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ENFORCEMENT DECREE OF THE VALUE-ADDED TAX ACT

Wholly Amended by Presidential Decree No. 24638, jun. 28, 2013

Amended by Presidential Decree No. 25057, Jan. 1, 2014

Presidential Decree No. 25133, Jan. 28, 2014

Presidential Decree No. 25196, Feb. 21, 2014

Presidential Decree No. 25945, Dec. 30, 2014

Presidential Decree No. 26071, Feb. 3, 2015

Presidential Decree No. 26600, Oct. 23, 2015

Presidential Decree No. 26983, Feb. 17, 2016

Presidential Decree No. 27037, Mar. 11, 2016

Presidential Decree No. 27433, Aug. 2, 2016

Presidential Decree No. 27472, Aug. 31, 2016

Presidential Decree No. 27838, Feb. 7, 2017

Presidential Decree No. 27970, Mar. 29, 2017

Presidential Decree No. 28211, Jul. 26, 2017

Presidential Decree No. 28475, Dec. 19, 2017

CHAPTER I GENERAL PROVISIONS
 Article 1 (Purpose)
The purpose of this Decree is to prescribe the matters delegated by the Value-Added Tax Act and other matters necessary for the enforcement thereof.
 Article 2 (Scope of Goods)
(1) Things mentioned in subparagraph 1 of Article 2 of the Value-Added Tax Act (hereinafter referred to as the “Act”), mean each of the following:
1. All corporeal things, such as commodities, products, raw materials, machines, and buildings;
2. Manageable natural forces, such as electricity, gas, and heat.
(2) Rights mentioned in subparagraph 1 of Article 2 of the Act, mean anything that has economic value, other than things referred to in paragraph (1), such as mining rights, patent rights, and copyrights.
 Article 3 (Scope of Services)
(1) Services mentioned in subparagraph 2 of Article 2 of the Act, mean all of the following labor and activities, other than goods, that has economic value:
1. Construction services;
2. Accommodation and food service activities;
3. Transport services;
4. Broadcast communications and information service activities;
5. Financial and insurance activities;
6. Real estate business and leasing services: Provided, That this shall exclude the service of leasing farms, rice fields, orchards, pasture land, forest land, or saltpans;
7. Professional, scientific and technical activities, and business facilities management, and business support service activities;
8. Public administration, national defense, and compulsory social security activities;
9. Educational services;
10. Human health and social work activities;
11. Arts, sports, and recreation related activities;
12. Activities of membership organizations, repair, and other personal service activities;
13. Activities of households as employers and undifferentiated goods-and services-producing activities of households for own use;
14. Activities of extraterritorial organizations and bodies.
(2) Notwithstanding paragraph (1) 1 and 6, any service prescribed by Ordinance of the Ministry of Strategy and Finance, among construction services and the real estate business, shall be deemed a business supplying goods.
 Article 4 (Classification of Business Activities)
(1) The classification of businesses supplying goods or services is subject to the Korean Standard Industrial Classification publicly announced by the Commissioner of the Korea National Statistical Office as at the start date of the pertinent taxable period, except as otherwise expressly provided for in this Decree.
(2) Any business activity similar to those listed in Article 3 (1), which involves the supply of services, shall be deemed included in the business activities referred to in the same paragraph, regardless of the Korean Standard Industrial Classification.
(3) Matters necessary for the classification of business activities, other than those provided for in paragraphs (1) and (2), shall be prescribed by Ordinance of the Ministry of Strategy and Finance.
 Article 5 (Scope of Simplified Taxable Persons)
“Amount prescribed by Presidential Decree” in subparagraph 4 of Article 2 of the Act, means the amount referred to in Article 109 (1).
 Article 6 (Standards for Commencement Date of Business)
The date an entrepreneur commences a business under Article 5 (2) of the Act, is as follows: Provided, That when a business is converted from a tax-free business to a taxable business due to any amendment to statutes, the date of conversion to a taxable business shall be deemed the date the business concerned commences:
1. Manufacturing business: The date the business concerned starts manufacturing goods for each place of manufacture;
2. Mining business: The date the business concerned starts extracting or mining minerals for each place of business;
3. Business, other than those provided for in subparagraphs 1 and 2: The date the business concerned starts supplying goods or services.
 Article 7 (Standards for Closure Date of Business)
(1) The date a business is closed under Article 5 (3) of the Act, is as follows:
1. For a corporation that is dissolved due to a merger: The date of registering the change to, or the incorporation of, a corporation surviving the merger;
2. For a business that is closed due to a division: The date of registering the change to a divided corporation (if the divided corporation is dissolved, the date of registering the incorporation of a corporation newly incorporated after the division);
3. In cases other than those falling under subparagraphs 1 and 2: The date the business concerned is substantially closed for each place of business: Provided, That when the date a business is closed is unclear, it means the date a report on business closure is received under Article 13 (1).
(2) Notwithstanding paragraph (1) 3, if a domestic corporation (referring to a domestic corporation as defined in subparagraph 1 of Article 1 of the Corporate Tax Act; hereafter the same shall apply in this paragraph) in liquidation following its dissolution, or a domestic corporation for which the rehabilitation procedure is pending after its rehabilitation plan has been authorized by a court under the Debtor Rehabilitation and Bankruptcy Act, reports the closure of its business to, and obtains approval from, the head of the tax office having jurisdiction over the place of tax payment within 25 days from the date it substantially closes its business, the date the value of remaining property is determined (if the value of remaining property is not determined within 365 days from the date of its dissolution, the date that falls on the 365th day from the date of its dissolution) may be construed as the date its business is closed.
(3) For an entrepreneur whose business has been registered before commencing its business under the proviso to Article 8 (1) of the Act, but who has no record of supplying goods or services for six months from the date of business registration, his/her business shall be deemed closed as at the date that falls on six months from the date of business registration: Provided, That the same shall not apply where at least a six-month period is required to establish a place of business, or otherwise good cause exists for delay in the commencement of business.
 Article 8 (Places of Business)
(1) The scope of places of business provided for in Article 6 (2) of the Act, is as set forth in the following table: <Amended by Presidential Decree No. 26983, Feb. 17, 2016>
BusinessPlace of Business
1. Mining businessThe location of its mining office. In such cases, if a mining office is located outside the relevant mine yard, the mining office shall be deemed situated in a mine yard registered at the head of the mining ledger prepared for a mine yard nearest to the mining office.
2. Manufacturing businessThis shall exclude the place of completing end products: Provided, That any place where products are separately packed or placed in containers and any oil reservoir referred to in Article 10-5 of the Individual Consumption Tax Act.
3. Construction business, transportation business, and real estate transaction business(a) For a corporationThe location of the corporation in the corporate registry (including the location of a branch office in the registry)
(b) For an individualA place where business affairs are controlled
(c) For the private operation of a vehicle registered in the name of a corporationThe location of the corporation in the corporate registry (including the location of a branch office in the registry)
(d) For the private operation of a vehicle registered in the name of another individualA place where the registered individual controls his/her business affairs
4. Water resources development and supply businessA place where the business affairs are controlled
5. Business conducted by the Daegu Infrastructure Management Corporation established under Article 76 of the Local Public Enterprises ActA place where the business affairs are controlled
6. Business supplying goods or services by a multi-level marketing salesperson registered under the Act on Door-to-Door Sales, Etc. (hereinafter referred to as “multi-level marketing salesperson”)The location of the principal place of business of a multi-level marketing business entity with which the multi-level marketing salesperson is registered under Article 13 of the Act on Door-to-Door Sales, Etc. (hereinafter referred to as “multi-level marketing business entity”): Provided, That, when there is any separate place where the multi-level marketing salesperson is stationed permanently to perform all or some of transactions, such place shall be deemed a place of business.
7. Telecommunications business in which a telecommunications business operator licensed, registered, or reported under the Telecommunications Business Act claims fees by integrated collection of communication fees determined by Ordinance of the Ministry of Strategy and FinanceA place where the business affairs are controlled
8. Telecommunications business in which a telecommunications business operator licensed, registered, or reported under the Telecommunications Business Act provides mobile communication services determined by Ordinance of the Ministry of Strategy and Finance(a) For a corporationThe location of the main office of the corporation
(b) For an individualA place where the business affairs are controlled
9. Business supplying goods or services through vending machinesA place where the business affairs are controlled
10. Business managed by the Korea Railroad Corporation established under the Korea Railroad Corporation ActA place where the business affairs are controlled for each region
11. Delivery-service business conducted by an organization for postal services established under the Act on Special Cases concerning the Management of Postal Service to deliver postal parcels as defined in subparagraph 3 of Article 1-2 of the Postal Service Act by means of receipt through personal visitationA place where the business affairs are controlled
12. Electricity wholesale or retail in which an electricity wholesaler or retailer licensed, registered, or reported the Electric Utility Act, claims charges by integrated collection of electric utility charges determined by Ordinance of the Ministry of Strategy and FinanceA place where the business affairs are controlled
13. Business supplying goods or services by the State, a local government, or an association of local governments under subparagraph 3 of Article 46 A place where the business affairs are controlled: Provided, That, when goods or services are supplied, upon delegation or consignment, or by proxy, a place where the person to whom the work is delegated, consignee or agent exercises overall control over the business affairs shall be deemed the place of business.
14. Business supplying goods or services by a pipeline installer as defined in subparagraph 3 of Article 2 of the Oil Pipeline Safety Control Act through oil pipelinesA place where the business affairs are controlled
15. Real estate leasing businessThe location of the real estate in the registry
(2) Notwithstanding subparagraph 15 of the table in paragraph (1), if only a right over real estate is lent or any of the following entities leases real estate, a place where the business affairs are controlled shall be deemed a place of business: <Amended by Presidential Decree No. 27037, Mar. 11, 2016>
2. The agricultural cooperative asset management company established under the Act on the Structural Improvement of Agricultural Cooperatives;
3. A corporate restructuring real estate investment trust established under the Real Estate Investment Company Act;
4. The Korea Deposit Insurance Corporation and the financial institution for resolution established under the Depositor Protection Act;
5. An electric utility business operator licensed under the Electric Utility Act;
6. A telecommunications business operator licensed, reported, or registered under the Telecommunications Business Act;
7. A local government-invested public corporation established under the Local Public Enterprises Act, as determined by Ordinance of the Ministry of Strategy and Finance;
8. The Korea Rural Community Corporation under the Korea Rural Community Corporation and Farmland Management Fund Act;
9. The Korea Expressway Corporation established under the Korea Expressway Corporation Act;
10. The Korea Rail Network Authority established under the Korea Rail Network Authority Act;
11. The Korea Land and Housing Corporation established under the Korea Land and Housing Corporation Act.
(3) A place in which an entrepreneur installs a special sales facility for directly selling goods produced or acquired in connection with his/her own business (hereinafter referred to as “direct sales depot”) shall be deemed a place of business.
(4) Any place, other than the places of business provided for in paragraphs (1) through (3), may be registered additionally as a place of business upon application by an entrepreneur: Provided, That the same shall not apply to any business supplying goods or services through vending machines under subparagraph 9 of the table in paragraph (1).
(5) Where an entrepreneur has no place of business and fails to file any application for registration under Article 8 (1) and (3) of the Act, his/her domicile or residence as at the time the tax base and the amount of tax are decided or rectified shall be deemed the place of business.
(6) For an entrepreneur who is a nonresident, any place referred to in Article 120 of the Income Tax Act shall be deemed his/her place of business; and for a foreign corporation, any place referred to in Article 94 of the Corporate Tax Act shall be deemed its place of business.
 Article 9 (Storage Spaces)
(1) Any entrepreneur who has a storage space referred to in Article 6 (5) 1 of the Act, shall submit a report on establishment of a storage space, specifying the following particulars, to the head of the tax office having jurisdiction over the storage space within ten days from the date the storage space is established: Provided, That for any liquor storage space approved by the head of the competent tax office under Article 64 (4) of the Enforcement Decree of the Liquor Tax Act, a report on establishment of storage space need not be submitted:
1. The entrepreneur’s trade name, name (for a corporation, the name of the representative), address, business registration number, resident registration number, the location of the place of business, and the type of business (hereinafter referred to as “personal details”);
2. The date of establishment, location, and classification of, the storage space;
3. Other reference information.
(2) Upon receipt of a report on establishment of a storage space submitted under paragraph (1), the head of the tax office having jurisdiction over the storage space, shall give notice thereof to the head of the tax office having jurisdiction over the place of tax payment, within ten days from the date of receipt of such report.
 Article 10 (Temporary Places of Business)
(1) A temporary place of business referred to in Article 6 (5) 2 of the Act, shall be deemed included in the place of business referred to in Article 8 that the entrepreneur uses prior to the establishment of the temporary place of business (hereafter referred to as “existing place of business” in this Article).
(2) Any person who seeks to establish a temporary place of business under Article 6 (5) 2 of the Act, shall file (including via the national tax information and communications network) a report on establishment of a temporary place of business, specifying the following particulars, with the head of the tax office having jurisdiction over the temporary place of business within ten days from the date of commencement of business at the temporary place of business: Provided, That when the period for which the temporary place of business is opened, does not exceed ten days, a report on establishment of a temporary place of business need not be submitted:
1. The entrepreneur’s personal details;
2. The location of the temporary place of business;
3. The period for which the temporary place of business is opened;
4. Other reference information.
(3) Upon receipt of a report submitted under paragraph (2), the head of a tax office shall ascertain whether establishment of a temporary place of business is appropriate and give notice of the conclusion to the applicant and the head of the tax office having jurisdiction over the existing place of business.
(4) Where a person who has established a temporary place of business closes the temporary place of business, he/she shall submit a report on closure of a temporary place of business, specifying the following particulars, to the head of the tax office having jurisdiction over the temporary place of business within ten days from the date of closure of the temporary place of business:
1. The entrepreneur’s personal details;
2. The date of, and grounds for, closure;
3. Other reference information.
 Article 11 (Filing Applications for Business Registration and Issuance of Business Registration Certificates)
(1) An entrepreneur who seeks to have his/her business registered under Article 8 (1) of the Act, shall file (including via the national tax information and communications network) an application for business registration, specifying the following particulars, with the head of a tax office (referring to either of the head of the competent tax office and the head of any other tax office) for each place of business:
1. The entrepreneur’s personal details;
2. Grounds for filing an application for business registration;
3. The date of commencement of business or the date the entrepreneur starts establishing the place of business;
4. Other reference information.
(2) Notwithstanding paragraph (1), an entrepreneur who seeks to file an application for registering himself/herself as a per-business unit taxable entrepreneur under Article 8 (3) or (4) of the Act, shall file an application for business registration, specifying the particulars referred to in each subparagraph of paragraph (1) regarding his/her main office or principal office (hereinafter referred to as “place of business subject to per-business unit taxation”), with the head of the tax office having jurisdiction over the place of business subject to per-business unit taxation.
(3) Every application filed under paragraphs (1) and (2) shall be accompanied by the documents classified as follows: <Amended by Presidential Decree No. 25196, Feb. 21, 2014>
ClassificationAccompanying Documents
1. For business subject to licensing, registration, or reporting under statutesA copy of a business license, a copy of a business registration certificate, or a copy of a certificate of report
2. For a place of business leasedA copy of a lease contract
3. For a commercial building partly leased under Article 2 (1) of the Commercial Building Lease Protection ActA plan of the relevant portion
4. For wholesale or retail trading of gold bullion under Article 106-3 (1) of the Restriction of Special Taxation Act (hereinafter referred to as “gold bullion”)A document detailing business funds, financial status, etc., as prescribed by Ordinance of the Ministry of Strategy and Finance
5. For business in a taxable entertainment venue under Article 1 (4) of the Individual Consumption Tax ActA document detailing business funds, financial status, etc., as prescribed by Ordinance of the Ministry of Strategy and Finance
6. For an entrepreneur who seeks to register by his/her business unit under Article 8 (3) and (4) of the Act Documents referred to in subparagraphs 1 through 5 of this Table regarding a place of business, other than the places of business subject to per-business unit taxation (hereinafter referred to as “ancillary place of business”), and other documents prescribed by Ordinance of the Ministry of Strategy and Finance that state the location of the place of business, the type and items of business, etc.
7. For wholesale trading of liquid fuel and related products, wholesale trading of gaseous fuel and related products, business operating vehicle refueling stations, gas vehicle refueling business, retail trading of liquid fuel for domestic use, and retail trading of gas fuel for domestic useA document detailing business funds, financial status, etc., as prescribed by Ordinance of the Ministry of Strategy and Finance
8. For renewable materials collection and sale businessA document detailing business funds, financial status, etc., as prescribed by Ordinance of the Ministry of Strategy and Finance
(4) In the case of the proviso to Article 8 (1) of the Act, if business registration is made prior to filing for registration for incorporation of the relevant corporation or the business license, registration, or report, a copy of an application for a business license, a copy of an application for business registration, a copy of a business report, or a business plan for incorporation of the corporation may be submitted in lieu of the documents referred to in subparagraph 1 of the table in paragraph (3).
(5) Upon receipt of an application filed under paragraph (1) or (2), the head of a tax office having jurisdiction over the applicant’s place of business, shall issue to the applicant a business registration certificate stating the entrepreneur’s personal details and other necessary matters within three days (excluding Saturdays, holidays referred to in Article 2 of the Regulations on Holidays of Public Agencies, and the Workers' Day designated under the Designation of Workers' Day Act; hereafter the same shall apply in this paragraph) from the date of receipt of the application: Provided, That when the Commissioner of the National Tax Service deems it necessary to inspect business facilities or operations, he/she may extend the deadline for issuance by up to five days and issue a business registration certificate based on the findings from such inspection.
(6) If an entrepreneur fails to file for a business registration under Article 8 (1) through (3) of the Act, the head of the tax office having jurisdiction over the place of business may register the entrepreneur’s business after inspecting his/her business.
(7) Upon receipt of an application for business registration filed under the proviso to Article 8 (1), the head of a tax office having jurisdiction over the applicant’s place of business may refuse the registration if the applicant is found to not have commenced a business.
(8) Where a multi-level marketing salesperson registered with a multi-level marketing business entity under Article 15 of the Act on Door-to-Door Sales, Etc., reports himself/herself to the multi-level marketing business entity as a wholesale or retail dealer, to engage in wholesale or retail trading, if the multi-level marketing business entity files a report on the personal details of the multi-level marketing salesperson, the commencement date of business, and other matters determined by the Commissioner of the National Tax Service, with the head of the tax office having jurisdiction over the place of business not later than the tenth of the month following the date of reporting, the multi-level marketing salesperson shall be deemed to file an application for business registration under paragraph (1): Provided, That the same shall not apply to any multi-level marketing salesperson not exempt from the obligation to pay tax under Article 69 of the Act and any multi-level marketing salesperson who falls under the proviso to subparagraph 6 of the table in Article 8 (1) of this Decree.
(9) With respect to a multi-level marketing salesperson who is reported under the main sentence of paragraph (8), the certificate of registration as a multi-level marketing salesperson issued by a multi-level marketing business entity under Article 15 of the Act on Door-to-Door Sales, Etc. shall be deemed a business registration certificate issued by the head of the competent tax office to the multi-level marketing salesperson pursuant to paragraph (5).
(10) Where a person who operates a tax-free business after being registered under Article 168 of the Income Tax Act and Article 111 of the Corporate Tax Act seeks to operate a taxable business additionally, he/she shall be deemed to have filed an application for business registration under paragraphs (1) and (2) upon the filing of a report on correction of business registration by applying Article 14 (1) mutatis mutandis.
(11) Upon receipt of an application for business registration filed under the proviso to Article 8 (1) of the Act, the head of a tax office having jurisdiction over the applicant’s place of business, shall inquire into the certified copies of promoters’ resident registration cards through data-matching of administrative information under the Electronic Government Act: Provided, That when the applicant for business registration does not consent to such inquiry, the head of the tax office shall have him/her submit the certified copies of promoters’ resident registration cards.
(12) If deemed that the details of an application for business registration filed under paragraphs (1) through (4) require corrections, the head of the tax office having jurisdiction over the applicant’s place of business, may require the applicant to make corrections, within a prescribed period not exceeding ten days. In such cases, the correction period shall not be included in the period referred to in the main sentence of, and the proviso to, paragraph (5).
 Article 12 (Registration Number)
(1) A registration number referred to in Article 8 (5) of the Act, shall be allocated by the head of the competent tax office to each place of business: Provided, That when an application for registration is filed by business unit under Article 8 (3) and (4) of the Act, only one registration number shall be allocated to a place of business subject to per-business unit taxation.
(2) The head of the competent tax office may allocate an identification number equivalent to a registration number to a person referred to in Article 54 (4) or (5) of the Act to ensure the efficient management of tax data.
(3) With respect to a multi-level marketing salesperson who is reported under the main sentence of Article 11 (8), a registration number allocated to him/her by a multi-level marketing business entity under Article 15 of the Act on Door-to-Door Sales, Etc., shall be deemed a registration number allocated under paragraph (1).
 Article 13 (Reporting on Business Suspension or Closure)
(1) Where an entrepreneur whose business has been registered under the main sentence of Article 8 (1) of the Act and paragraphs (3) through (5) of the same Article, suspends or closes his/her business, or an entrepreneur whose business has been registered under the proviso to Article 8 (1) of the Act and paragraph (5) of the same Article, is found to not have commenced a business, the entrepreneur shall promptly file (including via the national tax information and communications network) a report on business suspension (closure) stating the following, with the head of a tax office (referring to either of the head of the competent tax office and the head of any other tax office), pursuant to Article 8 (6) of the Act:
1. The entrepreneur’s personal details;
2. The date of business suspension or closure and the grounds therefor;
3. Other reference information.
(2) A report on business closure filed under paragraph (1) shall be accompanied by a business registration certificate and a written verification of business closure report (only applicable to business subject to licensing, registration or reporting under statutes, and referring to a copy of a document attesting that the business closure report is filed; hereinafter the same shall apply).
(3) Notwithstanding paragraph (1), if an entrepreneur who closes his/her business submits the final return of value-added tax under Article 91, stating the date of business closure and the grounds therefor, along with his/her business registration certificate and a written verification of business closure report, he/she shall be deemed to file a report on business closure.
(4) In cases of a corporate merger, a corporation surviving the merger (for a consolidation, a new corporation resulting from the consolidation) or a corporation dissolved following the merger (hereafter referred to as “absorbed corporation” in this paragraph), shall report the business closure of the absorbed corporation to the head of the tax office having jurisdiction over the absorbed corporation, along with a report on corporate merger, stating the following particulars, and its business registration certificate:
1. The personal details of the corporation surviving the merger or the new corporation resulting from the consolidation;
2. The personal details of the absorbed corporation;
3. The date of the merger or consolidation;
4. Other reference information.
(5) In cases of the business subject to licensing, registration, reporting, etc. under statutes, a report on business suspension (closure) referred to in paragraph (1) may be filed with the competent authority having jurisdiction over the business subject to licensing, registration, reporting, etc.; upon receipt of the report on business suspension (closure), the competent authority shall promptly forward (including via the information and communications network; hereafter the same shall apply in this paragraph) the document to the head of the competent tax office; and when a report to be filed under the statutes with the competent authority having jurisdiction over the business subject to licensing, registration, reporting, etc. is filed with the head of the competent tax office, the head of the competent tax office shall promptly forward the document to the competent authority.
(6) The date of business suspension under paragraph (1) refers to the date of actual suspension of business (if the date of actual suspension of business is unclear, the date a report on business suspension is received under paragraph (1)) for each place of business.
(7) In calculating a period of business suspension stated in a report on business suspension under paragraph (1), the off-season period of a seasonal business shall be deemed a period of business suspension.
 Article 14 (Modification of Business Registration)
(1) An entrepreneur shall promptly file (including via the national tax information and communications network) a report on correction of business registration stating his/her personal details, the modifications in his/her business registration, and other necessary information with the head of a tax office (referring to either of the head of the competent tax office and the head of any other tax office), where any of the following circumstances arises:
1. Where the entrepreneur changes his/her trade name;
2. Where a corporation or an organization prescribed by Ordinance of the Ministry of Strategy and Finance, other than those deemed corporations under Article 13 (1) and (2) of the Framework Act on National Taxes, replaces its representative;
3. Where a change occurs in the type of business prescribed by Ordinance of the Ministry of Strategy and Finance;
4. Where the entrepreneur relocates his/her place of business [for a per-business unit taxable entrepreneur as provided for in Article 8 (3) of the Act (hereinafter referred to as “per-business unit taxable entrepreneur”), referring to a place of business subject to per-business unit taxation];
5. Where the entrepreneur’s name is changed by inheritance;
6. Where any of the joint entrepreneurs or his/her investment shares is changed;
7. Where a lessor, leased object, or its size, security deposit, rent, or lease period is changed or a commercial building is newly leased (limited to where a lessee of a commercial building as defined in Article 2 (1) of the Commercial Building Lease Protection Act seeks to file a report on correction of his/her business registration, where a lessee seeks to file an application for the certification of a fixed date under Article 5 (2) of the same Act, or where any change occurs to a lessee who has obtained the certification of a fixed date);
8. Where a per-business unit taxable entrepreneur changes the place of business subject to per-business unit taxation;
9. Where a per-business unit taxable entrepreneur newly establishes or relocates an ancillary place of business;
10. Where a per-business unit taxable entrepreneur suspends or closes a business conducted at his/her ancillary place of business;
11. Where an entrepreneur who engages in the business of supplying goods or services after registering his/her personal details and other information on a cyber-mall (referring to a virtual place of business established by an entrepreneur who engages in the value-added telecommunications business classified under Article 5 of the Telecommunications Business Act (hereinafter referred to as “value-added telecommunications business operator”) to trade goods, etc. using computers, etc. and information and communications equipment; hereinafter the same shall apply) (hereinafter referred to as “mail order business operator”) changes the name of the cyber-mall or the Internet domain thereof under the Internet Address Resources Act.
(2) A report on correction of business registration filed under paragraph (1) shall be accompanied by a business registration certificate: Provided, That in the circumstances provided for in paragraph (1) 7, if the leased object or its size is modified or part of a commercial building as defined in Article 2 (1) of the Commercial Building Lease Protection Act is newly leased, such report shall be accompanied by a plan of the leased portion of the commercial building.
(3) Upon receipt of a report filed under paragraph (1), the head of a tax office shall correct the entries in the business registration certificate and reissue it after ascertaining the details of modifications within the deadline classified below:
1. For the circumstances provided for in paragraph (1) 1 and 11: The date the report is filed;
2. For the circumstances provided for in paragraph (1) 2 through 10: Within three days from the date the report is filed.
(4) Where an entrepreneur files a report on correction of business registration on grounds of paragraph (1) 4 or 8, the head of the tax office having jurisdiction over the place of business shall promptly give notice to the head of the tax office having jurisdiction over the former place of business of the relocation or change of the place of business.
 Article 15 (Cancellation of Registration)
(1) Upon cancelling registration under Article 8 (7) of the Act, the head of the competent tax office shall promptly collect the registration certificate and announce the cancelation of registration, if it is impossible to collect the registration certificate.
(2) Where an entrepreneur is found to not have commenced a business as provided for in Article 8 (7) 2 of the Act, means any of the following:
1. Where he/she fails to commence his/her business without good cause for at least six months after business registration;
2. Where his/her whereabouts are unknown after going bankrupt due to default, a large amount of arrears, etc.;
3. Where his/her business is virtually subject to closure due to the revocation of authorization or license, or on any ground that prevents him/her from operating his/her business;
4. Where his/her business is virtually subject to closure without filing the returns of value-added tax over at least two consecutive taxable periods without good cause;
5. Where he/she is found to not have commenced his/her business on any ground similar to those provided for in subparagraphs 1 through 4.
 Article 16 (Renewal of Business Registration Certificates)
Where deemed necessary to efficiently deal with affairs concerning value-added tax under Article 8 (8) of the Act, the head of the competent tax office may renew a business registration certificate.
 Article 17 (Waiver of Per-Business Unit Taxation)
(1) Where a per-business unit taxable entrepreneur intends to file a return and make a payment for each place of business or to make a lump-sum payment at his/her principal place of business under Article 92, he/she shall submit a report on waiver of per-business unit taxation to the head of the tax office having jurisdiction over the place of business subject to per-business unit taxation at least 20 days before the relevant taxable period begins, specifying the following:
1. The entrepreneur’s personal details;
2. Grounds for waiving per-business unit taxation;
3. Other reference information.
(2) The head of the tax office having jurisdiction over a place of business subject to per-business unit taxation shall promptly give notice to the relevant entrepreneur and the head of the tax office having jurisdiction over his/her ancillary place of business of the result of processing a report on waiver of per-business unit taxation under paragraph (1).
(3) Where an entrepreneur waives per-business unit taxation under paragraph (1), he/she shall file a return and make a payment for each place of business or make a lump-sum payment at his/her principal place of business under Article 92 according to the details of the report on waiver of per-business unit taxation, from the taxable period following that in which the date of waiver falls.
CHAPTER II TAXABLE TRANSACTIONS
SECTION 1 Transactions Subject to Taxation
 Article 18 (Scope of Supply of Goods)
(1) The supply of goods under Article 9 (1) of the Act is as follows:
1. Delivery or transfer of goods based on a contract for cash sale, credit sale, installment sale, long-term installment sale, conditional or fixed-term sale, consignment sale, or other trade;
2. Delivery of goods based on a processing contract under which one party makes new goods, processing the goods delivered by the other party, in which all or some of the essential materials are provided by the former;
3. Delivery or transfer of goods based on an exchange contract under which other goods are delivered or services are provided for in return for the delivery of those goods;
4. Delivery or transfer of goods based on auction, expropriation, investment in kind, or other contractual or legal grounds;
5. Re-bringing into the territory of Korea of any article that is bailed from the territory of Korea to a bonded warehouse (limited to a warehouse referred to in paragraph (2) 1 and 2).
(2) Notwithstanding paragraph (1) 1, none of the following shall be treated as the supply of goods:
1. Transfer of a warehouse receipt issued by the Administrator of the Public Procurement Service for any article kept in a bonded warehouse of the Public Procurement Service (referring to a bonded warehouse established by the Administrator of the Public Procurement Service and licensed by the head of a customs house under Article 174 of the Customs Act; hereinafter the same shall apply), which does not entail the return of the bailed article (including cases where an entrepreneur holding a warehouse receipt receives a delivery of a bailed article from a warehouse of the Public Procurement Service to deliver the article to another entrepreneur within the bonded area);
2. Transfer of a warehouse receipt issued by a designated bonded warehouse of an exchange prescribed by Ordinance of the Ministry of Strategy and Finance for any article kept in the designated bonded warehouse of that exchange, which does not entail the return of the bailed article (including cases where an entrepreneur holding a warehouse receipt receives a delivery of a bailed article from a designated warehouse to deliver the article to another entrepreneur within the bonded area);
3. Delivery of raw materials by an entrepreneur to consign the processing thereof to an overseas processor without compensation (excluding those subject to the tax rate of zero percent (hereinafter referred to as “zero tax rate”) under Article 31 (1) 5);
4. A loan for consumption through which the Korea National Oil Corporation established under the Korea National Oil Corporation Act supplies petroleum stockpiled pursuant to the Petroleum and Alternative Fuel Business Act to a nonresident or foreign corporation who has no domestic place of business as provided for in Article 8 (6) by means of riskless arbitrage, keeping such petroleum in a bonded area without undergoing the process for import customs clearance.
(3) Notwithstanding paragraph (1) 4, none of the following shall be treated as the supply of goods:
1. Delivery or transfer of goods through a public auction under Article 61 of the National Tax Collection Act (including sale of goods by a negotiated contract under Article 62 of the same Act);
2. Delivery or transfer of goods through an auction under the Civil Execution Act (including any compulsory auction and auction to exercise a security right under the same Act and any auction under the Civil Act, the Commercial Act and other Acts);
3. Receipt of compensation for expropriated goods by the owner of the goods expropriated through the expropriation procedures under the Act on the Improvement of Urban Areas and Residential Environments, the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects, and other Acts.
 Article 19 (Scope of Automobile-Related Business Types, etc. in which Use of Self-Produced or Acquired Goods for Other than Business Purposes is Deemed Supply of Goods)
