Value-added Tax

What are the types of input VAT that cannot be deducted?

• Input Tax Related to Duty-Free Business
• Input Tax Related to Entertainment Expenses
• Input Tax Related to Non-Operating Small Passenger Cars
• Input Tax Related to Land
• Input Tax Before Business Registration
• Input Tax Related to Acquisition, Maintenance, and Repair of Non-Business Assets
• Input Tax Related to Missing Tax Invoices and Misstatements

What types of personal services (freelancers, YouTubers) are exempt from VAT?

• Conditions of the service provider
• 1) There should be no physical facilities
• 2) They should not employ workers
• 3) They must have independent qualifications
• 4) They must provide services as specified by law (writing, calligraphy, composition, music, dance, acting, voice acting, singing, entertainment, sports, dancing, authorship, fortune-telling, etc.)

Is it possible to apply the zero-rate even if the supporting documents are not submitted?

• If it is confirmed that the taxable standard is applicable at a zero rate, even if no documents for the zero rate were submitted, the zero rate can be applied, and it will be subject to the additional tax for non-compliance in declaring the zero rate taxable standard.

How do simplified tax payers calculate value-added tax?

• (Revenue X Industry-specific value-added tax rate X 10%) – Deductible tax amount
• Deductible tax amount = Purchase amount X 0.5%

Is it possible to issue a cash receipt as a tax-exempt business?

• Value-added tax exempt businesses can also issue cash receipts on a tax-exemption basis according to the provisions of Article 126 (3) of the Special Tax Treatment Restriction Act.
• Among the exempt businesses, those that are required to issue cash receipts must do so.

Can new businesses apply for simplified taxation?

• If it is expected that the total amount of the supply price will fall below a certain amount in the first year of the 1st year, a simplified tax application report can be submitted upon registration.
• Exclusions from simplified taxation are not applicable.

Who are the mandatory issuers of electronic tax invoices and what are the benefits?

• 1. Subject
• 1) Corporate Subject
• 2) Individual business owners with a supply value of 80 million won or more in the previous year
• 2. Benefits
• 1) No need to keep tax invoices for 5 years
• 2) If documents issued are sent by the 11th of the month following the last day of the tax period, there is no need to submit a total statement for purchases and sales
• 3) For individual business owners whose supply value for the previous year is less than 300 million won or are new businesses, a deduction of up to 1 million won in value-added tax is possible at 200 won per case

What is the issuance period for electronic tax invoices?

• Issued by the 10th of the month following the supply of goods and services
• Additional tax imposed for non-issuance and delayed issuance

Can I get a 10% refund on value-added tax when purchasing a business passenger car?

• Passenger cars with less than 9 seats that are not classified as compact cars cannot claim input VAT deduction.
• Compact cars, vans (9 or more seats), and trucks can be deducted if used for business purposes.

What are the reasons for the rejection of the VAT refund?

• Expenses not related to the business
• Lack of supporting documents such as tax invoices
• The refunded tax amount is excessive or has changed unusually
• Transactions with simplified tax payers or tax-exempt businesses