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Periodic VAT returns must be submitted by all companies with a Korean VAT number, detailing all taxable supplies (sales) and inputs (costs). There are two return periods each year in South Korea, ie. 1st January – 30th June, and 1st July – 31st December. However, preliminary returns are also required at the end of the first and third calendar quarters.
The return deadline in Korea is 25 days from the period end, and any associated VAT liability must also be paid by this deadline. In the case of a tax credit (where the VAT incurred by the company exceeds the VAT charged on its sales in the reporting period), approved credits will be paid over to the company within 30 days of the return deadline.
If a foreign company is not making taxable supplies in Korea, but is incurring Korean VAT on local goods or services, then the VAT may, in certain circumstances, by recovered through a VAT reclaim. However, this regulation applies only where the tax refundable exceeds KRW 300,000 (approx. €200,000) and where a similar taxation system like VAT does not exist in the foreigner's nation, or a reciprocity agreement is in place with the foreign taxpayer’s country of residence.
The Korean VAT rate is currently 10%.
South Korea VAT rates | ||
Rate | Type | Which goods or services |
10% | Standard | All other taxable goods and services |
0% | Zero | Exports and associated transport services; finance and insurance services; services rendered overseas; some business support services |
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