“Transportation business, an automobile sales business, or any other type of business prescribed by Presidential Decree” in Article 10 (2) 2 of the Act, means each of the following: <Amended by Presidential Decree No. 25196, Feb. 21, 2014; Presidential Decree No. 26071, Feb. 3, 2015>
1. Transportation business;
2. Automobile sales business;
3. Automobile lease business;
4. Driving school business;
5. Security business that provides mechanical equipment security services as defined in subparagraph 1 (d) of Article 2 of the Security Services Industry Act. In such cases, the automobiles referred to in Article 10 (2) 2 of the Act, shall be limited to the vehicles referred to in Article 16-3 of the Security Services Industry Act;
6. Types of business similar to those referred to in subparagraphs 1 through 5.
 Article 20 (Scope of Donations for Business Not Deemed Supply of Goods)
“Donation as prescribed by Presidential Decree” in the proviso to Article 10 (5) of the Act, means the donation of any of the following: <Amended by Presidential Decree No. 27838, Feb. 7, 2017>
1. Samples delivered or transferred to other entrepreneurs for business without compensation;
2. Articles supplied to a special disaster area designated under the Framework Act on the Management of Disasters and Safety;
3. Goods supplied upon full payment of the settlement amount using self-accumulated mileage, etc. prescribed in Article 61 (1) 9 (b).
 Article 21 (Cases Deemed that Consignees or Agents Supply or are Supplied with Goods in Consignment Sales, etc.)
“When the consignor or the principal is not identified, as prescribed by Presidential Decree” in the proviso to Article 10 (7) of the Act, means when the consignor or the principal are unidentifiable in light of the characteristics of transactions or goods on consignment or through an agent, or their storage and management.
 Article 22 (Offering of Security Not Deemed Supply of Goods)
“Offering any goods as security, which is prescribed by Presidential Decree” in Article 10 (8) 1 of the Act, means offering movables, immovables or a right over immovables for pledge, mortgage, or security by means of transfer.
 Article 23 (Transfer of Business Not Deemed Supply of Goods)
“Transferring any business, which is prescribed by Presidential Decree” in the main sentence of Article 10 (8) 2 of the Act, means universal succession to all rights and obligations related to business for each place of business (in the case of a division or a merger after division under the Commercial Act, including by business category within the same place of business) [including divisions meeting the requirements provided for in Article 46 (2) or 47 (1) of the Corporate Tax Act, the comprehensive transfer of assets meeting the requirements provided for in each of the subparagraphs of Article 37 (1) of the Restriction of Special Taxation Act, and cases where a transferee adds a new type of business to the business he/she has succeeded to or changes the type of business he/she has succeeded to]. In such cases, even though the succession does not include any of the following in relation to the rights and obligations on the business, the business shall be deemed succeeded to under universal title: <Amended by Presidential Decree No. 25196, Feb. 21, 2014>
1. Note receivables;
2. Accrued payables;
3. Land, buildings, etc. not directly related to the business, which are prescribed by Ordinance of the Ministry of Strategy and Finance.
 Article 24 (Tax Payment In Kind Not Deemed Supply of Goods)
“Paying any tax in kind pursuant to Acts, which is prescribed by Presidential Decree” in Article 10 (8) 3 of the Act, means making a payment in kind with business assets pursuant to Article 73 of the Inheritance Tax and Gift Tax Act, Article 117 of the Local Tax Act and Article 19 of the Comprehensive Real Estate Holding Tax Act.
 Article 25 (Scope of Supply of Services)
The supply of services under Article 11 of the Act, shall be deemed to include each of the following:
1. In the case of a construction business, the provision of all or some of building materials by a constructor;
2. Processing operations, which one party performs on goods delivered by the other party without the former providing any essential materials on his/her part;
3. Provision of information about industrial, commercial or scientific knowledge, experience or skill.
 Article 26 (Leasing Real Estate for Business Use to Related Persons Deemed Supply of Services)
(1) “Related persons prescribed by Presidential Decree” in the proviso to Article 12 (2) of the Act, means persons referred to in Article 98 (1) of the Enforcement Decree of the Income Tax Act or in each subparagraph of Article 87 (1) of the Enforcement Decree of the Corporate Tax Act (hereinafter referred to as “related person”).
(2) “Services prescribed by Presidential Decree, such as the lease of real estate for business use” in the proviso to Article 12 (2) of the Act, means leasing real estate for business use, except between an industry-academic cooperation foundation established under Article 25 of the Industrial Education Enhancement and Industry-Academia-Research Cooperation Promotion Act and a university as defined in subparagraph 2 (c) of Article 2 of the same Act.
 Article 27 (Bonded Areas)
“Bonded area prescribed by Presidential Decree” in Article 13 of the Act, means each of the following area or zone:
1. A bonded area established under the Customs Act;
2. A free trade zone designated under the Act on Designation and Management of Free Trade Zones.
SECTION 2 Time and Place of Supply
 Article 28 (Time of Supply for Goods by Specific Types of Transactions)
(1) The time of supply for goods by specific types of transactions under the latter part of Article 15 (1) of the Act is as set forth in the following table:
ClassificationTime of Supply
1. For cash sales, credit sales or installment salesThe time goods are
delivered or made available
2. Where gift certificates, etc. are sold for cash or on credit and thereafter exchanged for goods The time goods are
actually delivered
3. For processing deemed the supply of goodsThe time processed goods are delivered
(2) For a return-conditional sale, consent-conditional sale or other conditional sale or for a fixed-term sale, the time the condition is fulfilled or the sale is determined upon expiration of the fixed term, shall be deemed the time of supply.
(3) If any of the following is applicable, the time each payment is determined to be made, shall be deemed the time of supply for goods: Provided, That in the case of subparagraph 2 or 3, with respect to the portion of payment determined to be made after the date goods are delivered or made available, the date the goods are delivered or made available, shall be deemed the time of supply for the goods:
1. Long-term installment sales prescribed by Ordinance of the Ministry of Strategy and Finance;
2. The supply of goods upon milestone payments;
3. The supply of goods upon interim payments prescribed by Ordinance of the Ministry of Strategy and Finance;
4. The continuous supply of electric power or other goods via an inseparable supply unit.
(4) Where goods are deemed supplied under Article 10 of the Act, the time classified as follows shall be deemed the time of supply for the goods:
ClassificationTime of Supply
1. Where goods are deemed supplied under Article 10 (1), (2), and (4) of the ActWhen such goods are used or consumed
2. Where goods are deemed supplied under Article 10 (3) of the ActWhen such goods are carried out
3. Where goods are deemed supplied under Article 10 (5) of the ActWhen such goods are donated
4. Where goods are deemed supplied under Article 10 (6) of the ActThe date of business closure under Article 7
(5) Where goods are supplied through a vending machine, the time the entrepreneur takes cash out of the vending machine shall be deemed the time of supply for the goods.
(6) Where goods are exported, the time classified as follows shall be deemed the time of supply for the goods:
ClassificationTime of Supply
1. Where Article 21 (2) 1 of the Act or Article 31 (1) 1 of this Decree is applicableThe date of shipping (loading) exported goods
2. In the case of pelagic fishery or where Article 31 (1) 2 is applicableWhen the supply value of exported goods is determined
3. Where any of Article 31 (1) 3 through 5 is applicableWhen goods are delivered in a foreign country
(7) Where the supply of goods by an entrepreneur from a bonded area to a domestic area outside the bonded area, is treated as importation of goods, the date the import declaration is received, shall be deemed the time of supply for goods.
(8) Where the supply of goods entails the return of a bailed article kept in a warehouse of the Public Procurement Service or a designated warehouse of an exchange under Article 18 (2) 1 and 2, the time classified as follows shall be deemed the time of supply for goods:
ClassificationTime of Supply
1. Where an entrepreneur holding a warehouse receipt takes the delivery of the actual object at the warehouse of the Public Procurement Service or the designated warehouse of the exchange and delivers it to another entrepreneur within the bonded areaWhen the relevant goods are delivered
2. Where the receipt of the actual object is treated as importation of goodsThe date the import declaration is received
3. Where an article that is bailed from the territory of Korea to a warehouse of the Public Procurement Service, or a designated warehouse of an exchange is brought into the territory of KoreaThe date the bringing-in declaration is received
(9) Notwithstanding paragraphs (1) through (8), if the time of supply for goods supplied by an entrepreneur before closing his/her business arrives after the date of business closure, the date of business closure shall be deemed the time of supply.
(10) In the case of sales on consignment or through an agent under the main sentence of Article 10 (7) of the Act, paragraphs (1) through (9) shall apply based on the supply of goods by the consignee or agent: Provided, That when the consignor or principal is unidentified under the proviso to Article 10 (7) of the Act, paragraphs (1) through (9) shall apply on the assumption that a separate supply has been made between the consignor and the consignee, or between the principal and the agent.
(11) Where an entrepreneur liable to pay tax, leases facilities, etc. from any lessor registered under the Specialized Credit Finance Business Act and takes the delivery of the facilities, etc. directly from the supplier or the head of the competent customs house, paragraphs (1) through (9) shall apply on the assumption that the entrepreneur has been supplied with the goods directly from the supplier or has imported the goods directly from the relevant foreign country.
 Article 29 (Time of Supply for Services Supplied in Installments or on Conditions)
(1) Where any of the following subparagraphs is applicable, the time each payment is determined to be made, shall be deemed the time of supply for services supplied in installments or on conditions under Article 16 (2) of the Act: Provided, That in the case of subparagraph 2 or 3, with respect to the portion of payment determined to be made after the date the offer of labor is completed, the date the offer of labor is completed shall be deemed the time of supply for the services:
1. Where services are supplied on condition of long-term installment or other conditions prescribed by Ordinance of the Ministry of Strategy and Finance;
2. Where services are supplied upon milestone payments;
3. Where services are supplied upon interim payments prescribed by Ordinance of the Ministry of Strategy and Finance;
4. Where services are continuously supplied via an inseparable supply unit.
(2) The time of supply for services under Article 16 (2) of the Act, shall be as follows:
1. Where the time the offer of labor is completed or payment is determined to be made, cannot be deemed the time of supply: The time the provision of services is completed or the price of supply is determined;
2. Where an entrepreneur provides real estate leasing services, which falls under any of the following: The date on which the preliminary return period or taxable period ends:
(a) Where Article 29 (10) 1 of the Act is applicable;
(b) Where Article 29 (10) 3 of the Act is applicable;
(c) Where the entrepreneur renders real estate leasing services after leasing the real estate, in which the calculation of tax base is subject to Article 65 (2);
3. Where any of the following services are provided over at least two consecutive taxable periods and the price is paid in advance: The date on which the preliminary return period or taxable period ends:
(a) Where an entrepreneur operating a fitness club or other sports center allows its members to use the facilities subject to advance payment of annual dues;
(b) Where an entrepreneur allows another entrepreneur to use his/her trademark after entering into a trademark license agreement with him/her in return for a lump-sum payment of the total amount of royalty;
(c) Where an entrepreneur establishing and operating a welfare facility for older persons (limited to charged ones) under the Welfare of Older Persons Act, allows the facility residents to use a swimming pool, fitness club, etc. in the facility after collecting the user fees in advance from them before they occupy the facility;
(d) Other services similar to those provided for in items (a) through (c);
4. Where an entrepreneur allows the use of a facility established in compliance with the mode provided for in subparagraph 3 of Article 4 of the Act on Public-Private Partnerships in Infrastructure over at least two consecutive taxable periods, collecting the fees for use thereof: The date on which the preliminary return period or taxable period ends.
(3) Notwithstanding paragraphs (1) and (2), if the time of supply for services provided by an entrepreneur before closing his/her business arrives after the date of business closure, the date of business closure shall be deemed the time of supply.
 Article 30 (Special Cases concerning Time of Supply for Goods and Services Subject to Issuance of Tax Invoices, etc. for Installment Payments)
“Time of supply for goods or services applicable to cases prescribed by Presidential Decree” in Article 17 (4) of the Act, means any of the following:
1. Time of supply where goods are supplied by means of long-term installment sales or services are provided on condition of long-term installment;
2. Time of supply where electric power or other goods are continuously supplied via an inseparable supply unit under Article 28 (3) 4;
3. Time of supply where services are continuously supplied via an inseparable supply unit under Article 29 (1) 4.
CHAPTER III ZERO TAX RATE AND TAX EXEMPTION
SECTION 1 Application of Zero Tax Rate
 Article 31 (Scope of Exportation)
(1) “Transaction prescribed by Presidential Decree, such as a transit trade transaction” in Article 21 (2) 2 of the Act, means any of the following:
1. Export made through transit trade transaction (referring to export of articles, etc. imported for export without bringing such articles, etc. into the territory of Korea, other than into the bonded areas designated under Article 154 of the Customs Act; and the places permitted for storage of goods outside bonded areas designated under Article 156 of the same Act or the free trade zones designated under Article 4 of the Act on Designation and Management of Free Trade Zones);
2. Consignment export [referring to export made under a contract, the price of which is settled within the limits of proceeds from the sale of articles, etc. exported without exchange];
3. Overseas delivery export [referring to export made by means of delivering or offering exports, etc. not cleared in the Republic of Korea to a foreign country although the price is received in the Republic of Korea];
4. Export based on consignment processing trade [referring to export made by means of either exporting all or some of the raw materials to be processed (including to be manufactured, fabricated, restructured, or remodeled; hereinafter the same shall apply) in a foreign country to the other party to transaction on condition of paying processing fees or delivering processed articles, etc. to a foreign country after procuring and processing them therein];
5. If raw materials are removed from the territory of Korea to make an overseas consignment processor process them without compensation and the processed goods are transferred, removal of the raw materials.
(2) “Goods as prescribed by Presidential Decree” in Article 21 (2) 3 of the Act, means any of the following:
1. Goods (excluding gold bullion) supplied by an entrepreneur using a local letter of credit or a written verification of purchase determined by Ordinance of the Ministry of Strategy and Finance;
2. Goods supplied by an entrepreneur to the Korea International Cooperation Agency established under the Korea International Cooperation Agency Act (limited to goods that the Korea International Cooperation Agency removes from the territory of Korea to a foreign country without compensation, for the project under Article 7 of the same Act);
3. Goods supplied by an entrepreneur to the Korean Foundation for International Healthcare established under the Korean Foundation for International Healthcare Act (limited to goods that the Korean Foundation for International Healthcare removes from the territory of Korea to a foreign country without compensation, for the project under Article 7 of the same Act);
4. Goods supplied by an entrepreneur to the Korean National Red Cross established under the Organization of the Republic of Korea National Red Cross Act (limited to goods that the Korean National Red Cross removes from the territory of Korea to a foreign country without compensation, for the project under Article 7 of the same Act);
5. Goods supplied by an entrepreneur in compliance with the following requirements:
(a) To be supplied under direct contract with a foreign nonresident or foreign corporation (hereafter referred to as “nonresident, etc.” in this subparagraph);
(b) For the entrepreneur to receive the price in Korean won at a foreign exchange bank;
(c) To be delivered to another domestic entrepreneur designated by the nonresident, etc.;
(d) To be removed from the territory of Korea by another domestic entrepreneur under contract with the nonresident, etc. as they are delivered, or after being manufactured or processed.
 Article 32 (Scope of Overseas Navigation Services by Ship or Aircraft)
(1) “Goods or services which are prescribed by Presidential Decree” in Article 23 (2) of the Act, means any of the following:
1. Selling boarding passes or making freight transport contracts for another overseas navigation service provider’s ship or aircraft;
2. Providing passengers with cabin services in a ship or aircraft that covers a foreign country;
3. Transporting passengers by the service provider’s private passenger limousine;
4. Accommodating passengers with lodging at the service provider’s private hotel.
(2) Any of the following services are included in the category of the overseas navigation services referred to in Article 23 (3) of the Act: <Amended by Presidential Decree No. 27970, Mar. 29, 2017>
1. International transport services in which a freight forwarder receives freight from a shipper based on an international multimodal transport contract and collects rates from the shipper subject to transporting the freight using a third-party’s means of transportation, such as a ship or aircraft, on his/her own responsibility and account;
2. Commercial document delivery services under the Aviation Business Act.
 Article 33 (Scope of Goods, Services, etc. Supplied for Acquisition of Foreign Currencies)
(1) “Supply of goods or services, which is made in the manner prescribed by Presidential Decree” in Article 24 (1) 2 of the Act means the supply of any of the following goods or services to those who present diplomatic tax exemption cards issued by the Minister of Foreign Affairs at a place of business designated by the head of the competent tax office as a diplomatic duty free shop (including a place of sales designated pursuant to Article 28 of the Enforcement Decree of the Individual Consumption Tax Act), as prescribed by the Commissioner of the National Tax Service, which is verified as having been supplied to the persons referred to in Article 24 (1) 2 of the Act (hereafter referred to as “diplomatic officials, etc.” in this paragraph) by a diplomatic sales tax exemption record stating their names and nationalities, the numbers of diplomatic tax exemption cards, the names of articles, quantity, the values of supplies, etc.:
1. Food and accommodation services;
4. Alcoholic beverages supplied under the Liquor Tax Act;
5. Electric power;
6. Automobiles purchased with approval from the Minister of Foreign Affairs.
(2) “Supply of goods or services, which is prescribed by Presidential Decree” in Article 24 (1) 3 of the Act means the supply of any of the following: <Amended by Presidential Decree No. 26071, Feb. 3, 2015; Presidential Decree No. 26983, Feb. 17, 2016; Presidential Decree No. 27838, Feb. 7, 2017>
1. Any of the following goods or business services that are supplied in the territory of Korea to a nonresident (excluding an individual having his/her residence in the Republic of Korea, an employee of a diplomatic office, etc. provided for in Article 24 (1) 1 of the Act, and a serviceperson or civilian employee of United Nations Armed Forces or United States Armed Forces permanently stationed in the Republic of Korea; hereafter the same shall apply in this paragraph) or foreign corporation having no domestic place of business, the price of which is paid in Korean won at a foreign exchange bank or in a manner prescribed by Ordinance of the Ministry of Strategy and Finance: Provided, That the professional activities referred to in item (b) and the activities referred to in item (h) are limited to where the relevant foreign country grants the identical tax exemption as provided for herein to Korean residents or corporations (referring to where the relevant foreign country has no provisions governing taxes equivalent to the value-added tax or other similar taxes of the Republic of Korea or exempts Korean residents or corporations from those taxes; hereafter the same shall apply in this paragraph):
(a) Goods delivered to a domestic entrepreneur designated by a nonresident or foreign corporation for the entrepreneur’s taxable business;
(b) Professional, scientific and technical activities (excluding veterinary activities, activities of head offices for manufacturing, and activities of head offices for other industries);
(c) Leasing of intangible property rights;
(d) Communications services;
(e) Repair of containers; storage and warehousing within bonded areas; and the shipping agency services, marine transportation brokerage business, and vessel management services under the Marine Transportation Act;
(f) News agency activities; motion picture, video and television program production, sound recording and music publishing activities (excluding motion picture and video exhibition); software development; computer programming; system integration and management; data processing; hosting, portals and other Internet information media service activities; and other information service activities, which all belong to the category of publishing, video, broadcasting, communications and information services;
(g) Brokerage of commodity;
(h) Business facilities management and business support service activities (excluding landscape care and maintenance service activities, activities of travel agencies and tour operators, and tourist assistance activities);
(i) Educational services (limited to educational support activities);
(j) Human health activities (limited to cases of supplying clinical trial services);
(k) Goods or services similar to those provided for in items (a) through (j), which are prescribed by Ordinance of the Ministry of Strategy and Finance;
2. Goods or business services referred to in any of the items of subparagraph 1 (for professional activities referred to in subparagraph 1 (b) and activities referred to in subparagraph 1 (h), limited to where the relevant foreign country grants Korean residents or corporations the identical tax exemption as provided for herein) that are supplied in the territory of Korea under direct contract with a foreign nonresident or foreign corporation having a domestic place of business: Provided, That this shall apply only where the price is paid by the relevant foreign nonresident or foreign corporation either in Korean won at a foreign exchange bank or in a manner prescribed by Ordinance of the Ministry of Strategy and Finance;
3. Export goods processing services (including export goods dyeing services; hereinafter the same shall apply) that process export goods under direct contract with exporters: Provided, That this does not apply where an entrepreneur issues a tax invoice on which value-added tax is itemized under Article 32 of the Act;
4. Export goods processing services supplied based on a local letter of credit or a written verification of purchase determined by Ordinance of the Ministry of Strategy and Finance;
5. Goods or services supplied to a ship, aircraft, or deep-sea fishing vessel that covers a foreign country: Provided, That this does not apply where an entrepreneur issues a tax invoice on which value-added tax is itemized under Article 32 of the Act;
6. Goods or services supplied to United Nations Armed Forces or United States Armed Forces that are permanently stationed in the Republic of Korea;
7. Travel agent services provided by general travel business operators for foreign tourists under the Enforcement Decree of the Tourism Promotion Act: Provided, That this shall apply only where the price is paid as follows:
(a) The price is received in Korean won at a foreign exchange bank;
(b) It is verified that foreign currency cash is generated from transactions with foreign tourists, based on a statement of travel agent service fees and a certificate of purchased foreign currency determined by the Commissioner of the National Tax Service;
8. Deleted; <by Presidential Decree No. 26071, Feb. 3, 2015>
9. Goods or services supplied in the territory of Korea by any of the following entrepreneurs: Provided, That this shall apply only where the price is paid in foreign currency and exchanged into Korean won at a foreign exchange bank:
(a) A person who operates a foreigner-only selling place designated under Article 17 (1) of the Individual Consumption Tax Act;
(b) A person who operates an entertainment restaurant exclusive for foreign military personnel stationed in the Republic of Korea and foreign seafarers under Article 115 of the Restriction of Special Taxation Act.
SECTION 2 Tax Exemptions
 Article 34 (Scope of Unprocessed Foodstuffs, etc.)
(1) Unprocessed foodstuffs referred to in Article 26 (1) 1 of the Act (hereafter referred to as “unprocessed foodstuffs” in this Article), mean any of the following stuffs supplied for food unprocessed or primarily processed, to the extent that the inherent nature of the original products remains unchanged, such as threshing, cleaning, polishing, milling, dressing, drying, freezing, salting or packing. In such cases, matters necessary relating to the scope of the following unprocessed foodstuffs, shall be prescribed by Ordinance of the Ministry of Strategy and Finance:
1. Cereals;
2. Potatoes;
3. Special-purpose crops;
4. Fruit;
5. Vegetables;
6. Livestock;
7. Meat;
8. Eggs (including milk and powdered milk);
9. Fishes (including whales);
10. Shellfish;
11. Seaweeds;
12. Other agricultural products, stock farm products, marine products, and forest products, all of which are supplied for food, besides those provided for in subparagraphs 1 through 11;
13. Salt (referring to bay salt and re-manufactured salt that meet the food standards and specifications determined by the Minister of Food and Drug Safety under Article 7 (1) of the Food Sanitation Act; hereinafter the same shall apply).
(2) Unprocessed foodstuffs include the following:
1. Simple processed foodstuffs prescribed by Ordinance of the Ministry of Strategy and Finance, such as kimchi and bean curd;
2. By-products generated naturally from primary processing, to the extent that the inherent nature of the original products remains unchanged;
3. Simple mixtures of unprocessed foodstuffs;
4. Foodstuffs produced through adding food additives, etc. to, or coating rice or culturing fungi, which are prescribed by Ordinance of the Ministry of Strategy and Finance.
(3) Agricultural products, stock farm products, marine products, and forest products referred to in Article 26 (1) 1 of the Act, are as follows:
1. Original products;
2. Products produced through original processing, to the extent that the inherent shape of the original products remains unchanged;
3. By-products generated naturally from original processing under subparagraph 2.
 Article 35 (Scope of Tax-Free Medical and Health Services)
Medical and health services referred to in Article 26 (1) 5 of the Act, mean the following services (including services provided by persons who have opened medical institutions or veterinary hospitals under the Medical Service Act or the Veterinarians Act): <Amended by Presidential Decree No. 25057, Jan. 1, 2014; Presidential Decree No. 25133, Jan. 28, 2014; Presidential Decree No. 26983, Feb. 17, 2016; Presidential Decree No. 27433, Aug. 2, 2016>
1. Services provided by a physician, a dentist, an oriental medical doctor, a midwife, or a nurse under the Medical Service Act: Provided, That this shall exclude medical services not covered by any of the care benefits under Article 41 (4) of the National Health Insurance Act, as listed below:
(a) Plastic surgery (excluding the treatment of plastic surgery complications, reconstructive surgery of congenital malformations, and reconstructive surgery following tumor removal), such as double eyelid surgery, rhinoplasty, breast augmentation and reduction surgery (excluding breast reconstruction surgery following mastectomy for breast cancer), liposuction, face-lifting, face contouring, and cosmetic dental treatment (referring to tooth whitening, laminate and gingivoplasty), and orthognathic surgery (excluding orthognathic surgery following teeth straightening);
(b) Nevus pigmentosus, freckle, lentigo and chloasma treatment, acne treatment, hair removal, alopecia treatment, hair transplantation, tattooing, tattoo removal, piercing, lipolysis, skin regeneration, skin whitening, anti-aging, and pore tightening;
2. Services provided by a bone-setter, acupuncturist, moxibustionist or massage therapist under the Medical Service Act;
3. Services provided by a clinical pathologist, radiologist, physical therapist, occupational therapist, dental technician or dental hygienists under the Medical Technologists, etc. Act;
4. Drug dispensing services provided by a pharmacist under the Pharmaceutical Affairs Act;
5. Services provided by a veterinarian under the Veterinarians Act: Provided, That diagnosing and treating animals shall be limited to each of the following:
(a) Diagnosing and treating livestock under the Livestock Products Sanitary Control Act;
(b) Diagnosing and treating aquatic animals under the Aquatic Life Disease Control Act;
(c) Diagnosing and treating guide dogs for persons with disabilities, which carry the mark of guide dog under Article 40 (2) of the Act on Welfare of Persons with Disabilities;
(d) Diagnosing and treating animals raised by recipients as defined in subparagraph 2 of Article 2 of the National Basic Living Security Act;
(e) Veterinary services to prevent animal diseases that are published by the Minister of Agriculture, Food and Rural Affairs or the Minister of Oceans and Fisheries in consultation with the Minister of Strategy and Finance, other than those provided for in items (a) through (d);
6. Funeral services provided by a funeral service provider;
7. Services related to cremation and graveyard subdivision and management provided by the establisher of a private cemetery, private crematory facility or private charnel facility under Articles 14 and 15 of the Act on Funeral Services, Etc.;
8. Services related to cremation and graveyard subdivision and management provided by a person to whom a local government has entrusted the management of a public cemetery, public crematory facility or public charnel facility;
9. Emergency patient transport services provided by an emergency patient transport service provider as defined in subparagraph 8 of Article 2 of the Emergency Medical Service Act;
10. Services provided by an entrepreneur holding a license for a foul waste collection and transportation business under Article 45 of the Sewerage Act, or a permit for a livestock excreta collection and transportation business or livestock excreta disposal business under Article 28 of the Act on the Management and Use of Livestock Excreta;
11. Disinfection services provided by an entrepreneur who has filed a report on his/her disinfection services under Article 52 of the Infectious Disease Control and Prevention Act;
12. Collection, transportation or disposal of household wastes or medical refuse provided by an entrepreneur holding a license for a business of treating household wastes or medical refuse under Article 25 of the Wastes Control Act, and recycling of household wastes provided by an entrepreneur who has obtained approval for, or filed a report on, installation of a waste disposal facility under Article 29 of the same Act;
13. Health management services provided by a specialized health management institution designated under Article 16 of the Occupational Safety and Health Act, and working environment measurement services provided by a measurement institution designated under Article 42 of the same Act;
14. Services, such as aid in physical activities and household chores or nursing, provided by a long-term care institution as defined in subparagraph 4 of Article 2 of the Long-Term Care Insurance Act for those who have obtained approval for long-term care under the same Act;
15. Services provided by a person other than the State and local governments in exchange for a welfare service voucher issued to an individual in need of protection under Article 33-7 of the Social Welfare Services Act;
16. Services, such as food and medical care, provided by a postnatal care center as defined in subparagraph 11 of Article 2 of the Mother and Child Health Act for women right after delivery or for newborn babies;
17. Services, such as nursing, postnatal care and childcare, directly provided by a social enterprise certified under Article 7 of the Social Enterprise Promotion Act.
 Article 36 (Scope of Tax-Free Educational Services)
(1) Educational services referred to in Article 26 (1) 6 of the Act, mean teaching knowledge, skills, etc. to students, attendees, trainees, learners or auditors at any of the following facilities, etc.: <Amended by Presidential Decree No. 26983, Feb. 17, 2016>
1. Schools, private teaching institutes, private learning centers, training centers, teaching schools or other nonprofit organizations, which are licensed or authorized by, registered with, or reported to the competent authorities;
2. Youth training facilities referred to in subparagraph 1 of Article 10 of the Juvenile Activity Promotion Act;
4. Social enterprises certified under Article 7 of the Social Enterprise Promotion Act;
6. Museums and art galleries registered under Article 16 of the Museum and Art Gallery Support Act.
(2) Notwithstanding paragraph (1), lessons provided by any of the following private teaching institutes shall be excluded from the educational services referred to in Article 26 (1) 6 of the Act:
2. Driving schools as defined in subparagraph 32 of Article 2 of the Road Traffic Act.
 Article 37 (Scope of Passenger Transport Services by Aircraft, Expressway Buses, etc. Subject to Taxation)
Passenger transport services by aircraft, expressway buses, chartered buses, taxies, special vehicles, special-type ships, or rapid-transit trains under the proviso to Article 26 (1) 7 of the Act, mean each of the following: <Amended by Presidential Decree No. 26071, Feb. 3, 2015; Presidential Decree No. 27970, Mar. 29, 2017>
1. Passenger transport services by aircraft under the Aviation Business Act;
2. Passenger transport services by automobiles used for the following passenger transport services among the passenger transport services provided under the Passenger Transport Service Act:
(a) Express intercity bus transport services: Provided, That the same shall be limited, until March 31, 2018, to passenger transport services by express intercity premium buses;
(b) Chartered bus transport services;
(c) General taxi transport services and owner-driver taxi transport services;
(d) Car rental services;
3. Passenger transport services by the following ships: Provided, That this shall exclude passenger transport services by the passenger and car ferries prescribed by Ordinance of the Ministry of Strategy and Finance:
(a) Hydrofoils;
(b) Air-cushion vessels;
(c) Car ferries;
(d) Passenger ships with a service speed of at least 20 knots;
4. Passenger transport services by high-speed rail under the Railroad Construction Act.
 Article 38 (Scope of Tax-Free Books, Newspapers, Magazines, etc.)
(1) Books referred to in Article 26 (1) 8 of the Act, include both books and music discs, recording tapes, or videotapes containing the contents thereof, usually constituting one supply unit, and electronic publications prescribed by Ordinance of the Ministry of Strategy and Finance.
(2) Newspapers and magazines referred to in Article 26 (1) 8 of the Act, mean newspapers and online newspapers as defined in subparagraphs 1 and 2 of Article 2 of the Act on the Promotion of Newspapers, Etc. and periodicals published under the Act on Promotion of Periodicals, including Magazines. <Amended by Presidential Decree No. 26071, Feb. 3, 2015>
(3) Official gazettes referred to in Article 26 (1) 8 of the Act, mean those subject to the Regulations on Official Gazettes.
(4) News communications referred to in Article 26 (1) 8 of the Act, include news communications (excluding where a corporation operating a news communications business provides specified information, such as financial information, for specific members) under the Act on the Promotion of News Communications and news communications services provided by foreign news agencies similar to news communications under the Act on the Promotion of News Communications.
 Article 39 (Scope of Tax-Free Tobacco for Special Use, etc.)
(1) “Amount of money prescribed by Presidential Decree” in Article 26 (1) 10 (a) of the Act, means 200 won (per 20 cigarettes).
(2) “Tobacco for special use, which is prescribed by Presidential Decree” in Article 26 (1) 10 (b) of the Act, means tobacco for special use referred to in Article 19 of the Tobacco Business Act, excluding zero-tax rated tobacco under Articles 21 through 24 of the Act.
 Article 40 (Scope of Tax-Free Financing and Insurance Services)
(1) Financing and insurance services referred to in Article 26 (1) 11 of the Act, mean labor for the following services, business and work: <Amended by Presidential Decree No. 25196, Feb. 21, 2014; Presidential Decree No. 26071, Feb. 3, 2015; Presidential Decree No. 26600, Oct. 23, 2015; Presidential Decree No. 26983, Feb. 17, 2016>
1. Banking services and incidental services under the Banking Act, as follows:
(a) Receipt of deposits and savings deposits, and issuance of securities and other debentures;
(b) Loans of funds or discount of notes;
(c) Domestic and foreign exchange;
(d) Guarantee of debts or acceptance of notes;
(e) Mutual savings;
(f) Factoring (purchase and recovery of bonds on sales price of a company and affairs related thereto);
(g) Deleted; <by Presidential Decree No. 26071, Feb. 3, 2015>
(h) Execution of collection and payment as an agent;
(i) A credit depository of a local government as an agent;
(j) Execution of payment related to electronic commercial transactions as an agent;
2. Services provided under the Financial Investment Services and Capital Markets Act, as follows:
(a) and (b) Deleted; <by Presidential Decree No. 26071, Feb. 3, 2015>
(c) Collective investment business: Provided, That this shall exclude where a collective investment business entity manages funds, etc. pooled from investors, investing them in real estate, commodities and other assets prescribed by Ordinance of the Ministry of Strategy and Finance;
(d) Trust business: Provided, That this shall be limited to the following work:
i) That a trust business entity manages (including keeping and managing as instructed by a collective investment business entity; hereafter the same shall apply in this item) property referred to in Article 103 (1) 1 through 4 or 7 of the Financial Investment Services and Capital Markets Act (including collective investment property as defined in Article 9 (20) of the same Act; hereafter the same shall apply in this item) entrusted by a trustor: Provided, That this shall exclude where a trust business entity manages property entrusted under Article 103 (1) 1 of the same Act, investing it in real estate, commodities and other assets prescribed by Ordinance of the Ministry of Strategy and Finance;
ii) That a trust business entity manages property referred to in Article 103 (1) 5 or 6 of the Financial Investment Services and Capital Markets Act entrusted by a trustor to guarantee the performance of an obligation to beneficiaries;
iii) That a trust business entity manages property referred to in Article 103 (1) 5 or 6 of the Financial Investment Services and Capital Markets Act entrusted by a trustor to carry out a real estate development project under paragraph (4) of the same Article;
(e) Investment trading business and investment brokerage business, and related work under the following division:
i) Work of a multilateral-trade contracting company under Article 8-2 (5) of the Financial Investment Services and Capital Markets Act;
ii) Work of the Korea Financial Investment Association established under Article 283 of the Financial Investment Services and Capital Markets Act concerning over-the-counter transactions of stock certificates that are not listed on the securities market under Article 286 (1) 5 of the same Act;
