tax that is reported and paid for added value acquired in the process of providing goods and services* and importing goods.


*The term “goods” means any things or rights that have property value and “services” means all labor and activities, other than goods, that have property values. Article 2, <Value-added tax act>


Value Added Tax

Who is the Taxpayer? and What is Taxable Income?

Taxpayers are all businesses and importers** of goods, and VAT is calculated by subtracting input tax (total sales x tax rate) from output tax (total amount of purchase x tax rate). If you have more output tax than input tax, and the final VAT shows negative for the accounting period, you can claim for VAT return.

**Any individual, corporation (including the State, a local government, or a local government association), unincorporated association or foundation, or other organization that falls under any of the following subparagraphs shall be liable to pay the value-added tax as prescribed by this Act: 1. An entrepreneur; 2. Person who imports goods. Article 3, <Value-added tax act>


Filing and Payment Schedule

VAT shall be filed and paid for four times;

  • First Half Preliminary for the period of January 1st – March 31st, must be filed and paid on April 25th

  • First Half Final for the period of January 1st – June 30th, must be filed and paid on July 25th

  • Second Half Preliminary for the period of July 1st to September 30th, must be filed and paid on October 25th

  • Second Half Final for the period of October 1st to December 31st, must be filed and paid on January 25th

Tax Rate

10% of VAT is charged to most goods or services sold domestically, while 0% of VAT is charged to the exported goods or overseas provision of service.


PLUS: Video for EASY Guide!





 


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