iii) Work of the Korea Securities Depository established under Article 294 of the Financial Investment Services and Capital Markets Act;
(f) Work of a general administration company (limited to services provided to collective investment schemes or collective investment business entities);
(g) Discretionary investment business: Provided, That this shall exclude where a discretionary investment business entity manages funds, etc. pooled from investors, investing them in real estate, commodities and other assets prescribed by Ordinance of the Ministry of Strategy and Finance;
(h) Deleted; <by Presidential Decree No. 26071, Feb. 3, 2015>
(i) Business providing a private equity fund participating in management with such services as the management, keeping and administration of the collective investment property, or sale or redemption of equity, of a private equity fund participating in management (limited to services provided by an executive partner of a private equity fund participating in management);
(j) through (m) Deleted; <by Presidential Decree No. 26071, Feb. 3, 2015>
(n) Short-term financing business;
(o) Business of a comprehensive financial investment business entity (limited to work offering credit to enterprises);
3. Deleted; <by Presidential Decree No. 26071, Feb. 3, 2015>
4. Money exchange business under the Foreign Exchange Transactions Act;
5. Mutual savings bank business under the Mutual Savings Banks Act;
6. Credit guarantee fund business under the Credit Guarantee Fund Act;
7. Guarantee business of the Korea Housing and Urban Guarantee Corporation established under the Housing and Urban Fund Act;
8. Insurance business under the Insurance Business Act (including serving as an insurance broker or agent and damage adjustment services and insurance investigation and reporting services provided to insurance companies, but excluding both insurance accounting services and pension accounting services under the Act on the Guarantee of Workers’ Retirement Benefits);
9. Specialized credit finance business under the Specialized Credit Finance Business Act (including where either of the entrepreneurs jointly operating a specialized credit finance business performs the specialized credit finance services delegated by the other entrepreneur);
10. Asset-backed securitization business and asset management business of special-purpose companies and asset managers under the Asset-Backed Securitization Act;
11. Work of special-purpose companies for mortgage securitization and mortgage managers under the Act on Special-Purpose Companies for Mortgage-Backed Bonds concerning mortgage securitization and the management, operation and disposal of mortgages;
12. Work of the administrator of claims under the Korea Housing Finance Corporation Act concerning the management, operation and disposal of mortgage-backed claims and student loan-backed claims;
13. Asset management and operation services that a small and medium business start-up investment company established under the Support for Small and Medium Enterprise Establishment Act provides for a small and medium business start-up investment fund under the same Act and the Korea Venture Fund established under the Act on Special Measures for the Promotion of Venture Businesses: Provided, That this shall exclude where a small and medium business start-up investment company manages funds, investing in real estate, commodities and other assets prescribed by Ordinance of the Ministry of Strategy and Finance;
14. Deleted; <by Presidential Decree No. 26071, Feb. 3, 2015>
15. Entrusted asset management and operation services provided by the Korea Investment Corporation established under the Korea Investment Corporation Act pursuant to the same Act;
16. Asset management and operation services that an organization specializing in investment management or executive member under the Act on Formation and Operation of Agricultural, Fisheries, and Food Investment Funds, provides for a fund of funds for agriculture and food investments or an agriculture and food investment fund under the same Act: Provided, That this shall exclude where a organization specializing in investment management or executive member manages funds, investing them in real estate, commodities and other assets prescribed by Ordinance of the Ministry of Strategy and Finance;
17. Payment and settlement system operation services that the Korea Financial Telecommunications and Clearings Institute established under Article 32 of the Civil Act renders as a payment and settlement system operation institution under Article 81 (2) of the Bank of Korea Act;
18. Money lending business (including the money lending business performed by means of discounting notes, transferring security or the like).
(2) Any services equal or similar to financing or insurance services provided for in paragraph (1), which are incidental to the work of a person engaging in business, other than those under each of the subparagraphs of the same paragraph, shall be deemed included in financing and insurance services referred to in Article 26 (1) 11 of the Act.
(3) Services provided by any of the following institutions, etc. shall be deemed included in the banking services referred to in paragraph (1) 1: <Amended by Presidential Decree No. 27037, Mar. 11, 2016>
1. A bank established under any Act other than the Banking Act;
3. The Korea Housing Finance Corporation established under the Korea Housing Finance Corporation Act;
4. The Korea Deposit Insurance Corporation and a financial company authorized to perform liquidation under the Depositor Protection Act;
5. The Agricultural Cooperative Asset Management Corporation and the Mutual Finance Depositor Protection Fund established under the Act on the Structural Improvement of Agricultural Cooperatives;
6. The Mutual Finance Depositor Protection Fund established under the Act on the Structural Improvement of Fisheries Cooperatives;
7. The Mutual Finance Depositor Protection Fund established under the Act on the Structural Improvement of Forestry Cooperatives;
8. Deleted. <by Presidential Decree No. 25945, Dec. 30, 2014>
(4) Notwithstanding paragraph (1), none of the following services shall be treated as financing and insurance services referred to in Article 26 (1) 11 of the Act:
1. Provision of services concerning lottery tickets, admission tickets, gift certificates, bullion coins or gold bullions as an agent: Provided, That this shall exclude the sale of beneficiary certificates or other financial instruments; title transfer of securities; receipt and payment; and services as credit depositories of the State and local governments performed by a financial business operator as an agent;
2. Brokerage, arrangement and agency of corporate merger or acquisition, and sale and lending of a computer system and software related to credit information services and banking services;
3. Leasing real estate;
4. Services similar to those provided for in subparagraphs 1 and 2;
5. Other services prescribed by Ordinance of the Ministry of Strategy and Finance.
 Article 41 (Scope of Tax-Free Lease of Housing and Land Appurtenant thereto)
(1) “Lease of housing and its appurtenant land” referred to in Article 26 (1) 12 of the Act, means leasing a permanent residential building (excluding any residential building for business) (hereinafter referred to as “housing”) and land appurtenant thereto, which does not exceed the wider of the following areas, in which the excess shall be deemed leasing land:
1. Total floor area of the housing (excluding the area of underground floors, the area of ground-floor parking lots, and the area of common facilities for residents referred to in subparagraph 3 of Article 2 of the Regulations on Standards, etc. for Housing Construction);
2. Area that is five times (ten times for land outside the urban areas designated under Article 6 of the National Land Planning and Utilization Act) the size of a site on which a building stands.
(2) Where a commercial building subject to value-added tax (hereinafter referred to as “commercial building”) is annexed to leased housing, the scope of the leased housing and land appurtenant thereto is as described in each of the following:
1. Where the area of housing exceeds the area of the commercial building, the entire area shall be deemed the leased housing area. In such cases, the scope of the leased land appurtenant to the housing is as set forth in paragraph (1);
2. Where the area of housing is equal to, or smaller than, the area of the commercial building, the area of the commercial building other than the housing shall not be deemed leased housing area. In such cases, the area of the land appurtenant to the housing shall be calculated by multiplying the entire land area by the ratio of the housing area to the entire building area, and the scope thereof is as set forth in paragraph (1).
 Article 42 (Scope of Tax-Free Personal Services, Including Vocational Services of Authors)
(1) Personal services referred to in Article 26 (1) 15 of the Act, mean services that constitute an independent business (including where an entrepreneur concurrently operating more than one business, independently supplies services not necessarily incidental to his/her taxable business), as follows:
1. Personal services that are provided by an individual, in exchange for consideration in his/her independent capacity without any hired workers and any physical facilities prescribed by Ordinance of the Ministry of Strategy and Finance, as follows:
(a) Writing, painting and calligraphy, design, sculpture, composition, music, dancing, cartoon, illustration, comic chat, performance, voice acting, vocal performance, or other similar services;
(b) Film directing, dramatization, production, filming, recording, apparatus, lighting, or other similar services;
(c) Construction supervision, scientific services, or other similar services;
(d) Music, garment cutting, dance (including social dance), cooking or Go (game) lessons, or other similar services;
(e) Services as a professional athlete, body builder, jockey or sports coach (including referees), or other similar services;
(f) Services as a waiter, waitress or dancer or other similar services;
(g) Solicitation of policyholders, encouragement of saving or collection of money to receive subscription allowances, incentives, collection allowances or other similar payments from an insurance company or financial institution based on the record of performance, and sales of books, records, etc. by door-to-door salespersons to receive pay based on the record of sales;
(h) Authors’ writing services in exchange for consideration copyright royalties;
(i) Proofreading, translation, historical research, stenography, stencil-paper writing, typing, music recording, or other similar services;
(j) Lecture services rendered to many people without any employment relationship, for lecture fees, tuition fees, etc.;
(k) Commentary, enlightenment, performance or examination services rendered through radio or television broadcasting, etc. for gratuities or similar fees;
(l) Naming, face reading, fortunetelling, or other similar services;
(m) Services rendered by an individual for allowances or similar payments based on his/her performance;
2. Personal services that are provided by an individual, corporation, unincorporated association or foundation, or other organization in his/her or its independent capacity, in exchange for consideration, as follows:
(a) Defense representation by a public defender under the Criminal Procedure Act, the Military Court Act, etc. and legal aid prescribed by Ordinance of the Ministry of Strategy and Finance;
(b) Scientific research services and technical research services prescribed by Ordinance of the Ministry of Strategy and Finance;
(c) Services provided by a job placement agency and services provided by the manager of a consulting office, etc. as prescribed by Ordinance of the Ministry of Strategy and Finance;
(d) Training of guide dogs for persons with disabilities under Article 40 of the Act on Welfare of Persons with Disabilities;
(e) Services supplied for a domestic business operated by the State or a local government with loans obtained from a foreign public institution or an international financial institution as defined in Article 2 of the Act on the Measures for the Admission to International Financial Institutions (including services supplied by a foreign corporation or nonresident having no domestic place of business).
 Article 43 (Scope of Tax-Free Creative Works of Art, etc.)
Creative works of art, artistic events, cultural events, or amateur athletic games referred to in Article 26 (1) 16 of the Act, mean each of the following: <Amended by Presidential Decree No. 26983, Feb. 17, 2016>
1. Creative works of art: Creative artistic, musical, photographical, theatrical or dancing works: Provided, That this shall exclude curios (referring to those under Tariff Schedule No. 9706 of the attached Table of the Customs Act);
2. Artistic events: Nonprofit presentations, workshops, contests, or other similar events;
3. Cultural events: Nonprofit exhibitions, fairs, public events, or other similar events;
4. Amateur athletic games: Nonprofit sports games or belt tests held, hosted, or sponsored by the Korean Olympic Committee or any of its affiliate organizations, or by the Kukkiwon established under the Act on the Promotion of Taekwondo and Creation of Taekwondo Park.
 Article 44 (Scope of Admission to Tax-Free Places)
“Places prescribed by Presidential Decree” in Article 26 (1) 17 of the Act, means the following:
1. Places for presenting folk culture resources;
2. The War Memorial of Korea established under the War Commemoration Service Association Act.
 Article 45 (Scope of Tax-Free Goods or Services Supplied by Organizations for Religion, Charity, Scholarship, Relief, or Other Public Interest)
Goods or services supplied by organizations for religion, charity, scholarship, relief, or other public interest under Article 26 (1) 18 of the Act, mean the following goods or services: <Amended by Presidential Decree No. 25196, Feb. 21, 2014; Presidential Decree No. 26071, Feb. 3, 2015>
1. Goods or services any organization permitted or authorized by, or registered with, the competent authority, which operates any business referred to in any of the subparagraphs of Article 12 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act; or any business prescribed by Ordinance of the Ministry of Strategy and Finance, supplies temporarily for its proper business purposes or supplies at cost or free of charge;
2. Goods or services any organization mainly performing scientific and technical research and presentations for scientific and technical development (hereinafter referred to as “academic research society”) supplies in relation to its research work at cost or free of charge;
3. Leasing land and a building or structure within the precinct of any religious organization (limited to religious organizations registered with the competent authority) that owns or manages any designated cultural heritage (including local cultural heritage, but excluding intangible cultural heritage) under the Cultural Heritage Protection Act;
4. Food and accommodation services a person operating a dormitory prescribed by Ordinance of the Ministry of Strategy and Finance for the public interest, supplies to students or workers at cost or free of charge;
5. Trust management services the operator of a copyright trust management business established with permission from the Minister of Culture, Sports and Tourism under Article 105 (1) of the Copyright Act, as prescribed by Ordinance of the Ministry of Strategy and Finance, supplies to copyright holders at cost or free of charge;
6. Services a non-profit educational foundation referred to in Article 24 (2) 4 (b) of the Corporate Tax Act, supplies to a person establishing and managing a foreigners’ school under Article 60-2 (1) of the Elementary and Secondary Education Act to improve an educational environment, such as the use of school facilities.
 Article 46 (Scope of Tax-Free Goods or Services Supplied by State, Local Governments, or Local Government Associations)
Goods or services supplied by the State, local governments, or local government associations under Article 26 (1) 19 of the Act, means goods or services, excluding the following: <Amended by Presidential Decree No. 26983, Feb. 17, 2016; Presidential Decree No. 27838, Feb. 7, 2017; Presidential Decree No. 28475, Dec. 19, 2017>
1. The following services provided by an organization for postal services established under the Act on Special Cases concerning the Management of Postal Services:
(a) Door-to-door pickup and delivery services of postal parcels as defined in subparagraph 3 of Article 1-2 of the Postal Service Act;
(b) Agency services of mail order sales prescribed by Ordinance of the Ministry of Strategy and Finance among extra postal services provided for in Article 15 (1) of the Postal Service Act;
2. Passenger transport services using high-speed rail under the Railroad Construction Act;
3. Real estate leasing services, wholesale and retail services, food and accommodation services, golf range and ski slope operation services, and other sports facility operation services: Provided, That this shall exclude the following:
(a) Goods or services that the Ministry of National Defense or the national armed forces under the Act on the Organization of National Armed Forces supply to servicepersons under Article 2 of the Military Personnel Management Act, general civilian military employees under Article 3 (1) of the Act on the Management of Civilian Personnel in the Military Service; their lineal ascendants and descendants; or other persons prescribed by Ordinance of the Ministry of Strategy and Finance;
(b) Food services that the State, a local government or an association of local governments supplies at a cafeteria directly operated by it for employee welfare;
4. Any of the following medical and health services:
(a) Medical services provided for in the proviso to subparagraph 1 of Article 35;
(b) Veterinary services that do not fall under subparagraph 5 of Article 35.
 Article 47 (Scope of Organizations for Public Interest)
(1) “Organizations for public interest prescribed by Presidential Decree” in Article 26 (1) 20 of the Act, means organizations that engage in business referred to in any of the subparagraphs of Article 12 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, which are permitted or authorized by, or registered with, the competent authority.
(2) Any organization that collects money or goods with approval from the competent authority to engage in public-interest activities, shall be deemed an organization for public interest for the purposes of Article 26 (1) 20 of the Act, even though it does not fall under paragraph (1).
 Article 48 (Scope of Nonprofit Publications-Related Services)
Services related to new letters prescribed by Ordinance of the Ministry of Strategy and Finance or other similar publications issued by any corporation or organization that pursues a not-for-profit activity, shall be deemed tax-exempt under Article 26 (2) of the Act.
 Article 49 (Scope of Tax-Free, Imported Unprocessed Foodstuffs)
(1) Article 34 (1) and (2) shall apply mutatis mutandis to the scope of unprocessed foodstuffs referred to in subparagraph 1 of Article 27 of the Act (hereafter referred to as “imported unprocessed foodstuffs” in this Article): Provided, That this shall exclude any imported unprocessed foodstuffs ineligible for customs reductions or exemptions, which are prescribed by Ordinance of the Ministry of Strategy and Finance.
(2) Except as otherwise expressly provided for in paragraph (1), matters necessary for the scope of imported unprocessed foodstuffs shall be prescribed by Ordinance of the Ministry of Strategy and Finance.
 Article 50 (Scope of Tax-Free Imported Books, Newspapers, and Magazines)
Books, newspapers, and magazines referred to in subparagraph 2 of Article 27 of the Act, mean printed books, newspapers, magazines, other periodicals, manuscripts, and typescripts under Chapter 49 of the Tariff Schedule in the attached Table of the Customs Act and the electronic publications prescribed by Ordinance of the Ministry of Strategy and Finance.
 Article 51 (Scope of Tax-Free Goods Imported for Scientific Purposes, etc.)
Goods imported for scientific, educational, or cultural purposes under subparagraph 3 of Article 27 of the Act, mean any of the following goods. In such cases, the goods referred to in subparagraphs 1 through 5 shall be limited to those eligible for customs reductions or exemptions, which is applicable only to the reduced or exempted portion: <Amended by Presidential Decree No. 27838, Feb. 7, 2017>
1. Samples, specimens for reference, exposed educational films, slides, records, tapes or other similar media displayed or goods used at schools (including the Seoul National University Hospital established under the Establishment of Seoul National University Hospital Act, the national university-affiliated hospitals established under the Act on the Establishment of National University-Affiliated Hospitals, the Seoul National University Dental Hospital established under the Establishment of Seoul National University Dental Hospital Act, and the national university-affiliated dental hospitals established under the Act on the Establishment of National University-Affiliated Dental Hospitals), museums or other facilities prescribed by Ordinance of the Ministry of Strategy and Finance;
2. Goods imported by research institutes, research institutions and other science and technology research and development institutions prescribed by Ordinance of the Ministry of Strategy and Finance for science and technology research and development;
3. Reagents imported by organizations supporting science and technology research and development for science and technology research and development;
4. Goods imported by the Korean Educational Development Institute established under Article 8 of the Act on the Establishment, Operation and Fostering of Government-Funded Research Institutes, Etc. for scientific research;
5. Goods imported by the Korea Educational Broadcasting System established under the Korea Educational Broadcasting System Act for educational broadcasting;
6. Goods donated by foreign countries to video-related organizations for any public interest prescribed by Ordinance of the Ministry of Strategy and Finance for their own use.
 Article 52 (Scope of Tax-Free Goods Donated to Religious Organizations, etc.)
Goods donated to religious, charitable, or relief organizations under subparagraph 4 of Article 27 of the Act, are as follows:
1. Customs duties-exempt goods, which are donated to temples or other religious organizations;
2. Customs duties-exempt supplies, which are donated for charity or relief;
3. Customs duties-exempt goods, which are donated to relief establishments and social welfare establishments directly for relief or social welfare.
 Article 53 (Scope of Goods Exempt from Customs Duties in Accordance with Treaties, etc.)
Customs duties-exempt goods referred to in subparagraph 11 of Article 27 of the Act, are as follows:
1. Goods used by the chief and his/her family and entourage members of a foreign country who visit the Republic of Korea;
2. Goods used in the course of business of foreign embassies legations, and other similar missions in the Republic of Korea;
3. Goods used by foreign ambassadors, ministers, other similar diplomatic missions, and their family members residing in the Republic of Korea;
4. Goods used in the course of business of foreign consulates and other similar missions in the Republic of Korea;
5. Goods used by the staff members and their family members of foreign embassies, legations, consulates or other similar missions in the Republic of Korea;
6. Goods for business imported by a foreigner who has entered into a business contract with the Government in compliance with the contract to fulfill such contract;
7. Goods used directly by the councilors, technical personnel or other similar persons who are dispatched by an international organization or foreign government to the Government.
 Article 54 (Scope of Re-Imported Goods Qualifying for Customs Reductions and Exemptions)
Goods re-imported after exportation under the main sentence of subparagraph 12 of Article 27 of the Act, which qualify for customs reductions or exemptions, mean goods re-imported by entrepreneurs after being exported from the territory of Korea without transferring the right to use or consume the goods, which are eligible for customs exemptions or reductions under Article 99 or 101 of the Customs Act.
 Article 55 (Scope of Temporarily Imported Goods Qualifying for Customs Reductions and Exemptions)
Goods imported temporarily under conditions of re-exportation under the main sentence of subparagraph 13 of Article 27 of the Act, which qualify for customs reductions or exemptions, mean goods eligible for customs reductions or exemptions under Article 97 of the Customs Act.
 Article 56 (Scope of Other Duty-Free or Duty-Reducible Goods)
Duty-free or duty-reducible goods referred to in subparagraph 15 of Article 27 of the Act, mean any of the following: <Amended by Presidential Decree No. 26983, Feb. 17, 2016; Presidential Decree No. 28211, Jul. 26, 2017>
1. War supplies imported directly by the Government;
2. Goods used for guarding the chief of State;
3. Decorations, badges or other similar citations and medals awarded to domestic residents;
4. Record documents and other documents;
5. Goods for public use returned by the Korean army or diplomatic offices abroad;
6. Where a Korean ship or any other means of transportation is wrecked and disassembled, the disassembled components and rigging;
7. Labels placed on Korean exports to indicate that the quality, standards, safety level, etc. of the Korean exports meet the conditions determined by the competent authority of the importing country;
8. Deleted; <by Presidential Decree No. 26071, Feb. 3, 2015>
9. Raw materials necessary to manufacture, repair or maintain aircraft, which the head of the competent central administrative agency finds hard to produce in the Republic of Korea;
10. Sports equipment (including accessories) for sports played in the Olympics and the Asian Games, which is used directly for training of the participating athletes;
11. Goods used to construct or repair bridges, communications facilities, submarine tunnels and other similar facilities between the Republic of Korea and a foreign country;
12. Goods donated by the International Committee of the Red Cross, international organizations and foreign Red Crosses to promote international peace service or friendship programs;
13. Goods imported by participants in fairs, international sports games and other similar events for use in such events;
14. Goods for emergency communications and radio wave management imported by the Minister of Science and ICT to meet the need for national security;
15. Goods declared for importation, but already deteriorated or damaged before such declaration is accepted;
16. Goods exempt from customs duties under any Acts and subordinate statutes (excluding the Restriction of Special Taxation Act) other than the Customs Act;
17. Maps, design drawings, designs, postage stamps, revenue stamps, currencies, securities, paintings and calligraphic works, prints, sculptures, statues, collections, samples, and other similar goods;
18. Deleted; <by Presidential Decree No. 26071, Feb. 3, 2015>
19. Goods made or manufactured specifically for persons with visual, hearing or speech impairments, persons with physical disabilities, patients with chronic renal failure, patients with rare incurable disease, etc., which are prescribed by Ordinance of the Ministry of Strategy and Finance;
20. Goods imported by the Director of the National Intelligence Service or a person delegated by him/her to meet the need for national security;
21. Deleted; <by Presidential Decree No. 26071, Feb. 3, 2015>
22. Other goods for which the general tariff rate is zero, which are prescribed by Ordinance of the Ministry of Strategy and Finance, and internal combustion engines and diesel locomotives for railway use and corneas for transplantation for which the conventional tariff rate is zero.
 Article 57 (Reporting on Waiver of Tax Exemption)
With respect to the supply of any goods or services exempt from value-added tax under Article 26 (1) of the Act, which falls under Article 28 (1) 1 of the Act, and any goods or services that an academic research society referred to in subparagraph 2 of Article 45 supplies as regards its research work at cost or free of charge, an entrepreneur who opts not to be exempt from value-added tax under Article 28 (1) of the Act, shall file (including via the national tax information and communications network) a report on waiver of tax exemption, stating the following particulars, with the head of the competent tax office. In such cases, he/she shall promptly file an application for business registration in accordance with Article 8 of the Act: <Amended by Presidential Decree No. 26071, Feb. 3, 2015>
1. The personal details of the entrepreneur;
2. Goods or services subject to waiver of tax exemption;
3. Other reference information.
 Article 58 (Procedures for Filing Reports on Reapplication of Tax Exemption)
Where an entrepreneur who has filed a report on waiver of tax exemption under Article 28 (1) of the Act and Article 57 of this Decree wishes to be exempt from value-added tax upon the expiration of the period referred to in Article 28 (2) of the Act, he/she shall submit a report on application of tax exemption, stating the following particulars, along with his/her business registration certificate issued under Article 11 (5), pursuant to paragraph (3) of the same Article:
1. The personal details of the entrepreneur;
2. Goods or services applying for tax exemptions;
3. Other reference information.
CHAPTER IV CALCULATION OF TAX BASES AND AMOUNTS OF TAX
SECTION 1 Tax Bases and Tax Rate
 Article 59 (Conversion of Foreign Currencies)
Where any payment is made in any foreign currency or other foreign exchange under the proviso to Article 29 (3) 1 of the Act, it means each of the following amounts:
1. Where the payment is converted into Korean currency before the time of supply provided for in Articles 15 through 17 of the Act arrives: The amount converted;
2. Where the payment is held or made in any foreign currency or other foreign exchange after the time of supply provided for in Articles 15 through 17 of the Act, arrives: The amount calculated according to the basic exchange rate or the arbitrated rate of exchange under the Foreign Exchange Transactions Act, as at the time of supply provided for in Articles 15 through 17 of the Act.
 Article 60 (Value of Supply Based on Acquisition Value, etc.)
(1) “Value prescribed by Presidential Decree” in Article 29 (3) 5 of the Act, means the acquisition value prescribed under Article 89 of the Enforcement Decree of the Income Tax Act or Article 72 (2) and (4) of the Enforcement Decree of the Corporate Tax Act: Provided, That when an entrepreneur relocates goods from one of his/her places of business to another after putting a certain premium on the acquisition value thereof, an amount calculated by adding the premium to the acquisition value, shall be deemed the value of supply. <Amended by Presidential Decree No. 25196, Feb. 21, 2014>
(2) Notwithstanding paragraph (1), with respect to goods subject to the individual consumption tax, liquor tax, and traffic, energy and environment tax, a total of both the tax base for the individual consumption tax, liquor tax, and traffic, energy and environment tax and an amount equivalent to the relevant individual consumption tax, liquor tax, education tax, special rural development tax, and traffic, energy and environment tax, shall be deemed the value of supply.
 Article 61 (Calculation of Value of Supply in Credit Sales, etc.)
(1) “Value prescribed by Presidential Decree” in Article 29 (3) 6 of the Act, means each of the following values: <Amended by Presidential Decree No. 25196, Feb. 21, 2014; Presidential Decree No. 26071, Feb. 3, 2015; Presidential Decree No. 27838, Feb. 7, 2017>
1. Where goods or services are supplied through credit sales or installment sales: The total value of the goods or services supplied;
2. Where any of the following is applicable: Each portion of the contract price:
(a) Long-term installment sales;
(b) The supply of goods or services upon milestone payments or interim payments;
(c) The continuous supply of goods or services;
3. Where contribution acceptance is made: The value of contribution acceptance under an Act that provides for a basis for the contribution acceptance: Provided, That when value-added tax is included in the value of contribution acceptance, the value-added tax shall be excluded;
4. Where reclamation services are supplied under the Public Waters Management and Reclamation Act: The total working expenses incurred in performing the reclamation works, which are calculated pursuant to the Public Waters Management and Reclamation Act;
5. Where an entrepreneur supplies goods kept in a bonded area to another entrepreneur and the entrepreneur supplied with the goods removes them from the bonded area: The value of supply of the goods less the value of supply stated in an import tax invoice issued by the head of the customs house in return for collection of value-added tax under Article 58 (2) of the Act: Provided, That when a bill of lading as a receipt for the goods, is transferred before the head of the customs house collects value-added tax under Article 58 (2) of the Act, the price received from the transferee of the bill of lading may be treated as the value of supply;
6. Where an entrepreneur supplies services over at least two consecutive taxable periods and receives the payment in advance under Article 29 (2) 3: A total of amounts calculated by dividing the relevant amount by the contracted number of months for each taxable period. In such cases, with respect to calculating the number of months, if the month, in which the date the period of the contract commences is included, is shorter than one month, it shall be deemed one month, and if the month, in which the date the period of the contract ends is included, is shorter than one month, it shall be disregarded;
7. Where an entrepreneur supplies services over at least two consecutive taxable periods under Article 29 (2) 4: A total of amounts calculated by dividing the payment made during the period of service supply and the value of facility installation by the number of months for which the services are supplied for each taxable period. In such cases, with respect to calculating the number of months, if the month, in which the date of the period of supplying the relevant services commences is included, is shorter than one month, it shall be deemed one month, and if the month, in which the date the period of supplying the relevant services ends, is included is shorter than one month, it shall be disregarded;
8. Where goods are exported through consignment processing trade under Article 31 (1) 4: The value at which the finished products are delivered;
9. Where the payment is settled wholly or partly with mileage, points or other equivalents accumulated without additional consideration on the basis of the details of goods or services purchased, which are usable as a settlement means for purchasing other goods or services, or with gift certificates delivered without additional consideration on the basis of the details of goods or services purchased, which are managed separately from other gift certificates through a computer system, etc. (hereafter referred to as “mileage, etc.” in this paragraph) (excluding where subparagraph 10 is applicable): A total of the following amounts:
(a) An amount settled by means of payment other than mileage, etc.;
(b) An amount compensated or to be compensated by a person other than the recipient of goods or services, which is settled with mileage, etc. other than self-accumulated mileage, etc. [referring to mileage, etc. used for the original entrepreneur who accumulates (including accumulating through another entrepreneur) mileage, etc. in return for supply of goods or services (for mileage, etc. that can be accumulated by or used for more than one entrepreneur, all of the following requirements must be met); hereafter the same shall apply in this paragraph]:
(i) It is ascertained that the original supplier and the subsequent supplier are the same person in view of the details of the accumulation and use of mileage, etc. that are separately managed for each customer and entrepreneur;
(ii) The entrepreneur is not compensated by a person other than the recipient of goods or services for the portion settled with mileage, etc.;
10. In any of the following cases, where the payment is settled wholly or partly with mileage, etc. other than self-accumulated mileage, etc.: The market price (referring to the amount referred to in Article 62) of goods or services supplied:
(a) Where self-produced or acquired goods referred to in Article 10 (1) of the Act are supplied without compensation for the amount pursuant to subparagraph 9 (b);
(b) Where the tax burden is deemed likely to be unfairly reduced because a related person’s compensation pursuant to subparagraph 9 (b) is unreasonably low or not made at all.
(2) Where goods are supplied in an amount less the container price and packing charge on condition that the container or package is ordinarily returned to the relevant entrepreneur, the container price and packing charge shall not be included in the value of supply.
(3) Where an entrepreneur supplies food and accommodation services or personal services and states the service charges of employees (including free-lancers) received with the price separately from the price on a tax invoice, receipt, credit card sales slip under Article 46 (1) of the Act, etc., if it is verified that the service charges are paid to the employees, the service charges shall not be included in the value of supply: Provided, That the same shall not apply where the entrepreneur includes the service charges in his/her personal income.
(4) Deleted. <by Presidential Decree No. 27838, Feb. 7, 2017>
 Article 62 (Criteria for Market Price)
The market price referred to in Article 29 (3) and (4) of the Act, is as described in each of the following:
1. The price at which an entrepreneur has continuously traded with any person other than related persons under circumstances similar to those in which the relevant transaction is made, or the ordinary price at which transactions are made among third parties;
2. In the absence of the price provided for in subparagraph 1, the price of goods or services which an entrepreneur is paid (referring to either the price of the goods or services in which the entrepreneur in receipt of supply has continuously traded with any person other than related persons under circumstances similar to those in which the transaction is made, or the ordinary price at which transactions are made among third parties);
3. In the absence of the price provided for in subparagraph 1 or 2 or where the market price is unclear, the price calculated under Article 98 (3) and (4) of the Enforcement Decree of the Income Tax Act or Article 89 (2) and (4) of the Enforcement Decree of the Corporate Tax Act.
 Article 63 (Calculation of Value of Supply of Goods Common to Taxable Business, Tax-Free Business, etc.)
(1) The value of supply to be included in the tax base under Article 29 (8) of the Act, shall be calculated according to the following formula. In such cases, if no value of supply exists for the immediately preceding taxable period due to the suspension, etc. of business, it shall be calculated based on the value of supply for a taxable period nearest to the date of supply of goods:
Value of supply = Value of supply of goods × (Taxable value of supplies for the taxable period immediately preceding that in which the date of supply of goods falls ÷ Total value of supplies for the taxable period immediately preceding that in which the date of supply of goods falls)
(2) Notwithstanding paragraph (1), where any goods supplied are subject to Article 81 (4) 3 or (5) or subparagraph 2 of Article 82 or recalculation of the amount of tax payable or the amount of tax refundable based on the ratio of usable area under Article 83, as well as being common to a taxable business, a tax-free business, etc. under Article 29 (8) of the Act (hereinafter referred to as “tax-free business, etc.”), the value of supply to be included in the tax base shall be calculated according to the following formula. In such cases, if no ratio of usable area exists for the immediately preceding taxable period due to suspension, etc. of business, it shall be calculated based on the ratio of usable area for the taxable period nearest to the date of supply of the goods:
Value of supply = Value of supply of goods × (Taxable usable area for the taxable period immediately preceding that in which the date of supply of goods falls ÷ Total usable area for the taxable period immediately preceding that in which the date of supply of goods fall)
(3) Notwithstanding paragraph (1), the total value of supply of goods shall be treated as the tax base if any of the following is applicable:
1. Where, of the total value of supplies in the taxable period immediately preceding that in which the date of supply of goods falls, the value of tax-free supply is less than five percent: Provided, That this shall exclude where the value of supply of the goods is at least fifty million won;
2. Where the value of supply of goods is less than five hundred thousand won;
3. Where no immediately preceding taxable period exists because the relevant business is newly commenced during the taxable period in which the date of supply of goods falls.
 Article 64 (Calculation of Value of Supply of Buildings, etc. Supplied with Land)
Where the distinction between the price of land and the price of a building, structure, etc. (hereafter referred to as “building, etc.” in this Article) in the actual transaction price is unclear as provided for in the proviso to Article 29 (9) of the Act, an amount calculated according to each of the following shall be the value of supply: <Amended by Presidential Decree No. 26071, Feb. 3, 2015; Presidential Decree No. 27472, Aug. 31, 2016>
1. Where a standard market price calculated under Article 99 of the Income Tax Act (hereafter referred to as “standard market price” in this Article) is available for both the land and the building, etc.: An amount calculated according to the proportional distribution of the value computed based on the standard market price as at the date of execution of the supply contract: Provided, That when any appraised value is available (referring to a value appraised and assessed by an appraisal business operator as defined in subparagraph 4 of Article 2 of the Act on Appraisal and Certified Appraisers for a period from the first day of the taxable period immediately preceding that in which the time of supply prescribed in Article 28 (or the time of initial supply in cases of supply of goods upon interim payments or on condition of long-term installment sales) falls, to the last day of the taxable period in which the time of supply falls; hereafter the same shall apply in this Article), it shall be an amount calculated according to the proportional distribution of the value;
2. Where no standard market price is available for either the land or building, etc. or both, but an appraised value is available: An amount calculated according to the proportional distribution of the value: Provided, That when no such appraised value is available, it shall be an amount calculated according to the proportional distribution of the book value (if no book value is available, the acquisition value) subject to the proportional distribution calculation of the total amount of assets, if any, on which a standard market price is applied, based on the standard market price;
3. Where none of subparagraphs 1 and 2 is applicable or practicable, an amount calculated according to proportional distribution, as prescribed by the Commissioner of the National Tax Service.
 Article 65 (Calculation of Value of Supply for Real Estate Leasing Services)
(1) Where an entrepreneur receives security money for lease on a deposit basis or for lease under Article 29 (10) 1 of the Act, an amount calculated according to the following formula shall be the value of supply, deeming that the entrepreneur has received payments other than money under Article 29 (3) 2 of the Act. In such cases, when a person bearing the total cost of constructing an underground passage that reverts to the State or a local government, leases the underground passage with a permit to occupy and use such underground (only within the first free occupation and use period), an amount equivalent to the construction cost prescribed by Ordinance of the Ministry of Strategy and Finance, shall not be deemed security money for lease on a deposit basis or for lease:
Value of supply = Amount of security money for lease on a deposit basis or for lease for the pertinent period × Number of days in the taxable period × [Interest rate for a time deposit with one year maturity (as at the date on which the relevant preliminary return period or taxable period ends) ÷ 365 (366 for leap year)]
(2) Where an entrepreneur renders real estate leasing services after leasing the real estate, “amount of security money for lease on a deposit basis or for lease for the pertinent period” in the formula under paragraph (1), shall be construed as “amount of security money for lease on a deposit basis or for lease for the pertinent period - amount of security money for lease on a deposit basis or for lease paid at the time of leasing real estate.” In such cases, if the leased real estate is partially used directly for the relevant entrepreneur’s own business, the amount of security money for lease on a deposit basis or for lease paid at the time of leasing real estate, shall be an amount less the amount calculated according to the following formula:
Amount of security money for lease on a deposit basis or for lease paid at the time of leasing real estate × (Area used directly for the relevant entrepreneur’s own business as at the date on which the preliminary return period or taxable period ends ÷ Total area of the leased real estate as at the date on which the preliminary return period or taxable period ends)
(3) In the cases of paragraphs (1) and (2), if an entrepreneur covers rents with security money for lease on a deposit basis or for lease to the extent provided for in the relevant contract, an amount less those rents shall be the amount of security money for lease on a deposit basis or for lease.
(4) Where the distinction between leases or between rents is unclear because the leasing services involve both a taxable real estate lease and a tax-free housing lease as provided for in Article 29 (10) 2 of the Act, the value of supply shall be calculated according to the following formulae in order:
1.
Amount of rents and amount calculated under paragraph (1) × (Value of land or value of a building ÷ Total of the value of land and the value of the building standing thereon) = Amount equivalent to the rent for land or amount equivalent to the rent for the building
2.
Amount calculated under subparagraph 1 × (Taxable land area leased ÷ Total land area leased) = Value of supply of land lease
3.
Amount calculated under subparagraph 1 × (Taxable building area leased ÷ Total building area leased) = Value of supply of building lease
(5) Where an entrepreneur leases real estate over at least two taxable periods on conditions of receiving the rents in advance or later under Article 29 (10) 3 of the Act, the value of supply shall be a total of amounts calculated by dividing the relevant amount by the contracted number of months by taxable period. In such cases, the latter part of Article 61 (1) 6 shall apply mutatis mutandis to calculating the number of months.
(6) Except as otherwise expressly provided for in paragraphs (1) through (5), matters necessary for calculating the value of supply for real estate leasing services shall be prescribed by Ordinance of the Ministry of Strategy and Finance.
 Article 66 (Calculation of Value of Self-Supply, etc. for Depreciable Assets)
(1) “Depreciable assets prescribed by Presidential Decree” in Article 29 (11) of the Act, means the depreciable assets provided for in Article 62 of the Enforcement Decree of the Income Tax Act or Article 24 of the Enforcement Decree of the Corporate Tax Act (hereinafter referred to as “depreciable assets”).
(2) Where goods supplied for a taxable business are depreciable assets that are deemed supplied pursuant to Article 10 (1), (2) and (4) through (6) of the Act, the value of supply shall be an amount calculated according to each of the following formulae. In such cases, the number of taxable periods elapsed, shall be calculated based on the taxable period prescribed under Article 5 of the Act. If the number of taxable periods elapsed, exceeds 20 for a building or structure, it shall be deemed 20, and if the number of taxable periods elapsed, exceeds 4 for other depreciable assets, it shall be deemed 4:
1. Buildings or structures:
Value of supply = Acquisition value of goods × [1- (5 ÷ 100) × Number of taxable periods elapsed]
2. Other depreciable assets:
Value of supply = Acquisition value of goods × [1- (25 ÷ 100) × Number of taxable periods elapsed]
(3) Where depreciable assets supplied for a taxable business are partially used for a tax-free business, the value of supply shall be an amount calculated according to each of the following formulae, but if the value of tax-free supplies through the tax-free business is less than 5 percent of the total value of supplies, the value of supply shall be deemed zero. In such cases, the latter part of paragraph (2) shall apply mutatis mutandis to the number of taxable periods elapsed:
1. Buildings or structures:
Value of supply = Acquisition value of goods × [1- (5 ÷ 100) × Number of taxable periods elapsed × (Value of tax-free supplies in the taxable period in which the date the goods are partially used for tax-free business, falls ÷ Total value of supplies in the taxable period in which the date the goods are partially used for tax-free business, falls)]
2. Other depreciable assets:
Value of supply = Acquisition value of goods × [1- (25 ÷ 100) × Number of taxable periods elapsed × (Value of tax-free supplies in the taxable period in which the date the goods are partially used for tax-free business, falls ÷ Total value of supplies in the taxable period in which the date the goods are partially used for tax-free business, falls)]
(4) The acquisition value of goods referred to in the subparagraphs of paragraphs (2) and (3) shall be the value of the goods, the input tax amount of which is deducted under Article 38 of the Act.
(5) For the purposes of calculating the number of taxable periods elapsed under paragraphs (2) and (3), if depreciable assets are deemed acquired or supplied after the date the taxable period commences, they shall be deemed acquired or supplied on the date the taxable period commences.
SECTION 2 Transaction Collection and Tax Invoices
 Article 67 (Tax Invoices)
(1) “Specific number prescribed by Presidential Decree” in the proviso to Article 32 (1) 2 of the Act, means an identification number allocated under Article 12 (2).
(2) Other matters to be stated in a tax invoice under Article 32 (1) 5 of the Act, are as follows:
1. A supplier’s address;
2. A recipient’s trade name, name and address;
3. The types and items of a supplier’s and a recipient’s business;
4. Supply items;
5. Unit price and quantity;
6. The date of supply;
7. The type of transaction;
8. For a per-business unit taxable entrepreneur, the location and trade name of his/her ancillary place of business at which he/she practically supplies or is supplied with goods or services.
(3) When issuing a tax invoice under Article 73 (5), an entrepreneur shall specify the revocation of a receipt in its reference column.
(4) An entrepreneur may issue a tax invoice stating the entries referred to in Article 32 (1) 1 through 4 of the Act, other necessary information, and the fact that the tax invoice is reported to the Commissioner of the National Tax Service, if reported to the Commissioner of the National Tax Service.
(5) Except as otherwise expressly provided for in paragraphs (1) through (4), matters necessary regarding tax invoices, such as issuance procedures, preservation requirements, application procedures and the format in which to be submitted, shall be prescribed by the Commissioner of the National Tax Service.
 Article 68 (Issuance, etc. of Electronic Tax Invoices)
(1) “Individual entrepreneur prescribed by Presidential Decree” in Article 32 (2) of the Act, means an individual entrepreneur in whose case the total value of supply of goods and services for each place of business in the immediately preceding year is at least three hundred million won (hereafter referred to as “individual entrepreneur required to issue electronic tax invoices” in this Article).
(2) The period during which an individual entrepreneur required to issue electronic tax invoices must issue electronic tax invoices, is both the second taxable period of the year following that for which the total value of supply of goods and services for each place of business, is at least three hundred million won, and the first taxable period of the next year: Provided, That when the total value of supply of goods and services for each place of business becomes at least three hundred million won following a revised return under Article 45 of the Framework Act on National Taxes or a decision or rectification under Article 57 of the Act (hereafter referred to as “revised return, etc.” in this paragraph), the period during which electronic tax invoices must be issued, is both the taxable period following that in which the date for filing the revised return, etc. falls and the next taxable period.
(3) Where an individual entrepreneur is required to issue electronic tax invoices, the head of the competent tax office shall give notice of such fact to the individual entrepreneur at least one month before the period of issuing electronic tax invoices begins under paragraph (2).
(4) “Electronic method prescribed by Presidential Decree” in Article 32 (2) of the Act, means any of the following methods in which a tax invoice stating the particulars mentioned in the subparagraphs of paragraph (1) of the same Article is issued through an information and communications network, using a licensed certification system by which the identity of the invoice issuer, alterations in the invoice, etc. are ascertainable:
1. Using facilities for enterprise resource planning referred to in subparagraph 1 of Article 5-2 of the Restriction of Special Taxation Act, the standards of which are certified under Articles 18, 23 and 24 of the Framework Act on Electronic Documents and Transactions;
2. Using the electronic tax invoice issuance system of an entrepreneur who issues electronic tax invoices on behalf of real transaction entrepreneurs who have obtained standards certification under Articles 18, 23 and 24 of the Framework Act on Electronic Documents and Transactions;
3. Using the electronic tax invoice issuance system built by the Commissioner of the National Tax Service;
4. Using the device to issue cash receipts available for electronic tax invoice issuance and other electronic tax invoice issuance systems designated by the Commissioner of the National Tax Service.
(5) Any person who intends to build and operate any of the facilities or systems referred to in paragraph (4) 1, 2 and 4 shall register it in advance with the Commissioner of the National Tax Service or the head of the competent tax office, as prescribed by Ordinance of the Ministry of Strategy and Finance.
(6) “Deadline prescribed by Presidential Decree” in Article 32 (3) of the Act, means the date following that electronic tax invoices are issued.
(7) “List of the issued electronic tax invoices prescribed by Presidential Decree” in Article 32 (3) of the Act, means a list of the particulars described in the subparagraphs of Article 32 (1) of the Act.
(8) Where an entrepreneur’s business falls under any of the following subparagraphs, the entrepreneur may, pursuant to Article 32 (4) of the Act, issue an invoice stating the entries referred to in Article 32 (1) 1 through 4 of the Act, other necessary information regarding the relevant business, and the fact that it is an electronic tax invoice reported to the head of the competent tax office, if reported to the head of the competent tax office. In such cases, the entrepreneur shall obtain standards certification referred to in each of the subparagraphs of paragraph (4) and submit an electronic tax invoice file to the Commissioner of the National Tax Service by electronic means, not later than the 11th day of the month following that in which the date of supply falls:
1. Where an electric utility business operator supplies electric power for industrial use pursuant to the Electric Utility Act;
2. Where a telecommunications business operator supplies telecommunications services to entrepreneurs pursuant to the Telecommunications Business Act: Provided, That this shall exclude where a value-added telecommunications business operator supplies value-added telecommunications services to mail order business operators pursuant to Article 5 (4) of the Telecommunications Business Act;
3. Where an urban gas business entity supplies urban gas for industrial use pursuant to the Urban Gas Business Act;
4. Where an integrated energy-supply business entity supplies heat or electricity for industrial use pursuant to the Integrated Energy Supply Act;
5. Where a broadcasting business operator as defined in subparagraph 3 of Article 2 of the Broadcasting Act supplies broadcasting services to entrepreneurs;
6. Where a general taxable person supplies machinery and materials for agriculture and fisheries referred to in Article 105-2 of the Restriction of Special Taxation Act to farmers and fishermen;
7. Where an Internet multimedia broadcast service provider as defined in subparagraph 5 (a) of Article 2 of the Internet Multimedia Broadcast Services Act supplies broadcasting services to entrepreneurs.
(9) Any corporate entrepreneur and any entrepreneur, other than individual entrepreneurs required to issue electronic tax invoices, may issue and transmit electronic tax invoices as prescribed in paragraphs (4) through (7) pursuant to Article 32 (5) of the Act.
(10) Where a person supplied with goods or services does not have or designate any message box to receive electronic tax invoices or uses any system inappropriate for message box, such as the system referred to in paragraph (4) 4, he/she shall be deemed to have designated the electronic tax invoice issuance system referred to in paragraph (4) 3 as his/her message box.
(11) When an electronic tax invoice has been sent to a message box designated by a person supplied with goods or services or to the electronic tax invoice issuance system referred to in paragraph (4) 3, the person supplied with goods or services shall be deemed to have received the electronic tax invoice.
(12) Except as otherwise expressly provided for in paragraphs (1) through (11), matters necessary for the issuance procedures and preservation requirements for electronic tax invoices, the procedures and requirements for registration of entrepreneurs who set up and operate each equipment and system, the documents to be submitted, the grounds for revocation of registration, etc., shall be prescribed by Ordinance of the Ministry of Strategy and Finance.
 Article 69 (Issuance of Tax Invoices for Consignment Sales, etc.)
(1) In cases of selling on consignment or through an agent, if a consignee or agent delivers goods, the consignee or agent shall issue a tax invoice in the name of the consignor or principal pursuant to Article 32 (6) of the Act, and if the consignor or principal delivers goods directly, he/she may issue a tax invoice. In such cases, the registration number of the consignee or agent shall be affixed.
(2) In cases of buying on consignment or through an agent, the supplier shall issue a tax invoice on which the consignor or principal is designated as a recipient under Article 32 (6) of the Act. In such cases, the registration number of the consignee or agent shall be affixed.
(3) In cases falling under the proviso to Article 10 (7) of the Act, paragraphs (1) and (2) shall not apply.
(4) If goods are supplied in consequence of expropriation, the relevant project operator may issue a tax invoice applying mutatis mutandis paragraph (1).
(5) Paragraphs (1) and (2) shall apply mutatis mutandis to the supply of services through good offices or brokerage.
(6) If commodities are supplied under the Government Procurement Act, the supplier or the head of the competent customs house shall issue a tax invoice directly to the end user under Article 32 (6) of the Act: Provided, That when the end user of the commodities is unidentifiable at the time of procuring the commodities, he/she shall issue a tax invoice to the Administrator of the Public Procurement Service, and when the Administrator of the Public Procurement Service delivers the commodities to the end user, he/she may issue a tax invoice to the end user.
(7) If the Korea Gas Corporation established under the Korea Gas Corporation Act directly imports natural gas (including liquefied gas) on behalf of a gas import and sale business operator prescribed by Ordinance of the Ministry of Strategy and Finance, the head of the competent customs house may issue a tax invoice directly to the gas import and sale business operator under Article 32 (6) of the Act.
(8) If an entrepreneur liable to pay taxes leases facilities, etc. from a facility leasing business operator registered under Article 3 of the Specialized Credit Finance Business Act and receives delivery of the facilities, etc. directly from the supplier or the head of the competent customs house, the supplier or the head of the competent customs house may issue a tax invoice directly to the entrepreneur under Article 32 (6) of the Act.
(9) The proviso to paragraph (6) shall apply mutatis mutandis to issuing a tax invoice where a warehouse receipt issued by the Administrator of the Public Procurement Service is transferred under Article 18 (2) 1, which entails the return of the bailed article. In such cases, “end user” in the proviso to paragraph (6) shall be construed as “person receiving the return of the bailed article in exchange for the warehouse receipt.”
(10) Where an appraisal business operator reported under the Act on Appraisal and Certified Appraisers provides appraisal services, or a newspaper publisher registered under the Act on the Promotion of Newspapers, Etc., a periodical publisher registered under the Act on Promotion of Periodicals, including Magazines, or a corporation operating a news communications business under the Act on the Promotion of News Communications provides advertising services in receipt of a court’s request, if the actual recipient of those services is unidentifiable, the appraisal business operator, the newspaper publisher, the periodical publisher or corporation operating the news communications business may, pursuant to Article 32 (6) of the Act, issue a tax invoice to the court; if the court collects the price for the appraisal services or advertising services from the actual recipient thereof, the court to the recipient. <Amended by Presidential Decree No. 27472, Aug. 31, 2016>
(11) If a telecommunications business operator as prescribed in the Telecommunications Business Act provides telecommunications services to a user (referring to a user as defined in Article 2 (1) 9 of the Telecommunications Business Act; hereafter the same shall apply in this Article) of another telecommunications business operator and entrusts the collection of the rate to the other telecommunications business operator, the business operator who provides those telecommunications services may, pursuant to Article 32 (6) of the Act, issue a tax invoice to the other telecommunications business operator, and the other telecommunications business operator to the user.
(12) If the operator of an electricity generation business under the Electric Utility Act supplies electricity to the operator of an electric sales business or a consumer of electricity under the same Act through the electricity market and receives the rate through the Korea Power Exchange under the same Act, the electricity generation business operator may, pursuant to Article 32 (6) of the Act, issue a tax invoice to the Korea Power Exchange, and the Korea Power Exchange to the electric sales business operator or electricity consumer.
(13) If a satellite mobile multimedia broadcasting business operator and a general satellite broadcasting business operator referred to in subparagraphs 4 and 5 of Article 1-2 of the Enforcement Decree of the Broadcasting Act each supply satellite mobile multimedia broadcasting services or general satellite broadcasting services to a user of a telecommunications business operator under the Telecommunications Business Act and entrusts the collection of the rate to the telecommunications business operator, the satellite mobile multimedia broadcasting business operator and the general satellite broadcasting business operator may, pursuant to Article 32 (6) of the Act, issue a tax invoice to the telecommunications business operator, and the telecommunications business operator to the user.
(14) Where, with respect to supply of electricity by the operator of an electric utility business under the Electric Utility Act, a person in name to whom electricity is supplied and the actual consumer of electricity are different, if the electric utility business operator issues a tax invoice on which the person in name is designated as a recipient of supply and the person in name issues a tax invoice on which the actual consumer of electricity is designated as a recipient of supply within the limits of the value of supply stated in the tax invoice issued (including where a tax invoice is issued although it is not required, as prescribed by Ordinance of the Ministry of Strategy and Finance), the electric utility business operator shall be deemed to have issued a tax invoice on which the actual consumer of electricity is designated as a recipient of supply.
(15) Paragraph (14) shall apply mutatis mutandis where an association or similar organization consisting of fellow traders, supplies or is supplied with goods or services for a member of the association or organization; where services are supplied under a joint contract concluded under the Act on Contracts to Which the State is a Party and the representative of the contractor team receives the price; and where, with respect to supply of urban gas by an urban gas business entity under the Urban Gas Business Act, a person in name to whom urban gas is supplied and the actual consumer of urban gas are different.
(16) Where goods kept in a warehouse of the Public Procurement Service under Article 18 (2) 1 or a designated warehouse of the exchange under subparagraph 2 of the same paragraph are brought into the territory of Korea, the head of the competent customs house shall issue an import tax invoice.
(17) Where services, etc. referred to in Article 52 (1) of the Act (hereinafter referred to as “services, etc.”) are supplied pursuant to Article 53 (1) of the Act, a tax invoice shall include the trade name and address of the supplier of those services, etc., who falls under any of the subparagraphs of Article 52 (1) of the Act.
(18) Where an entity whose account for trading emission permits has been registered under the Act on the Allocation and Trading of Greenhouse-Gas Emission Permits (hereinafter referred to as “business entity eligible for allocation, etc.”) supplies an emission permit as defined in subparagraph 3 of Article 2 of the same Act (including an offset emission permit provided for in Article 29 (3) of the same Act) to another business entity eligible for allocation, etc. through a market for trading emission permits opened by an emission permits exchange established under the same Act and receives the price through the emission permits exchange, the business entity eligible for allocation, etc. may, pursuant to Article 32 (6) of the Act, issue a tax invoice to the emission permits exchange, and the emission permits exchange to the business entity eligible for allocation, etc. supplied with the emission permit. <Newly Inserted by Presidential Decree No. 26071, Feb. 3, 2015>
 Article 70 (Grounds and Procedures for Issuance of Corrected Tax Invoices and Corrected Electronic Tax Invoices)
(1) Any corrected tax invoice or corrected electronic tax invoice may be issued under Article 32 (7) of the Act, on any of the following grounds and procedures: <Amended by Presidential Decree No. 25196, Feb. 21, 2014; Presidential Decree No. 26071, Feb. 3, 2015; Presidential Decree No. 26983, Feb. 17, 2016>
1. Where the original goods supplied are returned: It shall be prepared by writing the amount in red or adding a negative thereto after entering the return date of goods as the date the tax invoice is prepared and affixing the date the original tax invoice was prepared in its reference column;
2. Where no goods or services are supplied, due to cancellation of contract: It shall be prepared by writing the amount in red or adding a negative thereto after entering the date of contract cancellation as the date tax invoice is prepared and affixing the date the original tax invoice was prepared in its reference column;
3. Where a certain amount is added to, or subtracted from, the value of supply, due to the termination, etc. of contract: It shall be prepared by writing the added amount in black and writing the subtracted amount in red or adding a negative thereto after entering the date of occurrence of the grounds for addition or subtraction as the date tax invoice is prepared;
4. Where a local letter of credit is opened or a written verification of purchase is issued within 25 days after the end of the taxable period (if the 25th day after the end of the taxable period falls on a holiday or Saturday, referring to the business day immediately following such day) in which the time of supply of goods or services falls: It shall be prepared by writing the zero-tax rated portion in black and writing the amount described in the original tax invoice in red or adding a negative thereto, after entering the date the original tax invoice was prepared as the date tax invoice is prepared and affixing the opening date, etc. of the local letter of credit in its reference column;
5. Where any requisite entry item, etc. is wrongly stated in error (excluding where it is known in advance that the tax base or the amount of tax will be rectified, as specified in any of the following items): It shall be prepared by writing the amount described in the original tax invoice in red or adding a negative thereto and other portions in black:
(a) Where a notice of tax investigation is issued;
(b) Where a tax official has commenced an on-site inspection or inquiry to gather tax data or process civil petitions, etc.;
(c) Where a notice of demand for explaining tax data is issued by the head of the competent tax office;
(d) Where there are any grounds similar to any of items (a) through (c);
6. Where any requisite entry item, etc. is wrongly stated except in error (excluding where it is known in advance that the tax base or the amount of tax will be rectified, as specified in any of the items of subparagraph 5): It shall be prepared by the final return deadline for the taxable period in which the date of supply of goods or services falls, by writing the amount described in the original tax invoice in red or adding a negative thereto and other portions in black;
7. Where a duplicate electronic tax invoice is issued in error: It shall be prepared by adding a negative to the amount described in the original tax invoice;
8. Where a tax invoice is issued for tax-free or other transactions exempt from issuance thereof: It shall be prepared by writing the amount described in the original tax invoice in red or adding a negative thereto;
9. Where a tax invoice is issued with the wrongly applied tax rate (excluding where it is known in advance that the tax base or the amount of tax will be rectified, as specified in any of the items of subparagraph 5): It shall be prepared by writing the amount described in the original tax invoice in red or adding a negative thereto and writing other portions in black.
(2) Where any goods or services supplied before the taxable type of a taxpayer is converted from a general taxable person to a simplified taxable person is found to be subject to any of the subparagraphs of paragraph (1) after such conversion, a corrected tax invoice or corrected electronic tax invoice may be issued by writing an added amount in black and writing a subtracted amount in red or adding a negative thereto after entering the date the original tax invoice was prepared as the date the corrected tax invoice or corrected electronic tax invoice is prepared and affixing the date of occurrence of the grounds in its reference column, notwithstanding the procedures provided for in each of the subparagraphs of paragraph (1).
 Article 71 (Excuse, etc. from Duty to Issue Tax Invoices)
(1) “If the issuance of a tax invoice is impracticable or unnecessary, or is otherwise prescribed by Presidential Decree” in Article 33 (1) of the Act, means the supply of any of the following goods or services: <Amended by Presidential Decree No. 25196, Feb. 21, 2014; Presidential Decree No. 26071, Feb. 3, 2015; Presidential Decree No. 26983, Feb. 17, 2016; Presidential Decree No. 27970, Mar. 29, 2017>
1. Goods or services supplied by a taxi service business operator, street vendor or hawker, or other entrepreneur prescribed by Ordinance of the Ministry of Strategy and Finance;
2. Goods or services supplied by a person who operates any retail trade, beauty salon, bathhouse, or other similar service business: Provided, That in the case of retail trade, the same shall be limited to where a recipient of supply does not require a tax invoice;
3. Goods referred to in Article 10 (1), (2) and (4) through (6) of the Act;
4. Goods or services referred to in Articles 21 (excluding any raw materials referred to in Article 31 (1) 5 of this Decree, any goods supplied using a local letter of credit or a written verification of purchase under paragraph (2) 1 of the same Article, and any goods supplied by the Korea International Cooperation Agency, the Korean Foundation for International Healthcare or the Korean National Red Cross under subparagraphs 2 through 4 of the same paragraph), 22, and 23 (limited to where a recipient of supply is a nonresident or foreign corporation that has no domestic place of business, to overseas navigation services by aircraft under Article 23 (2) of the Act and to commercial document delivery services under the Aviation Business Act) of the Act;
5. Goods or services referred to in Article 33 (2) 1, 2, 5 (limited to where a recipient of supply is a nonresident or foreign corporation that has no domestic place of business), 6 or 7 (limited to general travel business operators), and goods or services supplied to diplomatic offices, etc. under Article 24 (1) 1 of the Act;
6. Real estate leasing services subject to Article 65 (1) and (2);
7. Authorized certificate issuance services by a licensed certification authority as defined in subparagraph 10 of Article 2 of the Digital Signature Act pursuant to Article 15 of the same Act: Provided, That this shall exclude where a recipient of supply requires a tax invoice in the capacity of entrepreneur;
8. Electronic services supplied in the Republic of Korea by an entrepreneur who has made a simplified business registration under Article 53-2 (3) of the Act;
9. Other goods or services supplied to a nonresident or foreign corporation that has no domestic place of business: Provided, That this shall exclude where such nonresident or foreign corporation requires a tax invoice, presenting a document evidencing that he/she or it is an individual entrepreneur or a corporate entrepreneur in his/her or its own country.
(2) “Entrepreneur prescribed by Presidential Decree” in Article 33 (2) of the Act, means a general taxable person provided for in Article 88 (5). <Amended by Presidential Decree No. 26983, Feb. 17, 2016>
 Article 71-2 (Entrepreneurs Subject to Issuance of Purchaser-Issued Tax Invoices, Procedures for Deducting Input Tax Amounts, etc.)
(1) “Entrepreneur as prescribed by Presidential Decree” in Article 34-2 (1) of the Act means an entrepreneur required to issue tax invoices under Article 32 of the Act (excluding a simplified taxable person provided for in Article 61 (1) of the Act, but including an entrepreneur required to issue tax invoices under Article 73 (3) and (4)).
(2) A person who intends to issue a purchaser-issued tax invoice prescribed in Article 34-2 (2) of the Act (hereafter referred to as “applicant” in this Article) shall file an application for transaction confirmation prescribed by Ordinance of the Ministry of Strategy and Finance with the head of the tax office having jurisdiction over the applicant, along with a document objectively evidencing the fact of transaction, within three months after the end of the taxable period in which the time of supply of the relevant goods or services falls.
(3) Transactions required to file an application for transaction confirmation under paragraph (2) shall be those whose supply price per transaction is at least 100,000 won.
(4) The head of the competent tax office in receipt of an application pursuant to paragraph (2) may request the applicant to correct the application within seven days from the date of its filing, specifying a period of time, if it includes an incorrect information on the personal details of the supplier of goods or services (hereafter referred to as “supplier” in this Article) or has an error in filling out the application form.
(5) If the applicant fails to comply with the request for correction within a period of time specified under paragraph (4) or any of the following subparagraphs is applicable, the head of the tax office having jurisdiction over the applicant shall refuse to confirm the fact of transaction:
1. Where it is clear that the deadline for application specified under paragraph (2) has passed;
2. Where the application clearly reveals that the transaction has been made with an entrepreneur whose business was unregistered, suspended or closed at the time of transaction.
(6) If the head of the tax office having jurisdiction over the applicant does not refuse the confirmation pursuant to paragraph (5), he/she shall forward the application and the documentary evidence submitted, to the head of the tax office having jurisdiction over the supplier, within seven days from the date the application for transaction confirmation is filed (if a request for correction is made under paragraph (4), the date such correction is made).
(7) The head of the tax office having jurisdiction over the supplier in receipt of an application forwarded under paragraph (6) shall verify the fact of transaction based on the details of the application and the documentary evidence submitted. In such cases, the burden of proving the fact and details of transaction shall rest on the applicant.
(8) The head of the tax office having jurisdiction over the supplier shall verify the fact of transaction by the end of the month following the month in which the date of application falls and then give notice to the heads of the tax offices having jurisdiction over the supplier and the applicant according to each of the following: Provided, That when an unavoidable reason prescribed by Ordinance of the Ministry of Strategy and Finance exists, such as the supplier’s default or temporary absence, the period of verifying the fact of transaction may be extended by up to 20 days:
1. Where the fact of transaction is verified: Notice of confirmation of transaction between the supplier and the recipient, including their business registration numbers, the date of preparation, the value of supply, and the amount of value-added tax;
2. Where the fact of transaction is not verified: Notice of non-confirmation of transaction.
(9) The head of the tax office having jurisdiction over the applicant shall, upon receipt of the notice provided for in paragraph (8) from the head of the tax office having jurisdiction over the supplier, promptly give notice to the applicant of the result of verification.
(10) The applicant in receipt of the notice of confirmation of transaction provided for in paragraph (8) 1 from the head of the tax office having jurisdiction over the applicant under paragraph (9) shall issue a purchaser-issued tax invoice prepared on the basis of the date of transaction confirmed by the head of the tax office having jurisdiction over the supplier and deliver it to the supplier.
(11) Notwithstanding paragraph (10), if the applicant and the supplier receive notice provided for in paragraph (8) 1 from the heads of the competent tax offices, the applicant shall be deemed to have issued a purchaser-issued tax invoice to the supplier.
(12) Where a purchaser-issued tax invoice is issued or is deemed to have been issued to the supplier pursuant to paragraph (10) or (11), if the applicant submits a list of total purchaser-issued tax invoices prescribed by Ordinance of the Ministry of Strategy and Finance when filing a preliminary return provided for in Article 48 of the Act, a final return provided for in Article 49 of the Act, or a request for correction provided for in Article 45-2 (1) of the Framework Act on National Taxes, he/she is entitled to deduction of the input tax amount stated on the purchaser-issued tax invoice from the output tax amount or the amount of tax payable for the taxable period in which the time of supply of relevant goods or services falls pursuant to Articles 37, 38 and 63 (3) of the Act.
[This Article Newly Inserted by Presidential Decree No. 27838, Feb. 7, 2017]
 Article 72 (Import Tax Invoices)
(1) Import tax invoices referred to in Article 35 (1) of the Act, shall be issued applying mutatis mutandis the provisions concerning the issuance of tax invoices under Article 32 (1) of the Act. In such cases, if the payment of value-added tax is deferred under Article 50-2 (1) of the Act, an import tax invoice shall be issued specifying that the payment of value-added tax is deferred. <Amended by Presidential Decree No. 26983, Feb. 17, 2016>
(2) When receiving the payment of value-added tax or collecting or refunding it under Articles 28 (2), 38-2 (1) and (2), 38-3 (1) through (3), 38-4 (1), 46, 47, and 106 of the Customs Act before deciding or rectifying the tax base or the amount of tax under the same Act, the head of the competent customs house shall issue a corrected import tax invoice to the importer under Article 35 (2) of the Act: Provided, That when a taxpayer files a revised return under Article 38-3 (1) of the Customs Act knowing in advance that the tax base or the amount of tax will be decided or rectified due to any act provided for in any of the subparagraphs of paragraph (3), a corrected import tax invoice shall be issued only in the case falling under any of the items of Article 35 (2) 2 of the Act. <Amended by Presidential Decree No. 25196, Feb. 21, 2014>
(3) “Customs investigations by a customs official or other acts prescribed by Presidential Decree” in Article 35 (2) 2 of the Act, means any of the following: <Amended by Presidential Decree No. 25196, Feb. 21, 2014>
1. Where a notice of customs investigation or investigation into a customs offense is issued;
2. Where a customs inspector commences an on-site inspection or inquiry to gather tax data or process civil petitions, etc.;
3. Other acts similar to subparagraph 1 or 2.
(4) “Cases prescribed by Presidential Decree, such as where a clerical error is made by the importer or the importer proves that such error is not attributable to himself/herself” in Article 35 (2) 2 (c) of the Act means any of the following: <Amended by Presidential Decree No. 25196, Feb. 21, 2014; Presidential Decree No. 27838, Feb. 7, 2017>
1. Where the importer files a revised return of the amount of tax or the head of the customs house rectifies it prior to the acceptance of an import declaration under Article 9 (2) of the Customs Act after the importer pays the amount of tax prior to the acceptance of the import declaration under the same paragraph;
2. Where it is verified that a document submitted to attest the place of origin, such as a certificate of origin under the Customs Act or other Acts, is wrongly prepared and submitted without good cause attributable to the importer;
3. Where a clerical error is made by the importer or the importer proves that such error is not attributable to himself/herself;
4. Where the importer files a revised return or the head of the customs house makes rectification by applying the method for determining the dutiable value notified after a prior examination under Article 37 of the Customs Act;
5. Where a reduction or exemption or its rate is wrongly applied to goods subject to examination of the amount of tax prior to the acceptance of an import declaration under the proviso to Article 38 (2) of the Customs Act.
(5) To issue a corrected import tax invoice under paragraphs (2) and (3), the head of a customs house shall prepare it by writing an added amount in black and writing a subtracted amount in red or adding a negative thereto after entering the date of receiving, collecting or refunding the value-added tax as the date the corrected import tax invoice is prepared and affixing the date, etc. the original import tax invoice was prepared in its reference column.
(6) Except as otherwise expressly provided for in paragraphs (1) through (5), matters necessary for the preparation, issuance, etc. of import tax invoices or corrected import tax invoices, shall be prescribed by Ordinance of the Ministry of Strategy and Finance.
 Article 73 (Receipts, etc.)
(1) “Entrepreneur prescribed by Presidential Decree” in Article 36 (1) 2 of the Act, means an entrepreneur who engages in any of the following: <Amended by Presidential Decree No. 26071, Feb. 3, 2015>
1. Retail trade;
2. Food service activities (including beverage service activities);
3. Accommodation;
4. Beauty salon, bathhouse and similar service business;
5. Passenger transportation business;
6. Business that issues admission tickets;
7. Business referred to in Article 109 (2) 7 and licensed administrative agent business (excluding the business of supply for an entrepreneur under Article 3 of the Act and a business operator referred to in Article 160-2 (2) of the Income Tax Act);
8. Business in which an organization for postal services established under the Act on Special Cases concerning the Management of Postal Services provides door-to-door pickup and delivery services of postal parcels among the extra postal services provided for in Article 15 (1) of the Postal Service Act;
9. Business supplying services provided for in the proviso to subparagraph 1 of Article 35;
10. Animal diagnosis and treatment services provided by a veterinarian, which do not fall under the proviso to subparagraph 5 of Article 35;
11. Business supplying services provided for in Article 36 (2) 1 and 2;
12. Authorized certificate issuance services provided for in Article 71 (1) 7;
13. Business supplying electronic services in the Republic of Korea by an entrepreneur who has made a simplified business registration under Article 53-2 (3) of the Act;
14. Business that mainly supplies goods or services to consumers other than entrepreneurs, as prescribed by Ordinance of the Ministry of Strategy and Finance.
(2) “If an operator of the electric utility business defined in subparagraph 2 of Article 2 of the Electric Utility Act supplies electricity for non-industrial use, or otherwise prescribed by Presidential Decree” in Article 36 (2) of the Act, means any of the following:
1. If a person who has established a temporary place of business under Article 10 supplies goods or services to consumers, other than entrepreneurs, in the temporary place of business;
2. If an operator of the electric utility business under the Electric Utility Act supplies electricity for non-industrial use;
3. If a telecommunications business operator under the Telecommunications Business Act supplies telecommunications services: Provided, That this shall exclude where a value-added telecommunications business operator supplies value-added telecommunications services under Article 5 (4) of the Telecommunications Business Act to mail order business operators;
4. If an urban gas business entity under the Urban Gas Business Act supplies urban gas for non-industrial use;
5. If an integrated energy-supply business entity licensed under the Integrated Energy Supply Act supplies heat or electricity for non-industrial use;
6. If a broadcasting business operator as defined in subparagraph 3 of Article 2 of the Broadcasting Act supplies broadcasting services to those other than entrepreneurs;
7. If an Internet multimedia broadcast service provider as defined in subparagraph 5 (a) of Article 2 of the Internet Multimedia Broadcast Services Act supplies broadcasting services to those other than entrepreneurs.
(3) Paragraphs (1) and (2) shall not apply where an entrepreneur, among general taxable persons, who receives supply under paragraph (1) 1 through 3, 5 (limited to chartered bus transport services under Article 3 of the Enforcement Decree of the Passenger Transport Service Act), 7, 8, 12 and 14 and paragraph (2), presents his/her business registration certificate and requires a tax invoice under Article 32 of the Act. <Amended by Presidential Decree No. 26071, Feb. 3, 2015>
(4) Paragraphs (1) and (2) shall not apply where an entrepreneur, among general taxable persons, who operates any business referred to in paragraph (1) 4, 5 (excluding chartered bus transport services under Article 3 of the Enforcement Decree of the Passenger Transport Service Act), 6, and 9 through 11, supplies any depreciable asset or any service other than those provided for in paragraphs (1) and (2);, an entrepreneur in receipt of such supply presents his/her business registration certificate and requires a tax invoice under Article 32 of the Act.
(5) Paragraph (1) shall not apply where an entrepreneur who operates an automobile manufacturing business or automobile sales business, among general taxable persons under paragraph (1) 14, issues a receipt under paragraph (1), but an entrepreneur in receipt of the relevant supply presents his/her business registration certificate and requires a tax invoice under Article 32 of the Act, by the tenth day of the month following the taxable period in which the date of supply the goods falls. In such cases, the receipt already issued shall be construed as if unissued. <Amended by Presidential Decree No. 26071, Feb. 3, 2015>
(6) Where an entrepreneur referred to in any of the subparagraphs of Article 36 (1) of the Act supplies goods or services prescribed in Article 71 (1), no receipt is required: Provided, That when a person referred to in Article 71 (1) 2 supplies goods or services, the same is applicable only where a person in receipt of such supply does not require a receipt.
(7) A receipt issued under Article 36 of the Act, shall specify the following particulars. In such cases, a receipt form and other necessary matters shall be determined by the Commissioner of the National Tax Service:
1. The registration number, trade name, and name (for a corporation, the name of the representative thereof) of the supplier;
2. The supply price;
3. The date the receipt is prepared;
4. Other necessary information.
(8) Where a general taxable person operating any business provided for in paragraphs (1) and (2) issues a receipt using a mechanical device (excluding cash registers), such as a credit card terminal or debit card terminal, he/she shall specify the amount of tax on the receipt, separate from the value of supply, notwithstanding paragraph (7).
SECTION 3 Amounts of Tax Payable, etc.
 Article 74 (Deduction of Input Tax Amounts in Cases of Non-Submission, etc. of Lists of Total Tax Invoices by Seller)
“Cases prescribed by Presidential Decree” in the proviso to Article 39 (1) 1 of the Act, means any of the following cases:
1. Where a list of total tax invoices by seller, regarding tax invoices issued under Article 32 of the Act, or a statement on the receipts of credit card sales slips, etc. under Article 46 (1) of the Act (including any electronic record processed via the information processing system; hereinafter referred to as “statement on the receipts of credit card sales slips, etc.”) is submitted with a revised return of tax base under Article 25 (1) of the Enforcement Decree of the Framework Act on National Taxes;
2. Where a list of total tax invoices by seller, regarding tax invoices issued under Article 32 of the Act, or a statement on the receipts of credit card sales slips, etc. is submitted with a written request for correction under Article 25-3 of the Enforcement Decree of the Framework Act on National Taxes and is rectified by the rectifying agency under Article 102;
3. Where a list of total tax invoices by seller, regarding tax invoices issued under Article 32 of the Act, or a statement on the receipts of credit card sales slips, etc. is submitted with a return of tax base after term under Article 25-4 of the Enforcement Decree of the Framework Act on National Taxes and is decided by the head of the competent tax office;
4. Where the customer registration number or the value of supply on a list of total tax invoices by seller, regarding tax invoices issued under Article 32 of the Act, is wrongly stated in error and transactions are verified from the tax invoice issued;
5. Where, in making rectification under Article 57 of the Act, an entrepreneur submits a tax invoice issued under Article 32 of the Act or a credit card sales slip, etc. issued under Article 46 (3) of the Act to the relevant rectifying agency subject to its verification under Article 102.
 Article 75 (Deduction of Input Tax Amounts in Cases of Erroneous Entry, etc. of Requisite Entry Items on Tax Invoices, etc.)
“Cases prescribed by Presidential Decree” in the proviso to Article 39 (1) 2 of the Act, means any of the following cases: <Amended by Presidential Decree No. 26983, Feb. 17, 2016>
1. Where an entrepreneur who has filed an application for business registration under Article 11 (1) or (2), is issued with a tax invoice or import tax invoice, including his/her own or his/her representative’s resident registration number, regarding transactions made until the date the business registration certificate is issued under Article 11 (5);
2. Where some of the requisite entry items on a tax invoice issued under Article 32 of the Act, are wrongly stated in error, but transactions are verified from the other requisite or optional entry items on the tax invoice;
3. Where a tax invoice is issued after the time of supply for goods or services but not later than the final return deadline for the taxable period in which the time of supply falls;
4. Where an electronic tax invoice issued under Article 32 (2) of the Act is not transmitted to the Commissioner of the National Tax Service, but the issuance thereof is verified;
5. Where a tax invoice, other than electronic tax invoices issued under Article 32 (2) of the Act, is issued not later than the final return deadline for the taxable period in which the time of supply for goods or services falls, and the relevant transactions are verified;
6. Where, even though a tax invoice is issued stating a place of business other than that which has actually supplied or received goods or services, the place of business is eligible for lump-sum payment under Article 51 (1) of the Act, or has been registered as a per-business unit taxable entrepreneur, and the entrepreneur who has actually supplied the goods or services files a return and pays the amount of tax payable for the pertinent taxable period to the head of the tax office having jurisdiction over the place of tax payment under Articles 48 and 49 of the Act.
 Article 76 Deleted. <by Presidential Decree No. 25196, Feb. 21, 2014>
 Article 77 (Disbursements Not Directly Related to Business)
 Article 78 (Transportation Business, etc.)
“Transportation business, an automobile sales business, or any other business within the types of business prescribed by Presidential Decree” in Article 39 (1) 5 of the Act, means a business within the types of business provided for in the subparagraphs of Article 19.
 Article 79 (Entertainment Expenses, etc.)
“Disbursement of other similar expenses prescribed by Presidential Decree” in Article 39 (1) 6 of the Act, means disbursement of entertainment expenses provided for in Article 35 of the Income Tax Act and Article 25 of the Corporate Tax Act and other similar expenses.
 Article 80 (Input Tax Amount Related to Land)
“Input tax amount related to land prescribed by Presidential Decree” in Article 39 (1) 7 of the Act, means any of the following input tax amounts related to capital expenditure for development, etc. of land:
1. An input tax amount related to the acquisition and change of the form and quality of land, the development of factory and housing sites, etc.;
2. Where land on which a building stands is purchased and then only the land is used after the building is removed, an input tax amount related to the acquisition and removal expenses of the building;
3. An input tax amount related to expenses that constitute the cost of land acquisition following enhancement of the actual value of land.
 Article 81 (Proportional Distribution Calculation of Common Input Tax Amounts)
(1) Where an entrepreneur concurrently operates both a taxable business and a tax-free business, etc. under Article 40 of the Act, if an input tax amount has unclear actual attribution (hereinafter referred to as “common input tax amount”), an input tax amount related to the tax-free business, etc. shall be calculated based on proportional distribution according to the following formula, except as based on the number of persons or otherwise prescribed by Ordinance of the Ministry of Strategy and Finance: Provided, That when a preliminary return is filed, it shall be calculated based on proportional distribution according to the ratio of the value of tax-free supplies (including the value of nontaxable supplies; hereafter the same shall apply in this Article and Article 82) to the total value of supplies in the preliminary return period, and then adjusted when a final return is filed: <Amended by Presidential Decree No. 26983, Feb. 17, 2016>
Input tax amount related to tax-free business, etc. = Common input tax amount × (Value of tax-free supplies ÷ Total value of supplies)
(2) Notwithstanding paragraph (1), any of the following input tax amounts relating to goods or services shall be deemed a deductible input tax amount:
1. A common input tax amount if the value of tax-free supplies is less than five percent of the total value of supplies in the taxable period: Provided, That this shall exclude where the common input tax amount is at least five million won;
2. An input tax amount if the common input tax amount is less than fifty thousand won in the taxable period;
3. An input tax amount for goods subject to which Article 63 (3) 3.
(3) In applying paragraph (1), a telecommunications business operator under the Telecommunications Business Act or the Korea Railroad Corporation established under the Korea Railroad Corporation Act may calculate a common input tax amount based on proportional distribution according to the following formula only for goods or services that have unclear actual attribution:
Input tax amount related to tax-free business, etc. = Common input tax amount × (Value of tax-free supplies in all places of business ÷ Total value of supplies in all places of business)
(4) In applying paragraph (1), if the value of supply for both or either of a taxable business and a tax-free business, etc. is nonexistent in the pertinent taxable period, the proportional distribution for the taxable period shall be calculated according to the following order: Provided, That when the area of a building or structure newly built or acquired is divisible by size predetermined for each of a taxable business and a tax-free business, etc., subparagraph 3 shall prevail over subparagraphs 1 and 2:
1. The ratio of the value of purchase related to the tax-free business, etc. to the total value of purchase (excluding the common value of purchase);
2. The ratio of the estimated value of supplies related to the tax-free business, etc. to the total estimated value of supplies;
3. The ratio of the predetermined area of use for the tax-free business, etc. to the total predetermined area of use.
(5) Where a common input tax amount regarding a building or structure referred to in under the proviso to paragraph (4), excluding land, is calculated based on proportional distribution under subparagraph 3 of the same paragraph, even though it becomes possible to calculate the common input tax amount according to the formula set forth in paragraph (1) as the values of supplies for both the taxable business and the tax-free business, etc. later become known, paragraph (4) 3 shall apply for the taxable period before the areas of use for the taxable business and the tax-free business, etc. are determined and then the common input tax amount shall be adjusted pursuant to subparagraph 2 of Article 82 for the taxable period during which the areas of use for the taxable business and the tax-free business, etc. are determined.
(6) Except as otherwise expressly provided for in paragraphs (1) through (5), matters necessary for calculating common input tax amounts based upon proportional distribution, shall be prescribed by Ordinance of the Ministry of Strategy and Finance.
 Article 82 (Adjustment of Common Input Tax Amounts)
Where an entrepreneur calculates his/her input tax amount based upon proportional distribution under Article 81 (4), he/she shall adjust the amount of tax payable for the taxable period during which the values of supplies or the areas of use for the taxable business and the tax-free business, etc. are determined following acquisition of the relevant goods, at the time of filing the final return, according to each of the following formulae: Provided, That when the entrepreneur files a preliminary return, he/she shall calculate it based upon proportional distribution according to the ratio of the value of tax-free supplies to the total value of supplies, and the ratio of the tax-free or nontaxable area of use to the total area of use, in the preliminary return period, and then adjust it when filing a final return:
1. Where an input tax amount is calculated based upon proportional distribution under Article 81 (4) 1 and 2:
Amount of tax to be added or deducted = Total common input tax amount × [1- (Value of tax-free supplies for the taxable period during which the values of supplies for taxable business and tax-free business, etc. are determined ÷ Total value of supplies for the taxable period during which the values of supplies for taxable business and tax-free business, etc. are determined)- Amount of tax already deducted]
2. Where an input tax amount is calculated based upon proportional distribution under Article 81 (4) 3:
Amount of tax to be added or deducted = Total common input tax amount × [1- (Tax-free area of use for the taxable period during which the areas of use for taxable business and tax-free business, etc. are determined ÷ Total area of use for the taxable period during which the areas of use for taxable business and tax-free business, etc. are determined)- Amount of tax already deducted]
 Article 83 (Recalculation of Amounts of Tax Payable or Amounts of Tax Refundable)
(1) The amount of tax payable or the amount of tax refundable under Article 41 of the Act, shall be recalculated only where there is at least five percent’s difference between both the ratio of the value of tax-free supplies to the total value of supplies, or the ratio of the tax-free area of use to the total area of use, and the ratio applied to the taxable period (if it is recalculated in a subsequent taxable period, the recalculated period) in which the acquisition date of depreciable assets is included, after an input tax amount for the depreciable assets are deducted pursuant to Article 38 (1) of the Act and Articles 81 and 82 of this Decree.
(2) The amount of tax to be added to, or deducted from, the amount of tax payable, or to be added to, or deducted from, the amount of tax refundable following the recalculation of the amount of tax payable or the amount of tax refundable under paragraph (1), shall be an amount calculated according to each of the following formulae. In such cases, the latter part of Article 66 (2) shall apply mutatis mutandis to the number of the taxable periods elapsed:
1. Buildings or structures:
Amount of tax to be added or deducted = Input tax amount for goods × [1- (5 ÷ 100) × Number of taxable periods elapsed] × Ratio of the value of tax-free supplies increased or decreased or the ratio of the tax-free area of use increased or decreased
2. Other depreciable assets:
Amount of tax to be added or deducted = Input tax amount for goods × [1- (25 ÷ 100) × Number of taxable periods elapsed] × Ratio of the value of tax-free supplies increased or decreased or the ratio of the tax-free area of use increased or decreased
(3) In applying paragraphs (1) and (2), if the relevant amount is calculated based upon proportional distribution according to the ratio of the value of tax-free supplies to the total value of supplies for the taxable period in which the acquisition date falls, it shall be recalculated according to the ratio of the value of tax-free supplies increased or decreased; while if the relevant amount is calculated based upon proportional distribution according to the ratio of the tax-free area of use to the total area of use for the taxable period in which the acquisition date falls, it shall be recalculated according to the ratio of the tax-free area of use increased or decreased.
(4) Paragraphs (1) and (2) shall not apply where Article 66 is applicable.
(5) When calculating the number of taxable periods elapsed under paragraph (2), if depreciable assets are acquired or subject to paragraph (1) after date the taxable period commences, they shall be deemed acquired or subject to paragraph (1) on the date the taxable period commences.
(6) Except as otherwise expressly provided for in paragraphs (1) through (5), matters necessary for recalculating the amounts of tax payable or the amounts of tax refundable shall be prescribed by Ordinance of the Ministry of Strategy and Finance.
 Article 84 (Calculation of Fictitious Input Tax Amounts)
(1) An amount deductible as an input tax amount under Article 42 (1) of the Act, shall be an amount calculated by multiplying the value of any agricultural product, stock farm product, marine product, or forest product supplied free of value-added tax (including those which have primarily processed under Article 34 (1), those listed in the subparagraphs of paragraph (2) of the same Article, and salt; hereinafter referred to as “tax-free agricultural product, etc.”) by a rate classified in the following table (hereafter referred to as “deduction rate” in this Article): <Amended by Presidential Decree No. 25057, Jan. 1, 2014; Presidential Decree No. 26071, Feb. 3, 2015>
ClassificationRate
1. Food service business(a) Operator of a taxable entertainment venue under Article 1 (4) of the Individual Consumption Tax Act4/104
(b) Individual entrepreneur who operates an eating establishment other than those provided for in item (a)8/108
(c) Entrepreneur who operates an eating establishment other than those provided for in item (a), excluding the individual entrepreneurs provided for in item (b)6/106
2. Manufacturing business (limited to small and medium enterprises referred to in Article 2 of the Enforcement Decree of the Restriction of Special Taxation Act and individual entrepreneurs)4/104
3. Business other than those provided for in subparagraphs 1 and 22/102
(2) The maximum amount deductible as an input tax amount under paragraph (1), shall be an amount calculated by multiplying a tax base for supply of tax-free agricultural products, etc. by an entrepreneur during the relevant taxable period (hereafter referred to as “tax base” in this paragraph) by 30/100 (for an individual entrepreneur, 50/100 for a tax base not exceeding two hundred million won and 40/100 for a tax base exceeding two hundred million won) and then multiplied by a deduction rate: Provided, That the maximum amount deductible as an input tax amount for a corporate entrepreneur and an individual entrepreneur operating an eating establishment until December 31, 2018 shall be an amount calculated according to the following classification: <Newly Inserted by Presidential Decree No. 26071, Feb. 3, 2015; Presidential Decree No. 26983, Feb. 17, 2016; Presidential Decree No. 27838, Feb. 7, 2017>
1. A corporate entrepreneur: An amount computed by multiplying a tax base by 35/100 and then multiplied by a deduction rate;
2. An individual entrepreneur operating an eating establishment: An amount computed by multiplying an amount calculated according to the following division by a deduction rate:
(a) Where a tax base does not exceed one hundred million won: An amount computed by multiplying the tax base by 60/100;
(b) Where a tax base is between one hundred million won and two hundred million won: An amount computed by multiplying the tax base by 55/100;
(c) Where a tax base exceeds two hundred million won: An amount computed by multiplying the tax base by 45/100.
(3) Notwithstanding paragraphs (1) and (2), an entrepreneur who satisfies both of the following requirements may deduct, as an input tax amount, an amount computed by subtracting an amount deducted as an input tax amount under paragraphs (1) and (2) for the first taxable period, from an amount calculated by multiplying the value of tax-free agricultural products, etc. supplied for one calendar year by a deduction rate, when filing a final return on the amount of tax payable for the second taxable period. In such cases, the maximum amount deductible as an input tax amount for one calendar year, shall be an amount computed by multiplying the total amount of tax bases for supply of tax-free agricultural products, etc. during one calendar year (hereinafter referred to as “total tax base amount”) by 30/100 (for an individual entrepreneur, 50/100 for a total tax base amount not exceeding four hundred million won and 40/100 for a total tax base amount exceeding four hundred million won; and for a corporate entrepreneur, 35/100 until December 31, 2018) and then multiplied by a deduction rate: <Newly Inserted by Presidential Decree No. 26071, Feb. 3, 2015; Presidential Decree No. 26983, Feb. 17, 2016; Presidential Decree No. 27838, Feb. 7, 2017>
1. The ratio calculated by dividing the value of tax-free agricultural products, etc. supplied for the first taxable period by the value of tax-free agricultural products, etc. supplied for one calendar year is at least 75/100 or less than 25/100;
2. The entrepreneur has been engaged in a manufacturing business continuously for one calendar year in which the taxable period is included.
(4) Where tax-free agricultural products, etc. for which an input tax amount is deducted under paragraphs (1) through (3) are transferred or delivered as they are, or used or consumed for any business that supplies goods or services exempt from value-added tax or for other purposes, the deducted amount shall be added to the amount of tax payable or deducted from the amount of tax refundable. <Amended by Presidential Decree No. 26071, Feb. 3, 2015>
(5) Any entrepreneur who seeks to qualify for the deduction of an input tax amount under Article 42 (1) of the Act, shall file (including via the national tax information and communications network) a return on the deduction of fictitious input tax amount in the form prescribed by Ordinance of the Ministry of Strategy and Finance with the head of the competent tax office, along with any of the following documents: Provided, That when an entrepreneur who operates a manufacturing business is supplied with tax-free agricultural products, etc. directly from a farmer or fisherman, only a return on the deduction of fictitious input tax amount is required:
1. An aggregate table of invoices by purchaser under Article 163 of the Income Tax Act or an aggregate invoice for each purchaser under Article 121 of the Corporate Tax Act;
2. A statement on the receipts of credit card sales slips, etc. prescribed by Ordinance of the Ministry of Strategy and Finance.
(6) A farmer or fisherman referred to in the proviso to paragraph (5) refers to an individual engaged in agriculture, such as growing crops, farming animals, and growing crops combined with farming animals, forestry, fishing, or extraction of salt under the Korean Standard Industrial Classification publicly announced by the Commissioner of the Korea National Statistical Office. <Amended by Presidential Decree No. 26071, Feb. 3, 2015; Presidential Decree No. 26983, Feb. 17, 2016>
(7) Articles 74 and 75 shall apply mutatis mutandis to the deduction of input tax amounts under paragraph (5). <Amended by Presidential Decree No. 26071, Feb. 3, 2015>
(8) Except as otherwise expressly provided for in paragraphs (1) through (7), matters necessary for calculation of fictitious input tax amounts, shall be prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 26071, Feb. 3, 2015>
 Article 85 (Special Cases concerning Deductions of Input Tax Amounts in Cases of Converting Depreciable Assets from Tax-Free Business, etc. to Taxable Business Use)
(1) Where an entrepreneur uses or consumes any depreciable asset, for which the input tax amount is not deducted under Article 39 (1) 7 of the Act, for a taxable business, an amount of tax to be deducted pursuant to Article 43 of the Act, shall be an amount calculated according to each of the following formulae. In such cases, the latter part of Article 66 (2) shall apply mutatis mutandis to the number of taxable periods elapsed:
1. Buildings or structures:
Amount of tax to be deducted = Input tax amount not deducted in relation to the tax-free business, etc. as at the time of acquiring goods × [1- (5 ÷ 100) × Number of taxable periods elapsed]
2. Other depreciable assets:
Amount of tax to be deducted = Input tax amount not deducted in relation to the tax-free business, etc. as at the time of acquiring goods × [1- (25 ÷ 100) × Number of taxable periods elapsed]
(2) Where an entrepreneur uses or consumes any depreciable asset, for which the input tax amount is not deducted under Article 43 of the Act, for both a taxable business and a tax-free business, etc., an amount of tax to be deducted shall be an amount calculated according to each of the following formulae, but if the value of taxable supplies through the taxable business is less than five percent of the total value of supplies, the amount of tax to be deducted shall be deemed zero. In such cases, the latter part of Article 66 (2) shall apply mutatis mutandis to the number of taxable periods elapsed:
1. Buildings or structures:
Amount of tax to be deducted = Input tax amount not deducted in relation to the tax-free business, etc. as at the time of acquiring goods × [1- (5 ÷ 100) × Number of taxable periods elapsed] × (Value of taxable supplies in the taxable period in which the date goods are used or consumed for the taxable business, falls ÷ Total value of supplies in the taxable period in which the date goods are used or consumed for the taxable business, falls)
2. Other depreciable assets:
Amount of tax to be deducted = Input tax amount not deducted in relation to the tax-free business, etc. as at the time of acquiring goods × [1- (25 ÷ 100) × Number of taxable periods elapsed] × (Value of taxable supplies in the taxable period in which the date goods are used or consumed for the taxable business, falls ÷ Total value of supplies in the taxable period in which the date goods are used or consumed for the taxable business, falls)
(3) In applying paragraph (2), if the value of supply for both or either of a taxable business and a tax-free business, etc. is nonexistent in the pertinent taxable period, the proportional distribution for the taxable period shall be calculated according to the following order: Provided, That when the area of a building for which the input tax amount is not deducted in relation to a tax-free business, etc. as at the time of acquisition thereof is divisible by a size predetermined for each of a taxable business and a tax-free business, etc., subparagraph 3 shall prevail over subparagraphs 1 and 2:
1. The ratio of the value of purchase related to the taxable business, to the total value of purchase;
2. The ratio of the estimated value of supplies related to the taxable business, to the total estimated value of supplies;
3. The ratio of the predetermined area of use for the taxable business, to the total predetermined area of use.
(4) Where an input tax amount calculated based upon proportional distribution under paragraph (3) is deducted, if a final return is filed on the amount of tax payable for the taxable period during which the values of supplies for a taxable business and a tax-free business, etc. or the areas of use for a taxable business and a tax-free business are determined following use or consumption for the taxable business of depreciable assets for the tax-free business, it shall be adjusted according to each of the following formulae: <Amended by Presidential Decree No. 26071, Feb. 3, 2015>
1. Where an input tax amount to be deducted, is calculated based upon proportional distribution under paragraph (3) 1 and 2:
(a) Buildings or structures:
Amount of tax to be added or deducted = Input tax amount not deducted in relation to the tax-free business, etc. as at the time of acquiring goods × [1- (5 ÷ 100) × Number of taxable periods elapsed] × (Value of taxable supplies in the taxable period during which the values of supplies for the taxable business and the tax-free business, etc. are determined ÷ Total value of supplies in the taxable period during which the values of supplies for the taxable business and the tax-free business, etc. are determined) - Input tax amount already deducted
(b) Other depreciable assets:
Amount of tax to be added or deducted = Input tax amount not deducted in relation to the tax-free business, etc. as at the time of acquiring goods × [1- (25 ÷ 100) × Number of taxable periods elapsed] × (Value of taxable supplies in the taxable period during which the values of supplies for the taxable business and the tax-free business, etc. are determined ÷ Total value of supplies in the taxable period during which the values of supplies for the taxable business and the tax-free business, etc. are determined) - Input tax amount already deducted
2. Where an input tax amount to be deducted, is calculated based upon proportional distribution under paragraph (3) 3:
Amount of tax to be added or deducted = Input tax amount not deducted in relation to the tax-free business, etc. as at the time of acquiring goods × [1- (5 ÷ 100) × Number of taxable periods elapsed] × (Taxable usable area in the taxable period during which the areas of use for the taxable business and the tax-free business, etc. are determined ÷ Total area of use in the taxable period during which the areas of use for the taxable business and the tax-free business, etc. are determined) - Input tax amount already deducted.
(5) Where an entrepreneur uses or consumes any depreciable asset, for which the input tax amount is not deducted under Article 43 of the Act, for a taxable business, he/she shall file a return on depreciable assets converted to taxable business use in the form prescribed by Ordinance of the Ministry of Strategy and Finance and a final return for the taxable period in which the date of use or consumption for the taxable business falls, with the head of the tax office having jurisdiction over the pertinent place of tax payment.
(6) When calculating the number of taxable periods elapsed under paragraphs (1) through (4), if depreciable assets are acquired after the date the taxable period commences, they shall be deemed acquired on the date the taxable period commences.
(7) Where, after an input tax amount is deducted under paragraphs (1) through (6), there is at least five percent’s difference between both the ratio of the value of tax-free supplies to the total value of supplies or the ratio of the tax-free area of use to the total area of use and the ratio applied to the taxable period (if it is recalculated in a subsequent taxable period, the recalculated period) in which the acquisition date of relevant depreciable assets falls, the input tax amount shall be recalculated applying mutatis mutandis Article 83.
(8) Except as otherwise expressly provided for in paragraphs (1) through (7), matters necessary for special cases concerning deductions of input tax amounts in cases of converting depreciable assets from a tax-free business, etc. to a taxable business, shall be prescribed by Ordinance of the Ministry of Strategy and Finance.
 Article 86 (Special Cases concerning Deductions of Input Tax Amounts for Goods in Stock, etc. in Cases of being Converted to General Taxable Persons)
(1) Where a simplified taxable person is converted to a general taxable person under Article 44 (1) of the Act, he/she shall, as regards any of the following goods in stock, assets under construction, and depreciable assets (limited to those qualifying for the deduction of input tax amount under Articles 38 through 43 of the Act; hereafter referred to as “goods in stock, etc.” in this Article) as at the date of such conversion, prepare a return on the goods in stock, etc. as at the time of conversion to general taxation and file (including via the national tax information and communications network) it, along with a return for the taxable period immediately preceding that in which the date of conversion falls, with the head of the tax office having jurisdiction over the pertinent place of tax payment:
1. Commodities;
2. Products (including semi-finished goods and work in-process);
3. Materials (including sub-materials);
4. Assets under construction;
5. Depreciable assets (for buildings or structures, limited to those within ten years after being acquired, constructed, or newly built; and for other depreciable assets, limited to those within two years after being acquired or manufactured).
(2) The amount of goods in stock, etc. referred to in paragraph (1) shall be the value of acquisition (including value-added tax) of the goods in stock, etc. verified from the book of account or tax invoice.
(3) Any person who files a return under paragraph (1) is entitled to deduct an amount calculated according to each of the following, as an input tax amount (hereinafter referred to as “inventory input tax”). In such cases, the latter part of Article 66 (2) and paragraph (5) of the same Article shall apply mutatis mutandis to the number of taxable periods elapsed under subparagraphs 3 and 4:
1. Goods in stock referred to in paragraph (1) 1 through 3:
Inventory input tax = Amount of inventory × (10 ÷ 110) × (1 - Value-added rate classified under the table in Article 111 (2))
2. Assets under construction referred to in paragraph (1) 4:
Inventory input tax = Input tax amount to be deducted in relation to assets under construction × (1 - Value-added rate classified under the table in Article 111 (2))
3. Assets referred to in paragraph (1) 5, which are purchased from a third person:
(a) Buildings or structures:
Inventory input tax = Value of acquisition × [1 - (10 ÷ 100) × Number of taxable periods elapsed] × (10 ÷ 110) × (1 - Value-added rate classified under the table in Article 111 (2))
(b) Other depreciable assets:
Inventory input tax = Value of acquisition × [1 - (50 ÷ 100) × Number of taxable periods elapsed] × (10 ÷ 110) × (1 - Value-added rate classified under the table in Article 111 (2))
4. Assets referred to in paragraph (1) 5, which are manufactured, constructed or newly built directly by the entrepreneur:
(a) Buildings or structures:
Inventory input tax = Amount to be deducted in relation to construction or new building of relevant assets × [1 - (10 ÷ 100) × Number of taxable periods elapsed] × (1 - Value-added rate classified under the table in Article 111 (2))
(b) Other depreciable assets:
Inventory input tax = Input tax amount to be deducted in relation to manufacturing thereof × [1 - (50 ÷ 100) × Number of taxable periods elapsed] × (1 - Value-added rate classified under the table in Article 111 (2))
(4) “Value-added rate classified under the table in Article 111 (2)” in the formulae in the subparagraphs of paragraph (3), means a value-added rate of the relevant business category that is applied to the taxable period in which the date immediately preceding the date of conversion to a general taxable person (for depreciable assets, the date of acquisition of the depreciable assets) falls.
(5) Where a general taxable person is converted to a simplified taxable person and then to a general taxable person, paragraphs (1) through (4) shall not apply to goods in stock, etc. exempt from Article 112 (7) as at the time of conversion to the simplified taxable person.
(6) Upon receipt of a return filed under paragraph (1), the head of a tax office shall investigate and approve an amount of inventory deductible as inventory input tax; and give notice to the relevant entrepreneur of the inventory input tax to be deducted within one month after the deadline under paragraph (1) expires. In such cases, if no notice is given by the deadline, the amount of inventory returned by the entrepreneur shall be deemed approved.
(7) The inventory input tax decided under paragraph (6) shall be deducted from the output tax amount for the preliminary return period or taxable period in which the date of approval falls.
(8) If any error or omission exists in the amount of inventory input tax approved or deemed approved under paragraph (6), the inventory input tax shall be investigated and rectified pursuant to Article 57 of the Act.
 Article 87 (Scope of Tax Deductions for Bad Debts)
(1) “Bankruptcy or compulsory execution or any other cause prescribed by Presidential Decree” in the main sentence of Article 45 (1) of the Act, means any grounds for recognition of bad debts under Article 55 (2) of the Enforcement Decree of the Income Tax Act and Article 19-2 (1) of the Enforcement Decree of the Corporate Tax Act.
(2) An amount of bad debt tax to be deducted under Article 45 of the Act, shall be an amount of bad debt tax (if value-added tax is paid on a tax base increased due to a decision or rectification under Article 57 of the Act, including the amount of bad debt tax) that is decided on any grounds provided for in paragraph (1) by the deadline for filing a final return for the taxable period in which the fifth anniversary falls after an entrepreneur supplies goods or services subject to value-added tax. <Amended by Presidential Decree No. 26071, Feb. 3, 2015>
(3) Where a supplier deducts an amount of bad debt tax from the output tax amount under the main sentence of Article 45 (1) of the Act, the head of the tax office having jurisdiction over the supplier, shall give notice of the deduction of the amount of bad debt tax to the head of the tax office having jurisdiction over the recipient of supply;, where the recipient of supply fails to file a return on the amount of bad debt tax less the input tax amount under the main sentence of Article 45 (3) of the Act, a decision or rectification shall be made pursuant to the proviso to the same paragraph.
(4) Any entrepreneur who seeks to qualify for the deduction of an amount of bad debt tax under Article 45 (1) of the Act or to add an amount of bad debt tax to the input tax amount under Article 45 (4) of the Act, shall file (including via the national tax information and communications network) with the head of the competent tax office a final return on value-added tax under Article 91 (1) accompanied by a return on the deduction (settlement) of amount of bad debt tax in the form prescribed by Ordinance of the Ministry of Strategy and Finance and a document evidencing the fact of bad debt or settlement.
SECTION 4 Tax Deductions
 Article 88 (Tax Deductions, etc. Subsequent to Use of Credit Cards, etc.)
(1) “Entrepreneur running a business prescribed by Presidential Decree” in Article 46 (1) of the Act, means an entrepreneur running any business referred to in Article 73 (1) and (2). <Amended by Presidential Decree No. 26983, Feb. 17, 2016>
(2) “Amount prescribed by Presidential Decree” in Article 46 (1) of the Act, means one billion won per place of business. <Newly Inserted by Presidential Decree No. 26983, Feb. 17, 2016>
(3) “Ones prescribed by Presidential Decree” in Article 46 (1) of the Act, means any of the following:
1. Any of the following, issued under the Specialized Credit Finance Business Act:
(a) Debit card receipts;
(b) Credit card sales slips issued through an agency for settlements;
(c) Pre-paid card receipts (limited to those by which real names are identifiable);
2. Cash receipts issued under Article 126-3 of the Restriction of Special Taxation Act (including cash receipts issued by a value-added telecommunications business operator on behalf of mail order business operators).
(4) “Means of electronic settlement prescribed by Presidential Decree” in Article 46 (1) of the Act, refers to any means that satisfies all of the following requirements:
1. It shall be a settlement means using currency value stored on cards or in electronic media, such as computers, as a means of payment for goods or services (hereafter referred to as “electronic money” in this Article);
2. An electronic money issuer shall manage the details of settlement by affiliated entrepreneur.
(5) “General taxable person prescribed by Presidential Decree” in Article 46 (3) of the Act, means an entrepreneur who operates a business other than the following:
1. Public bath, and hair and beauty salon business;
2. Passenger transport business (excluding chartered bus transport services under Article 3 of the Enforcement Decree of the Passenger Transport Service Act);
3. Business that issues admission tickets;
4. Business that supplies services provided for in the proviso to subparagraph 1 of Article 35;
5. Animal diagnosis and treatment services provided by a veterinarian, which do not fall under the proviso to subparagraph 5 of Article 35;
6. Business that supplies services provided for in Article 36 (2) 1 and 2.
(6) “Statement on the receipts of the credit card sales slip, etc. prescribed by Presidential Decree” in Article 46 (3) 1 of the Act, means a statement on the receipts of credit card sales slips, etc. referred to in subparagraph 1 of Article 74.
(7) “Method prescribed by Presidential Decree” in Article 46 (3) 2 of the Act, means a method determined under Article 160-2 (4) of the Income Tax Act or Article 116 (4) of the Corporate Tax Act.
(8) “Entrepreneur prescribed by Presidential Decree” in Article 46 (4) of the Act, means an entrepreneur engaged in retail trade, food service activities, accommodation services or other business that mainly supplies goods or services to consumers other than entrepreneurs, who is prescribed by the Commissioner of the National Tax Service in consideration of the size of business, area, etc.
(9) The Commissioner of the National Tax Service may determine the following matters, to the extent necessary for tax perpetuation:
1. Issuance and popularization of credit card sales slips and cash receipts;
2. Procedures for designation of persons eligible for credit card merchants and cash receipt merchants;
3. Other matters necessary for performing tax perpetuation-related work.
 Article 89 (Special Cases concerning Tax Deductions Subsequent to Issuance and Transmission of Electronic Tax Invoices)
(1) “Amount prescribed by Presidential Decree” in the former part of Article 47 (1) of the Act, means 200 won.
(2) The limit on deduction under the latter part of Article 47 (1) of the Act, is one million won per year.
CHAPTER V RETURNS, PAYMENTS, ETC.
SECTION 1 Returns and Payments
 Article 90 (Preliminary Returns and Payments)
(1) With respect to the preliminary return and payment of value-added tax under Article 48 (1), (2) and (4) of the Act, Article 60 of the Act and Articles 47-2 through 47-4 of the Framework Act on National Taxes concerning penalty taxes shall not apply, while Articles 46 (1) and (2) and 47 (1) of the Act concerning the amount of tax to be deducted shall apply.
(2) To file a preliminary return of value-added tax under Article 48 (1) and (4) of the Act, an entrepreneur shall submit (including via the national tax information and communications network) a preliminary return of value-added tax in the form prescribed by Ordinance of the Ministry of Strategy and Finance, specifying the following particulars, to the head of the tax office having jurisdiction over each place of tax payment: Provided, That the particulars already included in a return filed under Article 107 (4), shall be excluded from a preliminary return:
1. The entrepreneur’s personal details;
2. The amount of tax payable and the basis for calculation thereof;
3. The amount of tax deducted and the basis for calculation thereof;
4. The details of the lists of total tax invoices by customer and by seller, submitted under Article 54 (1) of the Act (hereinafter referred to as “lists of total tax invoices by customer and by seller”);
5. Other reference information.
(3) Any preliminary return of value-added tax filed under paragraph (2) shall accompany the documents as follows, as prescribed by Ordinance of the Ministry of Strategy and Finance:
ClassificationDocuments Required
1. Where an input tax amount is not to be deducted under Article 39 of the ActA statement of non-deductible input tax amount
2. Where an entrepreneur has issued credit card sales slips, etc. under Article 46 (1) of the ActA summary sheet of the amount of credit card sales slips, etc. issued
3. Where a deduction is made in regard to sales made through the electronic settlement method under Article 46 (1) of the ActA statement of electronic money settlements
4. Where an input tax amount is deducted under Article 46 (3) of the ActA statement on the receipts of credit card sales slips, etc.
5. Where an entrepreneur is engaged in leasing real estateA statement of supply prices in real estate lease contracts under Article 55 (2) of the Act and copies of lease contracts (limited to where lease contracts are renewed for leased places of business)
6. In the case of a business referred to in Article 55 (1) of the ActA statement of cash sales
7. Where any building, mechanical apparatus, etc. is acquiredA statement of acquisition of buildings or other depreciable assets
8. Where an entrepreneur is a per-business unit taxable entrepreneurA statement of the tax base and the amount of tax payable (the amount of tax refundable) for value-added tax returned by each place of business subject to per-business unit taxation
9. Where the supply of goods or services is zero-tax rated under Articles 21 through 24 of the Act or Articles 105 (1), 107 and 121-13 of the Restriction of Special Taxation ActA statement of zero-tax rated sales
(4) The head of the competent tax office shall issue a notice for payment of the value-added tax computed under the main sentence of Article 48 (3) of the Act within a period classified as follows:
ClassificationPeriod
1. Preliminary return for the first half periodFrom April 1 until April 10
2. Preliminary return for the second half periodFrom October 1 until October 10
(5) “If the deterioration of business performance is caused by the suspension of, or a decline in, business operations or otherwise any cause prescribed by Presidential Decree exists, the relevant individual entrepreneur” in Article 48 (4) of the Act, means any of the following:
1. If the value of supply or the amount of tax payable for the portion of each preliminary return period, falls short of 1/3 of either the value of supply in the immediately preceding taxable period or the amount of tax payable under Article 48 (3) of the Act due to the suspension of, or a decline in, business operations, the relevant entrepreneur;
2. If an early refund is sought under Article 107 for the portion of each preliminary return period, the relevant entrepreneur.
(6) The agent of a nonresident or foreign corporation shall make a preliminary return and payment, and a final return and payment; and submit lists of total tax invoices by customer and by seller under Articles 48, 49 and 54 of the Act on behalf of the nonresident or foreign corporation.
(7) A preliminary return filed under paragraph (2) unaccompanied by a document classified in the following, shall not be deemed a return filed under paragraph (2):
1. For a tax base, which is zero-tax rated under Articles 21 through 24 of the Act: Documents referred to in Article 101;
2. For a tax base, which is zero-tax rated under Article 105 (1) of the Restriction of Special Taxation Act: Documents referred to in Article 106 (12) of the Enforcement Decree of the Restriction of Special Taxation Act and Article 4 of the Regulations on Special Cases of Application of Zero Tax Rate for, and Exemptions from, Value-Added Tax on Instruments, Materials and Petroleum for Agriculture, Livestock Farming, Forestry and Fisheries.
(8) Any entrepreneur who supplies services referred to in any of the items of subparagraph 5 of Article 35, shall file a preliminary return or final return under Articles 48 and 49 of the Act (if he/she supplies only services exempt from value-added tax, when filing a report on the status of the place of business under Article 78 of the Income Tax Act), which shall be accompanied by a statement of sales in the form prescribed by Ordinance of the Ministry of Strategy and Finance.
 Article 91 (Final Returns and Payments)
(1) To file a final return on value-added tax under Article 49 (1) of the Act, an entrepreneur shall submit a final return on value-added tax in the form prescribed by Ordinance of the Ministry of Strategy and Finance, specifying the following particulars, to the head of the tax office having jurisdiction over each place of tax payment:
1. The entrepreneur’s personal details;
2. The amount of tax payable and the basis for calculation thereof;
3. The amount of penalty tax, the amount of tax deducted, and the basis for calculation thereof;
4. The details of the lists of total tax invoices by customer and by seller submitted;
5. Other reference information.
(2) Any final return of value-added tax filed under paragraph (1) shall accompany the documents classified as follows, as prescribed by Ordinance of the Ministry of Strategy and Finance:
ClassificationDocuments Required
1. Where a business is transferred under Article 10 (8) 2 of the ActA report of business transfer
2. Where an input tax amount is not to be deducted under Article 39 of the ActA statement of non-deductible input tax amount
3. Where an entrepreneur has issued credit card sales slips, etc. under Article 46 (1) of the ActA summary sheet of the amount of credit card sales slips, etc. issued
4. Where a deduction is made in regard to sales made through the electronic settlement method under Article 46 (1) of the ActA statement of electronic money settlements
5. Where an input tax amount is deducted under Article 46 (3) of the ActA statement on the receipts of credit card sales slips, etc.
6. Where an entrepreneur is engaged in leasing real estateA statement of supply prices in real estate lease contracts under Article 55 (2) of the Act and copies of lease contracts (required only when lease contracts are renewed for leased places of business)
7. Where an entrepreneur operates a real estate management business, except for residential building management A building management statement
8. Where an entrepreneur is engaged in a service business, such as a food or accommodation service businessA statement of the status of the place of business
9. In the case of a business referred to in Article 55 (1) of the ActA statement of cash sales
10. Where any building, mechanical apparatus, etc. is acquiredA statement of acquisition of buildings or other depreciable assets
11. Where an entrepreneur is a per-business unit taxable entrepreneurA statement of the tax base and the amount of tax payable (the amount of tax refundable) for value-added tax returned by each place of business subject to per-business unit taxation
12. Where the supply of goods or services is zero-tax rated under Articles 21 through 24 of the Act or Articles 105 (1), 107 and 121-13 of the Restriction of Special Taxation ActA statement of zero-tax rated sales
(3) A final return filed under paragraph (1) unaccompanied by a document classified in the following, shall not be deemed a final return filed under paragraph (1):
1. For a tax base, which is zero-tax rated under Articles 21 through 24 of the Act: Documents referred to in Article 101;
2. For a tax base, which is zero-tax rated under Article 105 (1) of the Restriction of Special Taxation Act: Documents referred to in Article 106 (12) of the Enforcement Decree of the Restriction of Special Taxation Act and Article 4 of the Regulations on Special Cases of Application of Zero Tax Rate for, and Exemptions from, Value-Added Tax on Instruments, Materials and Petroleum for Agriculture, Livestock Farming, Forestry and Fisheries.
 Article 91-2 (Deferred Payment of Value-Added Tax on Imported Goods)
(1) “Small or medium business owner or middle-standing business owner who meets the requirements prescribed by Presidential Decree, such as the ratio of exports to sales” in Article 50-2 (1) of the Act means a small or medium business owner or middle-standing business owner who satisfies all of the following requirements (hereafter referred to as “small or medium business owner or middle-standing business owner” in this Article): <Amended by Presidential Decree No. 27838, Feb. 7, 2017>
1. A corporation constituting a small or medium enterprise provided in Article 2 of the Enforcement Decree of the Restriction of Special Taxation Act or an enterprise of middle standing provided for in Article 10 (1) of the same Decree (limited to an enterprise mainly engaged in the manufacturing business provided for in Article 6 (3) 2 of the Restriction of Special Taxation Act) in the immediately preceding business year;
2. The total value of supply of zero-tax rated goods under Article 21 of the Act (hereafter referred to as “exports” in this subparagraph) in the immediately preceding business year shall satisfy the following:
(a) A small or medium enterprise provided for in Article 2 of the Enforcement Decree of the Restriction of Special Taxation Act in the immediately preceding business year: The ratio of exports to the total value of goods or services supplied in the immediately preceding business year is at least 30 percent or the amount of such exports is at least ten billion won;
(b) An enterprise of middle standing provided for in Article 10 (1) of the Enforcement Decree of the Restriction of Special Taxation Act in the immediately preceding business year: The ratio of exports to the total value of goods or services supplied in the immediately preceding business year is at least 50 percent;
3. All of the following requirements shall be satisfied as at the date a request for verification is made under paragraph (3):
(a) He/she has continuously operated his/her business for the last three years;
(b) He/she has not failed to pay any national tax (including customs duties; hereafter the same shall apply in this Article) for the last two years;
(c) He/she has not been punished for violating the Punishment of Tax Evaders Act or the Customs Act for the last three years;
(d) He/she has not been subjected to revocation of deferred payment under Article 50-2 (3) of the Act for the last two years.
(2) “Raw materials and other goods prescribed by Presidential Decree” in Article 50-2 (1) of the Act means goods used by a small or medium business owner or middle-standing business owner for his/her own taxable business: Provided, That this shall exclude goods related to an input tax amount that is not deducted from an output tax amount under Article 39 (1) of the Act. <Amended by Presidential Decree No. 27838, Feb. 7, 2017>
(3) A small or medium business owner or middle-standing business owner may request the head of the competent tax office to verify whether the requirements provided for in each of the subparagraphs of paragraph (1) are satisfied, within one month from the expiry date of a filing deadline referred to in the following, whichever comes later: <Amended by Presidential Decree No. 27838, Feb. 7, 2017>
1. The filing deadline of reports under Article 60 or 76-17 of the Corporate Tax Act for the immediately preceding business year;
2. The filing deadline of returns under Article 49 of the Act for the immediately preceding business year.
(4) Upon receipt of a small or medium business owner’s or middle-standing business owner’s request for verification under paragraph (3), the head of a tax office shall verify whether the small or medium business owner or middle-standing business owner satisfies the requirements provided for in each of the subparagraphs of paragraph (1) and then issue him/her a written verification in the form prescribed by Ordinance of the Ministry of Strategy and Finance within one month from the date of request. <Amended by Presidential Decree No. 27838, Feb. 7, 2017>
(5) Any small or medium business owner or middle-standing business owner who seeks to defer payment of his/her value-added tax under Article 50-2 (1) of the Act shall file an application for deferred payment of value-added tax, in the form prescribed by Ordinance of the Ministry of Strategy and Finance, with the head of the competent customs house, along with a written verification issued under paragraph (4). <Amended by Presidential Decree No. 27838, Feb. 7, 2017>
(6) Deferral of payment under Article 50-2 (1) of the Act, shall apply only to the value-added tax to be paid when filing a duty return under Article 38 of the Customs Act.
(7) Upon receipt of an application filed under paragraph (5), the head of a customs house shall determine whether to approve deferred payment and give notice of the determination to the relevant small or medium business owner or middle-standing business owner within one month from the date the application is filed. <Amended by Presidential Decree No. 27838, Feb. 7, 2017>
(8) Where deferred payment is approved under paragraph (7), the period of deferred payment shall be one year.
(9) When filing a return under Article 48 (1), 49 (1) or 59 (2) of the Act, a small or medium business owner or middle-standing business owner shall adjust and pay the input tax amount deducted under Article 38 (1) 2 of the Act and the deferred amount of tax regarding the relevant goods. <Amended by Presidential Decree No. 27838, Feb. 7, 2017>
(10) “Grounds prescribed by Presidential Decree, such as failing to pay national taxes” in Article 50-2 (3) of the Act means where a small or medium business owner or middle-standing business owner falls under any of the following cases after obtaining approval for deferred payment: <Amended by Presidential Decree No. 27838, Feb. 7, 2017>
1. Where the small or medium business owner or middle-standing business owner fails to pay national taxes;
2. Where the Commissioner of the National Tax Service, the Commissioner of a Regional Tax Office, the head of a tax office, the Commissioner of the Korea Customs Service or the head of a customs house charges the small or medium business owner or middle-standing business owner with a violation of the Punishment of Tax Evaders Act or the Customs Act;
3. Where the head of the competent customs house becomes aware that deferred payment is approved for the small or medium business owner or middle-standing business owner who does not satisfy all of the requirements provided for in the subparagraphs of paragraph (1).
(11) Where the Commissioner of the National Tax Service, the Commissioner of a Regional Tax Office or the head of a tax office becomes aware that a small or medium business owner or middle-standing business owner falls under any of the subparagraphs of paragraph (10), he/she shall promptly give notice thereof to the Commissioner of the Korea Customs Service. <Amended by Presidential Decree No. 27838, Feb. 7, 2017>
(12) No revocation of approval to defer payment under Article 50-2 (3) of the Act shall affect any goods that a small or medium business owner or middle-standing business owner imports with the payment of value-added tax deferred. <Amended by Presidential Decree No. 27838, Feb. 7, 2017>
(13) The Customs Act shall apply to any revised return, etc. to correct the amount of tax, the payment of which is deferred under Article 50-2 (1) of the Act.
[This Article Newly Inserted by Presidential Decree No. 26983, Feb. 17, 2016]
 Article 92 (Lump-Sum Payments at Principal Places of Business)
(1) The principal place of business referred to in Article 51 of the Act, means the main office (including the principal office; hereinafter the same shall apply) of a corporation or the principal office of an individual: Provided, That a corporation may treat a branch (including a sub-branch) as its principal place of business.
(2) Any person who seeks to qualify as an entrepreneur making lump-sum payment at his/her principal place of business under Article 51 of the Act (hereinafter referred to as “entrepreneur making lump-sum payment at his/her principal place of business”), shall file (including via the national tax information and communications network) an application for lump-sum payment at the principal place of business with the head of the tax office having jurisdiction over his/her principal place of business, at least 20 days before the taxable period concerned commences, specifying the following:
1. The entrepreneur’s personal details;
2. Grounds for applying for lump-sum payment;
3. Other reference information.
(3) Notwithstanding paragraph (2), where a person newly commencing a business seeks to make lump-sum payment at his/her principal place of business, he/she shall file (including via the national tax information and communications network) an application for lump-sum payment at the principal place of business under paragraph (2) with the head of the tax office having jurisdiction over his/her principal place of business, within 20 days from the date of receipt of the registration certificate of his/her principal place of business.
(4) Where a person newly commencing a business files an application for lump-sum payment at the principal place of business under paragraph (3), he/she shall make a lump-sum payment from the taxable period in which the date for filing the application falls.
 Article 93 (Change in Lump-Sum Payments at Principal Places of Business)
(1) Upon occurrence of any of the following grounds, an entrepreneur making lump-sum payment at his/her principal place of business shall, pursuant to Article 51 (2) of the Act, file (including via the national tax information and communications network) an application for change in lump-sum payment at the principal place of business with the head of the competent tax office as classified below, specifying his/her personal details, grounds for change, etc. In such cases, upon receipt of an application filed under subparagraphs 1 and 3, the head of the tax office having jurisdiction over an ancillary place of business shall promptly forward the application to the head of the tax office having jurisdiction over the principal place of business:
1. Where the entrepreneur establishes an ancillary place of business: The head of the tax office having jurisdiction over the ancillary place of business;
2. Where the entrepreneur seeks to change an ancillary place of business to his/her principal place of business: The head of the tax office having jurisdiction over the place of business to be changed to the principal place of business;
3. Where any of the subparagraphs of Article 14 (1) is applicable: The head of the tax office having jurisdiction over the place of business requiring correction (if subparagraph 2 of the same paragraph is applicable, the head of the tax office having jurisdiction over the principal place of business);
4. Where the entrepreneur seeks to exclude an ancillary place of business from the places of business subject to lump-sum payment: The head of the tax office having jurisdiction over the principal place of business;
5. Where the entrepreneur seeks to add an existing place of business as a place of business subject to lump-sum payment: The head of the tax office having jurisdiction over the principal place of business.
(2) Where an application for change in lump-sum payment at the principal place of business is filed under paragraph (1), lump-sum payment shall be made from the taxable period in which the date for filing the application for change falls.
 Article 94 (Exclusion from, and Waiver of, Application of Lump-Sum Payments at Principal Places of Business)
(1) Where an entrepreneur making lump-sum payment at his/her principal place of business, falls under any of the following, the head of the tax office having jurisdiction over the principal place of business may exclude the entrepreneur from application of lump-sum payment at the principal place of business:
1. Where lump-sum payment is deemed inappropriate due to a change in business items;
2. Where the principal place of business is frequently changed;
3. Where lump-sum payment is found to be inappropriate due to any change in circumstances.
(2) Where an entrepreneur making lump-sum payment at his/her principal place of business, waives lump-sum payment at the principal place of business under Article 51 of the Act, he/she shall file (including via the national tax information and communications network) a report on waiver of lump-sum payment at the principal place of business with the head of the tax office having jurisdiction over his/her principal place of business, at least 20 days before commencement of the taxable period for which payment is to be made at each place of business, specifying the following:
1. The entrepreneur’s personal details;
2. Grounds for waiving lump-sum payment;
3. Other reference information.
(3) Where lump-sum payment at the principal place of business is not applied or is waived under paragraphs (1) and (2), the head of the tax office having jurisdiction over the principal place of business shall promptly give notice thereof to both the relevant entrepreneur and the head of the tax office having jurisdiction over a place of business other than the principal place of business.
(4) Where lump-sum payment at the principal place of business is not applied or is waived under paragraphs (1) and (2), payment shall be made at each place of business from the taxable period following that in which the date of exclusion from application or the date of waiver falls.
 Article 95 (Payments by Proxy)
(1) The value-added tax collected under Article 52 (1) of the Act, shall be paid to the head of the tax office having jurisdiction over the place of business or the address at which the value-added tax is collected, with a return of payment of value-added tax by proxy, specifying the following particulars, or to the Bank of Korea (including agencies thereof; hereinafter the same shall apply) or a postal agency with a statement of payment prepared under the National Tax Collection Act:
1. The trade name, address and name of the supplier of services, etc.;
2. Personal details of the entrepreneur making payment by proxy;
3. The value of supply and the amount of value-added tax;
4. Other reference information.
(2) In applying Article 52 (1) of the Act, if the actual attribution of services, etc. supplied by a nonresident or foreign corporation is unclear due to the use thereof for both a taxable business and a tax-free business, etc., the tax base for the services, etc. used for the tax-free business, etc. shall be an amount calculated according to the following formula: Provided, That when the value of supply for both or either of the taxable business and the tax-free business, etc. is nonexistent in the taxable period, the proportional distribution for the taxable period shall be calculated applying mutatis mutandis Articles 81 (4) and 82:
Tax base = Total value of supply of relevant services, etc. × (Value of tax-free supplies for the taxable period in which the payment date of the price falls ÷ Total value of supplies for the taxable period in which the payment date of the price falls)
(3) In applying Article 52 (1) of the Act, if the price is paid in foreign currency, it shall be an amount classified in the following:
1. Where it is paid in foreign currency purchased with Korean currency: An amount calculated according to the sale rate of foreign exchange for customers as at the date of payment;
2. Where it is paid in foreign currency held: An amount calculated according to the basic exchange rate or the arbitrated rate of exchange under the Foreign Exchange Transactions Act as at the date of payment.
(4) “As prescribed by Presidential Decree” in Article 52 (1) 2 of the Act, means any of the following:
1. Where the main sentence of Article 156 (1) of the Income Tax Act or the main sentence of Article 98 (1) of the Corporate Tax Act is applicable;
2. Other than in cases falling under subparagraph 1, where the offering of relevant services, etc. is not attributable to the domestic place of business.
(5) The value-added tax that the transferee of a business under Article 52 (4) of the Act collects from the recipient of the transfer price, shall be paid to the head of the tax office having jurisdiction over the place of business, with a return of payment of value-added tax by proxy, specifying the following particulars, or to the Bank of Korea or a postal agency with a statement of payment prepared under the National Tax Collection Act: <Newly Inserted by Presidential Decree No. 25196, Feb. 21, 2014>
1. The business transferee’s personal details;
2. Personal details of the recipient of the transfer price;
3. The amount of the business transfer price and the amount of the value-added tax thereon;
4. Other reference information.
 Article 96 Deleted. <by Presidential Decree No. 26983, Feb. 17, 2016>
 Article 96-2 (Special Cases concerning Supply of Services, Business Registration, etc. by Foreign Entrepreneurs Providing Electronic Services)
(1) “Game, audio or video file, software, or other services prescribed by Presidential Decree, which are capable of being executed in a mobile communication terminal device, computer, etc.” in Article 53-2 (1) of the Act, means any of the following supplied through an information and communications network as defined in Article 2 (1) 1 of the Act on Promotion of Information and Communications Network Utilization and Information Protection, Etc. (hereafter referred to as “information and communications network” in this Article), which is capable of being stored and executed, or being operated in real time without being stored, in a mobile communication terminal device, computer, etc.:
1. A game, audio or video file, electronic document, software or other works, which are manufactured or processed in the form of code, letters, voice, sounds, images, etc. after optical or electronic processing;
2. Services to improve electronic services under subparagraph 1.
(2) Any entrepreneur who seeks to file for simplified business registration under Article 53-2 (3) of the Act, shall do so with the Commissioner of the National Tax Service by entering the following information via the national tax information and communications network:
1. The names, telephone numbers, mail addresses, e-mail addresses, website addresses and other contact information of the entrepreneur and the representative. In such cases, if a corporate entrepreneur uses a name, other than the corporate name, in transactions, such name shall be included;
2. The country of registration, address, registration number and other information on registration of the entrepreneur in a country in which the place of business supplying services, is located;
3. The types of electronic services supplied, the date the entrepreneur commences a business supplying electronic services in the Republic of Korea, and other information necessary for simplified business registration, as prescribed by Ordinance of the Ministry of Strategy and Finance.
(3) The Commissioner of the National Tax Service shall allocate a simplified business registration number to an entrepreneur who has filed for simplified business registration under paragraph (2) and give notice (including via an information and communications network) thereof to the entrepreneur (including his/her tax manager, if any).
(4) Any entrepreneur who intends to file a value-added tax return under Article 53-2 (4) of the Act, shall file a preliminary return and a final return of value-added tax by entering the following information via the national tax information and communications network:
1. The entrepreneur’s name and simplified business registration number;
2. The total value of supply of electronic services in the Republic of Korea for the filing period of return, the input tax amount to be deducted, and the amount of tax payable;
3. Other necessary information prescribed by Ordinance of the Ministry of Strategy and Finance.
(5) The payment under Article 53-2 (4) of the Act shall be made by depositing into a foreign exchange bank account, as prescribed by the Commissioner of the National Tax Service.
(6) Notwithstanding Article 59, if an entrepreneur who has filed for simplified business registration receives any foreign currency or other foreign exchange in exchange for the supply of electronic services in the Republic of Korea, he/she may use, as a tax base, an amount converted applying the basic exchange rate as at the last day of the taxable period (for a preliminary return and payment, referring to the last day of the preliminary return period). In such cases, the Commissioner of the National Tax Service shall give notice to the entrepreneur (including his/her tax manager, if any) of the basic exchange rate via an information and communications network or announce it via the national tax information and communications network.
(7) The time of supply for electronic services supplied in the Republic of Korea under Article 53-2 (6) of the Act, shall be the time described in each of the following, whichever comes earlier:
1. When a purchaser takes the supply of electronic services from a supplier;
2. When a purchaser completes payment to purchase electronic services.
(8) The place of tax payment for an entrepreneur who has filed for simplified business registration under Article 53-2 (6) of the Act, shall be designated by the Commissioner of the National Tax Service in consideration of the efficiency and convenience of return and payment on the part of the entrepreneur.
[This Article Newly Inserted by Presidential Decree No. 26071, Feb. 3, 2015]
SECTION 2 Documents Required, Etc.
 Article 97 (Method of Submitting Lists of Total Tax Invoices)
(1) Where an entrepreneur submits a tape or diskette processed through the electronic data processing system, including all the entries in the lists of total tax invoices by customer and by seller, as prescribed by the Commissioner of the National Tax Service, he/she shall be construed as submitting the lists of total tax invoices by customer and by seller under Article 54 of the Act.
(2) Except as otherwise expressly provided for in paragraph (1), matters necessary for the method of submitting lists of total tax invoices, shall be prescribed by Ordinance of the Ministry of Strategy and Finance.
 Article 98 (Lists of Total Tax Invoices)
Matters to be stated in lists of total tax invoices by customer and by seller under Article 54 (1) 5 of the Act, shall be the number of tax invoices issued by customer and by seller and other matters prescribed by Ordinance of the Ministry of Strategy and Finance.
 Article 99 (Scope of Persons Required to Submit Lists of Total Tax Invoices)
“Person prescribed by Presidential Decree” in Article 54 (5) of the Act, means:
1. A person liable to pay income tax or corporate tax (including any person exempt from income tax or corporate tax under the Restriction of Special Taxation Act) among the entrepreneurs exempt from value-added tax;
2. A corporation established under Article 32 of the Civil Act;
3. A corporation established under a special Act;
4. A school support or aid association or other similar organization.
 Article 100 (Submission of Statements of Cash Sales)
“Business prescribed by Presidential Decree” in Article 55 (1) of the Act, means the wedding hall business, real estate brokerage business, public health service (limited to hospitals and medical clinics), and business referred to in Article 109 (2) 7.
 Article 101 (Submission of Accompanying Documents for Zero Tax Rate)
(1) Where the supply of goods or services is zero-tax rated pursuant to Articles 21 through 24 of the Act, a preliminary return of value-added tax shall be submitted along with the documents as follows: Provided, That when such documents cannot be submitted due to any unavoidable causes, the documents prescribed by the Commissioner of the National Tax Service may be submitted in lieu thereof: <Amended by Presidential Decree No. 26071, Feb. 3, 2015; Presidential Decree No. 26983, Feb. 17, 2016>
ClassificationDocuments Required
1. Where Article 21 (2) 1 of the Act is applicableAn export performance statement prescribed by Ordinance of the Ministry of Strategy and Finance (including a tape or diskette processed through the electronic data processing system): Provided, That when exports are shipped by parcel post, a parcel post receipt issued by the postmaster shall be submitted in lieu thereof.
2. Where Article 21 (2) 2 of the Act is applicableA copy of an export contract or a certificate of receipt of foreign currency issued by a foreign exchange bank. In such cases, if an entrepreneur subject to Article 31 (1) 3 purchases goods, etc. from another entrepreneur subject to subparagraph 4 of the same paragraph, a purchase contract shall be additionally submitted.
3. Where Articles 31 (2) 1 and 33 (2) 4 are applicable(a) Where a local letter of credit or a written verification of purchase is opened or issued through the electronic trade infrastructure under Article 12 (1) 3 and 5 of the Electronic Trade Facilitation ActA statement of the electronic issuance of a local letter of credit or a written verification of purchase prescribed by Ordinance of the Ministry of Strategy and Finance
(b) In cases of other than item (a)A copy of a local letter of credit
4. Where Article 31 (2) 2 is applicableA document attesting to the fact of supply, issued by the Korea International Cooperation Agency
5. Where Article 31 (2) 3 is applicableA document attesting to the fact of supply, issued by the Korea Foundation for International Healthcare
6. Where Article 31 (2) 4 is applicableA document attesting to the fact of supply, issued by the Korean Red Cross
7. Where Article 31 (2) 5 is applicable(a) A document attesting to the fact of Article 31 (2) 5 (d);
(b) A certificate of receipt of foreign currency issued by a foreign exchange bank.
8. Where Article 22 of the Act is applicableA certificate of receipt of foreign currency issued by a foreign exchange bank or a contract for services supplied overseas
9. Where Article 23 of the Act is applicableA certificate of receipt of foreign currency issued by a foreign exchange bank: Provided, That in the case of overseas navigation services by aircraft, a statement of fixed supply price shall be submitted in lieu thereof.
10. Where Article 33 (2) 1 and 2 is applicable(a) A certificate of receipt of foreign currency issued by a foreign exchange bank;


(b) A document evidencing that any operative Act, subordinate statute, etc. of a foreign country grant the identical tax exemption to Korean residents or corporations in the foreign country (only applicable to the professional activities referred to in Article 33 (2) 1 (b) and the services referred to in item (h) of the same subparagraph).
11. Where Article 33 (2) 3 is applicable(a) A copy of a processing contract (excluding where export goods processing services are provided at the same place as the exporter’s place of business);
(b) A document evidencing the delivery of goods (limited to the delivery of goods under direct contract with the exporter) or a certificate of receipt of export amount issued by the exporter.
12. Where Article 33 (2) 5 is applicable A certificate of completion of shipment (loading) issued by the head of the competent customs house: Provided, That in the case of a telecommunications business under the Telecommunications Business Act, a service supply record shall be submitted in lieu thereof; and in the case of tax-exempt oil under Article 20 (2) 3 of the Enforcement Decree of the Individual Consumption Tax Act and Article 17 (2) 2 of the Enforcement Decree of the Traffic, Energy and Environment Tax Act, a statement of supply of oil shall be submitted in lieu thereof.
13. Where Article 24 (1) 1 of the Act and Article 33 (2) 6 are applicableA certificate of receipt of export (military supply) amount issued by a foreign exchange bank, a certificate of completion of military supply issued by the head of the competent tax office, or a document attesting to the delivery of goods or the supply of services issued by a diplomatic office, etc. under Article 24 (1) 1 of the Act: Provided, That in the case of a business of continuously supplying electric power, gas or other goods, via an inseparable supply unit, a goods supply record shall be submitted in lieu thereof; and in the case of a telecommunications business under the Telecommunications Business Act, a service supply record shall be submitted in lieu thereof.
14. Where Article 33 (2) 7 is applicableA certificate of receipt of foreign currency issued by a foreign exchange bank: Provided, That when foreign currency cash is received, a statement of travel agent service fees and a certificate of purchased foreign currency shall be submitted in lieu thereof.
15. Where Article 33 (2) 8 is applicableA record of sales of goods to foreigners
16. Where Article 33 (2) 9 is applicableA certificate of receipt of foreign currency or a certificate of purchased foreign currency issued by a foreign exchange bank
17. Where Article 24 (1) 2 of the Act and Article 108 of the Enforcement Decree of the Restriction of Special Taxation Act are applicableA record of tax-exempt sales to diplomats
(2) Where the supply of goods or services is zero-tax rated pursuant to Articles 21 through 24 of the Act and Article 33 of this Decree, a final return of value-added tax shall be submitted along with the documents referred to in paragraph (1): Provided, That no documents already submitted when a preliminary return of value-added tax and a return under Article 107 (4) are filed, are required.
(3) Where the documents referred to in each of the subparagraphs of paragraph (1) are already submitted to the head of the competent tax office to qualify for tax exemption for exportation pursuant to the Individual Consumption Tax Act, a list of accompanying documents for zero tax rate prescribed by Ordinance of the Ministry of Strategy and Finance may be submitted in lieu of the documents referred to in each of the subparagraphs of the table in paragraph (1).
(4) Where an entrepreneur has submitted a parcel post receipt referred to in the proviso to subparagraph 1 (the ‘documents required’ column) of the table in paragraph (1) and a tape or diskette on which the photocopied documents referred to in subparagraphs 2 through 17 of the table in the same paragraph are stored, along with the list of accompanying documents for zero tax rate under paragraph (3) (including a tape or diskette processed through the electronic data processing system), as prescribed by the Commissioner of the National Tax Service, the documents referred to in each of the subparagraphs of the table in paragraph (1), shall be deemed to have been submitted.
CHAPTER VI DECISIONS, RECTIFICATIONS, COLLECTION, AND REFUNDS
SECTION 1 Decisions, etc.
 Article 102 (Deciding or Rectifying Agencies)
(1) A decision or rectification of the tax base and the amount of tax payable or the amount of tax refundable for value-added tax under Article 57 of the Act, shall be made by the head of the tax office having jurisdiction over the place of tax payment: Provided, That such decision or rectification may be made by the Commissioner of the Regional Tax Office having jurisdiction over the place of tax payment or the Commissioner of the National Tax Service, if deemed particularly important by the Commissioner of the National Tax Service.
(2) With respect to lump-sum payment at a principal place of business under Article 51 of the Act, if the head of the tax office having jurisdiction over the place of tax payment, the Commissioner of the Regional Tax Office having jurisdiction over the place of tax payment, or the Commissioner of the National Tax Service decides or rectifies the tax base and the amount of tax payable or the amount of tax refundable under paragraph (1), he/she shall promptly give notice thereof to the head of the tax office having jurisdiction over the place of tax payment or the head of the tax office having jurisdiction over the principal place of business at which the lump-sum payment is made.
 Article 103 (Scope of Grounds for Decisions and Rectifications)
(1) “Where he/she is likely to evade value-added tax as prescribed by Presidential Decree” in Article 57 (1) 4 of the Act, means any of the following:
1. Where his/her place of business is frequently changed;
2. Where his/her place of business is located in a place where it is likely to be frequently changed;
3. Where his/her business is subject to suspension or closure;
4. Where he/she fails to become a credit card merchant or a cash receipt merchant without good cause, after being designated as a person eligible for such merchant under Article 46 (4) of the Act and so is deemed likely to file an untruthful tax return in view of the scale of business or the status of operations;
5. Where any error or omission exists in his/her return on early refund filed under Article 59 (2) of the Act.
(2) Where an entrepreneur operating any business within the types of business designated by the Commissioner of the National Tax Service among those listed in the subparagraphs of Article 73 (1), has operated his/her business at the same place for at least five consecutive years, his/her return may be rectified only when it is deemed obviously understated, based on objective evidentiary materials.
 Article 104 (Methods of Estimation in Making Decisions and Rectifications)
(1) Any estimation under the proviso to Article 57 (2) of the Act, shall be made according to any of the following:
1. The method of calculation by reference to another entrepreneur in the same category of business and the same status of operations who has not been subject to rectification under Article 57 (1) of the Act on the assumption that entries in the book of account are right and a return is filed truthfully;
2. Where a production rate of input raw materials by category of business has been surveyed by the Commissioner of the National Tax Service, the method of calculation applying the market price of the quantity supplied during the taxable period to an output calculated applying the production rate;
3. Where there is a utility factor of operating determined by the Commissioner of the National Tax Service regarding the relationship between sales and the quantity or value of human and physical facilities related to business, such as employees, guest rooms, place of business, vehicles, waterworks and electric power, in consideration of the type of business, area, etc., the method of calculation applying the utility factor of operating;
4. The method of calculation based on the following criteria determined by the Commissioner of the National Tax Service by type of business and by area:
(a) Input unit that indicates the relationship between all or part of the input of raw materials and sub-materials used for production and the output;
(b) Expense-related rate that indicates the relationship between all or some of the labor costs, rents, material costs, water, lighting and heating costs, and other operating expenses and the sales;
(c) Merchandise turnover ratio that indicates the relationship between the mean amount of inventory and the sales or the cost of goods sold over a period;
(d) Total profit margin of purchase and sale that indicates the ratio of gross profit to sales over a period;
(e) Value-added rate that indicates the ratio of value-added amount to sales over a period;
5. Where the ratio referred to in subparagraphs 2 through 4 is calculable for an entrepreneur subject to rectification or decision by estimation, the method of calculation applying such ratio;
6. For food and accommodation business and service business aimed mainly at end consumers, the method of calculation based on the attendance inspection criteria determined by the Commissioner of the National Tax Service.
(2) The input tax amount to be deducted when calculating the amount of tax payable under paragraph (1), shall be limited to the portion for which the tax invoices issued under Article 32 of the Act are submitted to the head of the competent tax office and the entries therein are clearly understandable: Provided, That when it is impossible to submit some of such tax invoices due to any disaster or force majeure, the input tax amount to be deducted from the amount of tax payable, shall be an amount verified through the tax invoices submitted by the other parties to transactions involved.
 Article 105 (Collection of Value-Added Tax on Importation of Goods)
Articles 11, 16 through 19, 38, 38-2 through 38-4, 39, 41, 43, 46, 47 and 106 of the Customs Act shall apply where the head of a customs house collects (including receipt of payment or refund) value-added tax pursuant to Article 58 (2) of the Act.
 Article 106 (Refunds)
(1) The amount of tax refundable under Article 59 of the Act, shall be limited to an amount verified through the return filed under Article 48 or 49 of the Act or Article 107 (5) of this Decree and evidentiary documents accompanying such return, the list of total tax invoices by seller submitted under Article 54 of the Act, and the statement on the receipts of credit card sales slips, etc.
(2) If an amount of tax is refundable additionally following a decision or rectification under Article 57 of the Act, the head of the competent tax office shall promptly refund it to the relevant entrepreneur.
 Article 107 (Early Refunds)
(1) The head of the competent tax office shall refund the amount of tax refundable under Article 59 (2) of the Act for each preliminary return period to the entrepreneur who has filed the preliminary return, within 15 days after the expiration of the deadline for filing such preliminary return.
(2) “Business facilities prescribed by Presidential Decree” in Article 59 (2) 2 of the Act, means the depreciable assets referred to in Article 62 of the Enforcement Decree of the Income Tax Act or Article 24 of the Enforcement Decree of the Corporate Tax Act.
(3) A return filed under Article 90 (2) or 91 (1) by an entrepreneur who seeks to obtain an early refund pursuant to paragraph (1) shall be deemed a return of early refund filed under Article 59 (2) of the Act: Provided, That the return shall be accompanied by a statement of acquisition of buildings or other depreciable assets, specifying matters provided for in the following, in cases falling under Article 59 (2) 2 of the Act, or by a financial restructuring plan prescribed by Ordinance of the Ministry of Strategy and Finance in cases falling under subparagraph 3 of the same paragraph: <Amended by Presidential Decree No. 27838, Feb. 7, 2017>
1. The type and use of business facilities, the scheduled date of installation and the date of completion thereof;
2. Goods or services supplied, and the input tax amount;
3. Other reference information.
(4) Where an entrepreneur qualifying for Article 59 (2) of the Act files, within 25 days after the expiration of an early refund period fixed on a monthly or bimonthly basis (hereinafter referred to as “early refund period”) in the preliminary return period or in the last three months of the taxable period (hereafter referred to as “deadline for filing an early refund return” in this paragraph), a return on the tax base and the amount of tax refundable for the early refund period with the head of the competent tax office, the head of the competent tax office shall refund the amount of tax refundable for each early refund period to the entrepreneur, within 15 days after the expiration of the deadline for filing early refund return, notwithstanding paragraph (1).
(5) In filing a return of early refund under paragraph (4), a return of early refund on zero tax rate, etc., specifying the following particulars, shall be filed, along with the documents classified in the table in Article 101 (1) and the lists of total tax invoices by customer and by seller regarding the tax base: Provided, That in case falling under Article 59 (2) 2 or 3 of the Act, the return shall be accompanied by a statement of acquisition of buildings or other depreciable assets or a financial restructuring plan referred to in the proviso to paragraph (3): <Amended by Presidential Decree No. 27838, Feb. 7, 2017>
1. The entrepreneur’s personal details;
2. The tax base and the amount of tax refundable and the basis for calculation thereof;
3. The details of the lists of total tax invoices by customer and by seller submitted;
4. Other reference information.
(6) Where the lists of total tax invoices by customer and by seller are submitted under paragraph (5), they shall be deemed submitted under Article 54 (1) of the Act.
(7) “Where the entrepreneur is in the implementation process of a financial restructuring plan prescribed by Presidential Decree” in Article 59 (2) 3 of the Act means where the entrepreneur is in the implementation process of a plan referred to in Article 34 (6) 1, 2 or 4 of the Enforcement Decree of the Restriction of Special Taxation Act that is approved by the approval authority of a financial restructuring plan provided for in paragraph (7) of the same Article as at the end of the early refund period, preliminary return period, or taxable period. <Newly Inserted by Presidential Decree No. 27838, Feb. 7, 2017>
SECTION 2 Penalty Taxes
 Article 108 (Penalty Taxes)
(1) “Another person specified by Presidential Decree” in Article 60 (1) 2 of the Act, means a person other than those who operate their businesses on their own account and responsibility: Provided, That this shall exclude any of the following persons and those prescribed by Ordinance of the Ministry of Strategy and Finance: <Amended by Presidential Decree No. 27838, Feb. 7, 2017>
1. An entrepreneur’s spouse;
2. An ancestor if the ancestor’s business is inherited due to inheritance pursuant to subparagraph 1 of Article 2 of the Inheritance Tax and Gift Tax Act (limited to where his/her heir runs the business based on business registration made in the ancestor’s name during the period between the commencement date of inheritance provided for in subparagraph 2 of the same Article and the deadline for reporting the tax basis of inherited property provided for in Article 67 of the same Act).
(2) “Individual entrepreneur prescribed by Presidential Decree” in the provisos to Article 60 (2) 3 and 4 of the Act, means an individual entrepreneur required to issue electronic tax invoices.
(3) Where some of the requisite entry items on a tax invoice issued under Article 32 of the Act are wrongly stated in error or by negligence, but transactions are verified from the other requisite or optional entry items on the tax invoice, the tax invoice shall not be treated as an erroneous tax invoice under Article 60 (2) 5 of the Act.
(4) “Grounds prescribed by Presidential Decree” in Article 60 (5) of the Act, means cases falling under subparagraph 5 of Article 74, where, in making rectification under Article 57 of the Act, an entrepreneur submits a tax invoice issued under Article 32 of the Act or a credit card sales slip, etc. issued under Article 46 (3) of the Act to the relevant rectifying agency subject to its verification under Article 102.
(5) “As prescribed by Presidential Decree” in Article 60 (7) 1 of the Act, means where tax invoices are issued during the period between the time of supply for goods or services and the deadline for filing a final return for the taxable period in which the time of supply falls. <Amended by Presidential Decree No. 26983, Feb. 17, 2016>
(6) “Cases prescribed by Presidential Decree” in the proviso to Article 60 (7) 2 of the Act, means where any of subparagraphs 1 through 4 of Article 74 is applicable regarding the deduction of input tax amount in the case of failure to submit a list of total tax invoices by seller.
CHAPTER VII SIMPLIFIED TAXATION
 Article 109 (Scope of Application of Simplified Taxation)
(1) “Amount prescribed by Presidential Decree” in the main sentence of Article 61 (1) and Article 62 (1) of the Act, means forty-eight million won.
(2) “Entrepreneur prescribed by Presidential Decree” in Article 61 (1) 2 of the Act, who is not deemed a simplified taxable person, means a person who operates a business under any of the following: <Amended by Presidential Decree No. 25196, Feb. 21, 2014; Presidential Decree No. 26071, Feb. 3, 2015>
1. Mining;
2. Manufacturing: Provided, That this shall exclude any business that mainly supplies goods directly to end consumers, as prescribed by Ordinance of the Ministry of Strategy and Finance;
3. Wholesale trade (including where it is operated with retail trade, but excluding the business collecting and selling renewable materials);
4. Real estate transaction business;
5. Business in a taxable entertainment venue referred to in Article 1 (4) of the Individual Consumption Tax Act, as prescribed by Ordinance of the Ministry of Strategy and Finance;
6. Real estate leasing business prescribed by Ordinance of the Ministry of Strategy and Finance;
7. Service business operated by an attorney-at-law, an appeal counsel, a patent attorney, a certified judicial scrivener, a certified public accountant, a certified tax accountant, a certified management consultant, a certified technology consultant, a certified public appraiser, a certified loss adjuster, a customs clearance agent, a professional engineer, a certified architect, a pilot, a professional surveyor, a certified labor consultant, a medical doctor, an oriental medical doctor, a pharmacist, an oriental pharmacist, a veterinarian or similar service business prescribed by Ordinance of the Ministry of Strategy and Finance;
8. Business transferred from a general taxable person under Article 23: Provided, That this shall exclude a business not falling under any of subparagraphs 1 through 7 and 9 through 11, in which the sum total of proceeds from supply under the main sentence of Article 61 (1) of the Act (hereinafter referred to as “proceeds from supply”) falls short of an amount prescribed in paragraph (1) after the business transfer;
9. Business that meets the standards determined by the Commissioner of the National Tax Service in consideration of the place of business, the type and scale of business, etc.;
10. Business operated by an individual entrepreneur who does not fall under Article 208 (5) of the Enforcement Decree of the Income Tax Act (hereafter referred to as “person subject to double-entry bookkeeping as of the year before the preceding year” in this subparagraph). In such cases, for the purpose of Article 208 (5) of the Enforcement Decree of the Income Tax Act, “relevant taxable period” in subparagraph 1 of the same paragraph shall be construed as “relevant taxable period or immediately preceding taxable period;” and in subparagraph 2 of the same paragraph, “preceding taxable period” as “taxable period before the preceding taxable period;” and “total revenue (including the revenue increased by determination or correction)” as “total revenue (including the revenue increased by determination or correction, but excluding the revenue of the place of business permanently closed as at the date the taxable type is changed).” If a person is subject to double-entry bookkeeping as at the year before the preceding year as his/her total revenue is increased by a decision, rectification or revised return, he/she shall not be deemed a person subject to double-entry bookkeeping as of the year before the preceding year until the taxable period in which the date when the decision, rectification or revised return is made, falls;
11. Business operated by an entrepreneur having at least two places of business in which the sum total of proceeds from supply is at least the amount prescribed in paragraph (1).
(3) In calculating an amount referred to in paragraph (1) and the proviso to paragraph (2) 8, where an entrepreneur suspends his/her business, newly commences or acquires a business by transfer during the immediately preceding calendar year, the amount shall be based on an amount computed by converting the sum total of proceeds from supply of goods or services for the period less either the period of business suspension or the period before the commencement or acquisition of the business into an aggregate for 12 months; and where an individual entrepreneur has suspended his/her business and has no record of proceeds from supply during the immediately preceding calendar year, he/she shall be deemed to have newly commenced his/her business. In such cases, any fraction of less than one month shall be deemed one month. <Amended by Presidential Decree No. 25196, Feb. 21, 2014>
(4) Any entrepreneur who seeks to qualify for Chapter VII of the Act under Article 61 (3) of the Act, shall file (including via the national tax information and communications network) a report on application of simplified taxation, along with an application for business registration under Article 11 (1), with the head of the competent tax office, specifying the following particulars: Provided, That when he/she files an application for business registration stating an estimated annual amount of proceeds from supply and other reference information, the report on application of simplified taxation shall be deemed submitted:
1. The entrepreneur’s personal details;
2. The date the entrepreneur starts business facility works or the date the entrepreneur commences a business;
3. The estimated annual amount of proceeds from supply;
4. Other reference information.
 Article 110 (Time of Application of Simplified Taxation and General Taxation)
(1) In cases of Article 62 (1) and (2) of the Act, the head of the tax office having jurisdiction over the relevant entrepreneur shall give notice as to whether provisions concerning simplified taxable persons apply or as to whether he/she is excluded therefrom under Article 61 of the Act, at least 20 days before the pertinent taxable period begins; correct the business registration certificate; and issue it by the date on which the taxable period begins.
(2) Provisions concerning simplified taxable persons under Article 61 of the Act, shall apply during the period prescribed under Article 62 (1) of the Act to an entrepreneur subject to application of provisions concerning simplified taxable persons under Article 61 of the Act during the period under Article 62 (1) and (2) of the Act, regardless of the notice given under paragraph (1): Provided, That provisions concerning general taxable persons shall apply to an entrepreneur who operates a real estate leasing business, until the taxable period in which the date of receipt of the notice given under paragraph (1) falls, notwithstanding Article 62 (1) of the Act.
(3) Provisions concerning simplified taxable persons under Article 61 of the Act, shall apply to an entrepreneur excluded from application of Article 61 of the Act during the period prescribed under Article 62 (1) and (2) of the Act, until the taxable period in which the date of receipt of the notice given under paragraph (1) falls, notwithstanding Article 62 (1) of the Act.
(4) Where a simplified taxable person newly operates any of the businesses referred to in Article 109 (2) concurrently with his/her original business, provisions concerning simplified taxable persons shall not apply to the simplified taxable person, starting from the taxable period following that in which the date he/she commences the new business falls.
(5) Where the sum total of proceeds from supply in another place of business excluded from application of simplified taxation under Article 61 (1) 1 of the Act (hereafter referred to as “reference place of business” in this Article) for one calendar year, falls short of an amount specified in Article 109 (1), the provisions concerning simplified taxation shall apply during the period prescribed under Article 62 (1) of the Act, to both the reference place of business and the place of business converted into one subject to general taxation under Article 61 (1) 1 of the Act: Provided, That the same shall not apply where the sum total of proceeds from supply in the place of business converted into one subject to general taxation under Article 61 (1) 1 of the Act for one calendar year is not less than an amount specified in Article 109 (1) or Article 61 (1) 2 of the Act is applicable.
(6) Where a simplified taxable person reports the waiver of simplified taxation under Article 70 of the Act, the provisions concerning simplified taxable persons shall not apply to the places of business other than the relevant place of business, from the taxable period following that in which the month he/she intends to be subject to provisions concerning general taxable persons is included.
(7) Where a simplified taxable person newly opens a place of business subject to application of the provisions concerning general taxable persons, he/she becomes ineligible to application of provisions concerning simplified taxable persons, from the taxable period following that in which the date he/she starts the business falls.
(8) Where a reference place of business is permanently closed, the provisions concerning simplified taxable persons shall apply to a place of business converted into one subject to general taxation under Article 61 (1) 1 of the Act, from the year following that in which the date the reference place of business is permanently closed, falls: Provided, That the same shall not apply where the sum total of proceeds from supply in the place of business converted into one subject to general taxation under Article 61 (1) 1 of the Act for one calendar year is not less than an amount specified in Article 109 (1) or Article 61 (1) 2 of the Act is applicable.
 Article 111 (Calculation of Tax Bases and Tax Amounts for Simplified Taxable Persons)
(1) Articles 59 through 66 shall apply mutatis mutandis to the calculation of tax base for a simplified taxable person. In such cases, “value of supply” shall be construed as “proceeds from supply.”
(2) “Value-added rate of the relevant business category prescribed by Presidential Decree” in Article 63 (2) of the Act, means a value-added rate as follows:
ClassificationValue-Added Rate
1. Electric power, gas, steam and waterworks business5 percent
2. Retail trade, renewable materials collection and sale business, and food service activities 10 percent
3. Manufacturing business, agriculture, forestry and fisheries, accommodation services, and transport and communication services20 percent
4. Construction services, real estate leasing services and other services30 percent
(3) Where a simplified taxable person submits any of the following documents pursuant to Article 63 (3) of the Act or any of such documents retained by him/her, to the head of the competent tax office subject to verification by a deciding or rectifying agency under Article 102 when making a decision or rectification under Article 68 of the Act, an amount calculated under each of the subparagraphs of Article 63 (3) of the Act, shall be deducted from the amount of tax payable: Provided, That the same shall not apply where it is deducted as an input tax amount under Article 63 (6) of the Act:
1. A list of total tax invoices by seller under Article 54 (1) and (3) of the Act;
2. A statement on the receipts of credit card sales slips, etc.
(4) “Statement on the receipts of credit card sales slips, etc. prescribed by Presidential Decree” in the main sentence of Article 63 (3) of the Act, means a statement on the receipts of credit card sales slips, etc.
(5) Where the actual attribution of goods supplied by a simplified taxable person is unclear by business category due to the common use thereof in two or more business categories, a value-added rate applicable shall be a total of the rates calculated according to the following formula. In such cases, if no proceeds from supply exist for the relevant taxable period due to business suspension, etc., it shall be calculated based on the proceeds from supply for the taxable period nearest to the date of supply of goods:
Value-added rate of goods by relevant business category × (Proceeds from supply of goods by relevant business category for the taxable period in which the date of supply of goods falls ÷ Total proceeds from supply of goods by relevant business category for the taxable period in which the date of supply of goods falls)
(6) When calculating an amount to be deducted under Article 63 (3) 2 of the Act, if a simplified taxable person operates a business referred to in subparagraphs 1 through 4 of the table in paragraph (2) concurrently with his/her original business, it shall be calculated based upon actual attribution by business category, while any portion that has unclear actual attribution by business category, shall be calculated according to paragraph (2) 1.
(7) When calculating an amount to be deducted under Article 63 (3) 3 of the Act, if a simplified taxable person concurrently operates both a taxable business and a tax-free business, etc., it shall be calculated based upon actual attribution of the taxable business and the tax-free business, etc., while any portion that has unclear actual attribution of the taxable business and the tax-free business, etc., shall be calculated according to the following formula. In such cases, “tax invoices, etc.” in the following formula, means tax invoices, etc. referred to in Article 60 (3) 1 of the Act:
Amount of tax to be deducted from the amount of tax payable = Input tax amount stated in tax invoices, etc. issued during the taxable period × (Proceeds from taxable supplies for the taxable period ÷ Total proceeds from supplies for the taxable period) × Value-added rate of the relevant business category
(8) “Taxable period prescribed by Presidential Decree” in the former part of Article 63 (6) of the Act, means the second taxable period following that during which a decision or rectification is made: Provided, That when the taxable period during which the decision or rectification is made is an initial taxable period for the person who has newly commenced a business, it means the second taxable period following the initial taxable period.
 Article 112 (Special Cases concerning Goods in Stock, etc. in Cases of being Converted to Simplified Taxable Persons)
(1) Where a general taxable person is converted to a simplified taxable person under Article 64 of the Act, as regards any of the following goods in stock, assets under construction, and depreciable assets (limited to those qualifying for deductions under Articles 38 through 43 of the Act, but including those which are acquired by a business transferee through the business transfer under the main sentence of Article 10 (8) 2 of the Act and for which the business transferor is entitled to deduct the input tax amount; hereafter referred to as “goods in stock, etc.” in this Article) as at the date of such conversion, he/she shall prepare a return on the goods in stock, etc. as at the time of conversion to simplified taxation and file (including via the national tax information and communications network) it, along with a final return for the taxable period immediately preceding that in which the date of conversion falls, with the head of the tax office having jurisdiction over the pertinent place of tax payment: <Amended by Presidential Decree No. 25196, Feb. 21, 2014>
1. Commodities;
2. Products (including semi-finished goods and work in-process);
3. Materials (including sub-materials);
4. Assets under construction;
5. Depreciable assets (for buildings or structures, limited to those within ten years after being acquired, constructed or newly built; and for other depreciable assets, limited to those within two years after being acquired or manufactured).
(2) The amount of goods in stock, etc. referred to in paragraph (1) shall be the value of acquisition of the goods in stock, etc. verified from the book of account or tax invoice: Provided, That in the absence of the book of account or tax invoice or where the value of acquisition is omitted from the book of account, the value of the goods in stock, etc. shall be determined based on the market price thereof.
(3) Where a general taxable person is converted to a simplified taxable person, he/she shall pay an amount computed according to each of the following formulae (hereinafter referred to as “inventory tax payable”) in addition to the amount of tax payable. In such cases, the latter part of Article 66 (2) and paragraph (5) of the same Article shall apply mutatis mutandis to the number of taxable periods elapsed under subparagraphs 3 and 4:
1. Goods in stock referred to in paragraph (1) 1 through 3:
Inventory tax payable = Amount of inventory × (10 ÷ 100) × (1 - Value-added rate classified in the table in Article 111 (2))
2. Assets under construction referred to in paragraph (1) 4:
Inventory tax payable = Input tax amount deducted in relation to the assets under construction × (1 - Value-added rate classified in the table in Article 111 (2))
3. Assets referred to in paragraph (1) 5, which are purchased from a third person:
(a) Buildings or structures:
Inventory tax payable = Value of acquisition × [1 - (5 ÷ 100) × Number of taxable periods elapsed] × (10 ÷ 100) × (1 - Value-added rate classified in the table in Article 111 (2))
(b) Other depreciable assets:
Inventory tax payable = Value of acquisition × [1 - (25 ÷ 100) × Number of taxable periods elapsed] × (10 ÷ 100) × (1 - Value-added rate classified in the table in Article 111 (2))
4. Assets referred to in paragraph (1) 5, which are manufactured, constructed or newly built directly by the entrepreneur:
(a) Buildings or structures:
Inventory tax payable = Input tax amount deducted in relation to construction or new building of relevant assets (if the proviso to paragraph (2) is applicable, an amount of tax equivalent to 10 percent of the market price thereof) × [1 - (5 ÷ 100) × Number of taxable periods elapsed] × (1 - Value-added rate classified in the table in Article 111 (2))
(b) Other depreciable assets:
Inventory tax payable = Input tax amount deducted in relation to manufacturing of relevant assets (if the proviso to paragraph (2) is applicable, an amount of tax equivalent to 10 percent of the market price thereof) × [1 - (25 ÷ 100) × Number of taxable periods elapsed] × (1 - Value-added rate classified in the table in Article 111 (2))
(4) “Value-added rate classified in the table in Article 111 (2)” in the formulae under the subparagraphs of paragraph (3), means a value-added rate of the relevant business category applicable to the taxable period in which the date of conversion to a simplified taxable person, falls.
(5) Upon receipt of a return filed under paragraph (1), the head of a tax office shall investigate and approve an amount of inventory and give notice to the relevant entrepreneur of the inventory tax payable, within 90 days from the date such entrepreneur is converted to a simplified taxable person. In such cases, if no notice is given within the aforesaid period, the amount of inventory returned by the entrepreneur shall be deemed approved.
(6) Where an entrepreneur fails to file a return under paragraph (1) or makes an understatement on such a return, the head of the competent tax office shall investigate the amount of inventory and determine and give notice of the inventory tax payable.
(7) The inventory tax payable, which is determined under paragraphs (5) and (6) shall be paid, in addition to the amount of tax payable when filing a final return for the taxable period in which the date of conversion to a simplified taxable person, falls. <Amended by Presidential Decree No. 25196, Feb. 21, 2014>
(8) If any error or omission exists in the amount of inventory tax payable that is approved or deemed approved under paragraph (5), the inventory tax payable shall be investigated and rectified pursuant to Article 57 of the Act.
 Article 113 (Deductions of Fictitious Input Tax Amounts for Simplified Taxable Persons)
(1) “Type of business as prescribed by Presidential Decree” in Article 65 (1) of the Act, means food service activities and manufacturing business.
(2) An amount to be deducted from the amount of tax payable under Article 65 (1) of the Act, shall be an amount calculated by multiplying the value of tax-free agricultural products, etc. supplied free of value-added tax, by the ratio classified below:
1. For the operator of a taxable entertainment venue for food service activities and the operator of a manufacturing business: 4/104;
2. For a person other than those provided for in subparagraph 1: 8/108.
(3) Where tax-free agricultural products, etc. for which the amount calculated under paragraph (2) is deducted from the amount of tax payable, are transferred or delivered as they are, or used or consumed for any business, etc. supplying goods or services exempt from value-added tax, the deducted amount shall be added to the amount of tax payable.
(4) Any entrepreneur who seeks to qualify for the deduction under Article 65 (1) of the Act, file a return on the deduction of fictitious input tax amount in the form prescribed by Ordinance of the Ministry of Strategy and Finance and any of the following relevant evidentiary documents with the head of the competent tax office: Provided, That with respect to an amount equivalent to five percent of the proceeds from taxable supplies in the value of tax-free agricultural products, etc. with which an entrepreneur (excluding any person subject to double-entry bookkeeping under Article 160 of the Income Tax Act) engaged in food service activities, is supplied directly from a farmer, fisherman or other individual, only a return on the deduction of fictitious input tax amount is required:
1. An aggregate table of invoices by purchaser under Article 163 of the Income Tax Act or an aggregate invoice for each purchaser under Article 121 of the Corporate Tax Act;
2. A statement on the receipts of credit card sales slips, etc. prescribed by Ordinance of the Ministry of Strategy and Finance.
 Article 114 (Returns and Payments by Simplified Taxable Persons)
(1) The head of the competent tax office shall issue a notice for payment of the value-added tax under the main sentence of Article 66 (1) of the Act during the period between July 1 and July 10.
(2) “Simplified taxable person prescribed by Presidential Decree” in Article 66 (2) of the Act, means a person whose total proceeds from supplies or amount of tax payable for the preliminary imposition period under Article 66 (1) of the Act (hereafter referred to as “preliminary imposition period” in this Article) falls short of 1/3 of either the total proceeds from supplies or the amount of tax payable under Article 66 (1) of the Act in the immediately preceding taxable period due to the suspension of, or a decline in, business operations.
(3) To file a return on value-added tax under Articles 66 (2) and 67 (1) of the Act, a simplified taxable person shall submit (including via the national tax information and communications network) a return on value-added tax of simplified taxable person, specifying the following particulars, and the documents prescribed by Ordinance of the Ministry of Strategy and Finance, to the head of the competent tax office:
1. The entrepreneur’s personal details;
2. The amount of tax payable and the basis for calculation thereof;
3. The amount of penalty tax and the basis for calculation thereof;
4. The details of the list of total tax invoices by seller submitted;
5. Other reference information.
(4) To pay value-added tax under Articles 66 (4) and 67 (1) of the Act, a simplified taxable person shall pay to the head of the competent tax office an amount computed by adding a penalty tax calculated under Article 68 (2) of the Act and Articles 47-2 through 47-4 of the Framework Act on National Taxes to the amount of tax payable for the relevant preliminary imposition period or taxable period; and subtracting the following amounts therefrom, with a return on value-added tax of simplified taxable person, or pay it to the Bank of Korea or a postal agency with a statement of payment prepared under the National Tax Collection Act:
1. An amount computed under Article 46 (1) of the Act;
2. An amount computed under Article 63 (3) of the Act;
3. An amount computed under Article 65 of the Act.
(5) The deduction under Article 63 (3) of the Act, shall not apply where all or any of registration numbers or supply values by transaction party, among the items to be stated in a list of total tax invoices by seller issued to a simplified taxable person by another entrepreneur and submitted to the head of the competent tax office under Articles 66 (5) and 67 (3) of the Act, is omitted or wrongly stated.
(6) A simplified taxable person shall file a return under Article 67 (1) of the Act, which is accompanied by the documents classified in the table in Article 101 (1), to be zero-tax rated under Articles 21 through 24 of the Act.
(7) A return unaccompanied by the document referred to in paragraph (6) shall not be deemed a return filed under Article 67 (1) of the Act.
 Article 115 (Scope of Persons Exempt from Payment Obligations Who are Not Subject to Penalty Taxes for Failure to File Business Registration)
“Where no fixed place of business prescribed by Presidential Decree exists” in the proviso to Article 69 (2) of the Act, means where no fixed physical facility or place of business registered in the public record exists.
 Article 116 (Waiver of Simplified Taxation)
(1) Where a simplified taxable person or a general taxable person qualifying for application of provisions concerning simplified taxable persons under Article 62 of the Act, intends to waive the application of those provisions, or a person intends to waive the application of those provisions when filing an application for business registration under Article 70 (2) of the Act, he/she shall file (including via the national tax information and communications network) with the head of the competent tax office a report on waiver of simplified taxation to meet the reporting requirements under Article 70 (1) and (2) of the Act, specifying the following particulars: <Amended by Presidential Decree No. 25196, Feb. 21, 2014>
1. The entrepreneur’s personal details;
2. The taxable period for which he/she intends to waive the application of simplified taxation;
3. Other reference information.
(2) Where an individual entrepreneur who has filed a report under paragraph (1) intends to qualify for Chapter VII of the Act upon the expiration of the period prescribed under Article 70 (3) of the Act, he/she shall file a report under Article 109 (4) with the head of the competent tax office at least ten days before the intended taxable period begins. In such cases, the entrepreneur qualifying for application of such provisions shall be an individual entrepreneur whose total proceeds from supply of goods or services for one calendar year immediately preceding the relevant taxable period, meet Article 61 (1) of the Act. <Amended by Presidential Decree No. 25196, Feb. 21, 2014>
CHAPTER VIII SUPPLEMENTARY PROVISIONS
 Article 117 (Keeping and Preservation of Books of Account)
(1) The facts of transactions to be recorded in a book of account under Article 71 (1) and (2) of the Act, are as follows:
1. Suppliers and recipients;
2. Items supplied and received;
3. Values of supplies and receipts;
4. Output tax amount and input tax amount;
5. Time of supply and receipt;
6. Other reference information.
(2) A simplified taxable person may enter a total of supply values and value-added taxes as the proceeds from supply, in his/her book of account.
(3) A simplified taxable person who has kept tax invoices or receipts that he/she issued or received under Articles 32 and 36 of the Act, shall be deemed to have fulfilled the duty to keep the book of account under Article 71 of the Act.
(4) An entrepreneur may preserve the book of account, tax invoices or receipts under Article 71 (3) of the Act in electronic format, such as information processing devices, magnetic tapes and diskettes.
(5) An entrepreneur who supplies services referred to in any of the items of subparagraph 5 of Article 35, shall prepare a sales ledger in the form prescribed by Ordinance of the Ministry of Strategy and Finance and keep it in his/her place of business. In such cases, the entrepreneur may prepare the sales ledger in electronic format, such as an information processing device, magnetic tape or diskette.
(6) Notwithstanding the former part of paragraph (5), if an entrepreneur includes all items to be stated in the sales ledger prescribed by Ordinance of the Ministry of Strategy and Finance in the medical record under Article 13 (1) of the Veterinarians Act, the medical record may be submitted in lieu of the sales ledger.
 Article 118 (Selection and Report of Tax Managers)
(1) “Person prescribed by Presidential Decree” in Article 73 (2) of the Act, means any of the following persons:
1. A person registered under Article 6 of the Certified Tax Accountant Act;
2. A multi-level marketing business entity (limited to where, among the multi-level marketing salespersons registered with the multi-level marketing business entity, a multi-level marketing salesperson other than those provided for in the proviso to Article 11 (8) selects the multi-level marketing business entity as his/her tax manager);
3. A trust business entity under the Financial Investment Services and Capital Markets Act (limited to a real estate trust business among the trust businesses under the same Act).
(2) An entrepreneur (including a multi-level marketing business entity referred to in paragraph (1) 2) who selects or replaces a tax manager under Article 73 of the Act, shall promptly submit a report on selection (or replacement) of tax manager, including the following particulars, to the head of the competent tax office. The same shall also apply where the domicile or residence of the tax manager is changed:
1. The entrepreneur’s personal details;
2. The name, address and resident registration number of the tax manger;
3. Other reference information.
 Article 119 (Inquiries, Investigations and Directions)
The Commissioner of the National Tax Service, the Commissioner of a Regional Tax Office or the head of a tax office may direct a person liable to pay tax to implement the following, pursuant to Article 74 (2) of the Act:
1. Issuance of tax invoices;
2. Installation and use of a cash register;
3. Installation and use of a credit card checker;
4. Installation and use of a cash receipt-issuing device;
5. Mark posting;
6. Display of business category;
7. Other matters necessary to enforce tax perpetuation.
 Article 120 (Forms)
Matters necessary for preparing applications, returns, reports and other documents under this Decree, shall be prescribed by Ordinance of the Ministry of Strategy and Finance.
ADDENDA
Article 1 (Enforcement Date)
This Decree shall enter into force on July 1, 2013: Provided, That the amended provisions of Articles 100-2 (4), 100-3 (1) 4 (e), and 100-6 (2) 1 and 4 (main sentence) of the Enforcement Decree of the Restriction of Special Taxation Act in Article 16 (30) of these Addenda, shall enter into force on January 1, 2015.
Article 2 (General Applicability)
This Decree shall begin to apply from the goods or services supplied or received, or imported and declared after this Decree enters into force.
Article 3 (Applicability to Returns and Payments)
The amended provisions of this Decree concerning returns and payments, shall begin to apply from the first taxable period that begins after this Decree enters into force.
Article 4 (Applicability to Electronic Tax Invoices)
The amended provisions of Article 68 (1) and (2) shall begin to apply from the goods or services supplied on or after July 1, 2014, based on the total value of supply of goods and services for each place of business in the year in which this Decree enters into force.
Article 5 (Applicability to Corrected Import Tax Invoices)
The amended provisions of Article 72 (2) through (4) shall begin to apply from the first corrected declaration, decision or rectification of tax amount filed or made after this Decree enters into force.
Article 6 (Applicability to Submission of Documents Required to Qualify for Zero Tax Rate)
The amended provisions of subparagraph 9 of the table in Article 90 (3), subparagraph 12 of the table in Article 91 (2), and subparagraph 6 of the table in Article 101 (1), shall begin to apply from the first preliminary or final return filed after this Decree enters into force.
Article 7 (Applicability to Time of Application of Simplified Taxation and General Taxation, etc.)
The amended provisions of Articles 110 (8), 112 (7), and 114 (2) shall apply, beginning with the first taxable period during which this Decree enters into force.
Article 8 (General Transitional Measures)
The former provisions shall apply to any value-added tax imposed or to be imposed, or refunded or to be refunded, pursuant to the former provisions as at the time this Decree enters into force, notwithstanding the amended provisions of this Decree.
Article 9 (Transitional Measures concerning General Taxable Persons and Simplified Taxable Persons)
Any person who falls under a general taxable person or a simplified taxable person pursuant to the former provisions as at the time this Decree enters into force, shall be deemed a general taxable person or a simplified taxable person under the amended provisions of this Decree.
Article 10 (Transitional Measures concerning Business Registration, etc.)
(1) Where an application for business registration (including any registration for change to a per-business unit taxable entrepreneur and any registration as an entrepreneur making lump-sum payment at his/her principal place of business; hereafter the same shall apply in this Article) is filed or business registration is made pursuant to the former provisions as at the time this Decree enters into force, the application for business registration or business registration shall be deemed filed or made pursuant to this Decree.
(2) Where a report, etc. on the suspension or closure of business or on the change of registered matters is made pursuant to the former provisions as at the time this Decree enters into force, such report, etc. shall be deemed made pursuant to this Decree.
Article 11 (Transitional Measures concerning Issuance, etc. of Tax Invoices)
The former provisions shall apply where tax invoices are to be issued or can be issued after this Decree enters into force, with respect to any goods or services supplied, or any goods imported, before this Decree enters into force, notwithstanding the amended provisions of this Decree.
Article 12 (Transitional Measures concerning Preliminary Returns, Final Returns, etc. of Value-Added Tax)
Any person who has filed a preliminary return, final return or other return and paid value-added tax pursuant to the former provisions as at the time this Decree enters into force, shall be deemed to have filed a return and to have paid value-added tax pursuant to this Decree.
Article 13 (Transitional Measures concerning Penalty Taxes)
The former provisions shall apply to any penalty tax on value-added tax imposed or to be imposed pursuant to the former provisions as at the time this Decree enters into force, notwithstanding the amended provisions of this Decree.
Article 14 (Transitional Measures concerning Electronic Tax Invoices)
The former provisions of Articled 53-2 (1) and (2) shall to any goods or services supplied before July 1, 2014, notwithstanding the amended provisions of Article 68 (1) and (2).
Article 15 (Transitional Measures concerning Corrected Import Tax Invoices)
The former provisions shall apply to any corrected declaration, decision or rectification of tax amount filed or made before this Decree enters into force, notwithstanding the amended provisions of Article 72 (2) through (4).
Article 16 Omitted.
Article 17 (Relationship with Other Acts and Subordinate Statutes)
A citation of the former Enforcement Decree of the Value-Added Tax Act or the provisions thereof in other statutes as at the time this Decree enters into force, shall be deemed a citation of the corresponding provisions of this Decree in lieu of the former provisions, if such corresponding provisions exist herein.
ADDENDA <Presidential Decree No. 25057, Jan. 1, 2014>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2014: Provided, That the amended provisions of subparagraph 1 of Article 35, shall enter into force on February 1, 2014.
Article 2 (Applicability to Conversion of Taxable Status of Some Medical and Health Services)
The amended provisions of subparagraph 1 of Article 35 shall apply to the supply of services that commences after the enforcement date specified in the proviso to Article 1 of these Addenda.
Article 3 (Applicability to, and Special Cases concerning, Upper Limits of Fictitious Input Tax Amounts)
The amended provisions of Article 84 (1) shall apply to the taxable period that begins on or after January 1, 2014: Provided, That for an individual entrepreneur whose tax base does not exceed one hundred million won under the amended provisions of the proviso to Article 84 (1), an amount computed by multiplying the tax base by 60/100 and then multiplied by a deduction rate, shall be the maximum amount deductible as an input tax amount until December 31, 2014, notwithstanding the amended provisions of the proviso to Article 84 (1).
ADDENDA <Presidential Decree No. 25133, Jan. 28, 2014>
Article 1 (Enforcement Date)
(1) This Decree shall enter into force on January 31, 2014.
(2) through (5) Omitted.
Articles 2 and 3 Omitted.
ADDENDA <Presidential Decree No. 25196, Feb. 21, 2014>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (General Applicability)
This Decree shall begin to apply from the goods or services supplied or received, or imported and declared after this Decree enters into force.
Article 3 (Applicability to Business Registration for Renewable Materials Collection and Sale Business, etc.)
The amended provisions of subparagraphs 7 and 8 of the table in Article 11 (3) shall begin to apply from the first application for business registration filed after this Decree enters into force.
Article 4 (Applicability to Value of Supply in Cases of Supplying Goods Kept in Bonded Areas to Other Entrepreneurs)
The amended provisions of the proviso to Article 61 (1) 5 shall begin to apply from the first return, decision or rectification filed or made after this Decree enters into force.
Article 5 (Applicability to Proxy Payments of Value-Added Taxes by Business Transferees Following Universal Transfers of Businesses)
The amended provisions of Article 95 (5) shall begin to apply from the first business transfer that occurs after January 1, 2014.
Article 6 (Applicability to Conversion of Transferred Businesses into Simplified Taxable Businesses Following Universal Transfers of Businesses)
The amended provisions of the proviso to Article 109 (2) 8 and the former part of paragraph (3) of the same Article shall begin to apply from the first entrepreneur who is converted to a simplified taxable person after this Decree enters into force.
Article 7 (Applicability to Special Cases concerning Goods in Stock, etc. in Cases of being Converted to Simplified Taxable Persons)
The amended provisions of Article 112 (7) shall apply where the sum total of proceeds from supply in the year in which this Decree enters into force or thereafter, falls short of the amount specified in Article 109 (1).
Article 8 (Applicability to Submission of Reports on Waiver of Simplified Taxation)
The amended provisions of Article 116 (1) shall apply where the application of provisions concerning simplified taxable persons, is waived after January 1, 2014.
Article 9 (Special Cases concerning Research Services Provided by Industry-Academic Cooperation Foundations)
Research services commenced by an industry-academic cooperation foundation established under the Industrial Education Enhancement and Industry-Academia-Research Cooperation Promotion Act, after concluding a contract therefor by December 31, 2013, shall be deemed services exempt from value-added tax under Article 26 (1) 18 of the Act, notwithstanding the amended provisions of subparagraph 2 of Article 45.
ADDENDA <Presidential Decree No. 25945, Dec. 30, 2014>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date a merger is registered pursuant to Article 4 (6) of the Addenda to the Korea Development Bank Act, wholly amended by Act No. 12663.
Articles 2 through 5 Omitted.
ADDENDA <Presidential Decree No. 26071, Feb. 3, 2015>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions of the proviso to subparagraph 2 (a) of Article 37, shall enter into force on April 1, 2015; and the amended provisions of Article 40 (1) 1 (g), 2 (d) and (g), 7 and 8, Article 71 (1) 8, Article 73 (1) 13 and 14, (3) and (5), and Article 96-2, on July 1, 2015.
Article 2 (General Applicability)
This Decree shall begin to apply from the goods or services supplied or received, or imported and declared after this Decree enters into force.
Article 3 (Applicability to Online Newspapers Exempt from Value-Added Taxes)
The amended provisions of Article 38 (2) shall begin to apply from the first return, decision or rectification filed or made after this Decree enters into force.
Article 4 (Applicability to Imposition of Value-Added Taxes on Financing and Insurance Services)
The amended provisions of Article 40 (1) 1 (g), 2 (d) and (g), and 8 shall begin to apply from the first service contract concluded, revised, modified or renewed, on or after July 1, 2015.
Article 5 (Applicability to Extended Scope of Appraisal Agencies)
The amended provisions of the proviso to subparagraph 1 of Article 64 shall apply to the appraisal of land, a building, etc. to be conducted after this Decree enters into force.
Article 6 (Applicability to Issuance of Tax Invoices on Trading of Greenhouse-Gas Emission Permits through Emission Permits Exchanges)
The amended provisions of Article 69 (18) shall apply, beginning with the first taxable period during which this Decree enters into force.
Article 7 (Applicability to Grounds for Issuance of Corrected Tax Invoices)
The amended provisions of Articles 70 (1) 4 shall begin to apply from the first local letter of credit opened, or a written verification of purchase issued, on or after January 1, 2015.
Article 8 (Applicability to Deduction Methods and Limits of Fictitious Input Tax Amounts)
The amended provisions of Article 84 (2) through (8) shall apply, beginning with the first taxable period that begins on or after January 1, 2015.
Article 9 (Transitional Measures concerning Imposition of Value-Added Taxes on Financing and Insurance Services)
The former provisions shall apply to a service contract concluded before July 1, 2015, but not revised, modified or renewed on or after July 1, 2015, notwithstanding the amended provisions of Article 40 (1) 1 (g), 2 (d) and (g), and 8.
ADDENDA <Presidential Decree No. 26600, Oct. 23, 2015>
Article 1 (Enforcement Date)
This Decree shall enter into force on October 25, 2015. (Proviso Omitted.)
Articles 2 through 9 Omitted.
ADDENDA <Presidential Decree No. 26983, Feb. 17, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions of Articles 33 (2) 1 and 2 and 101 (1) 10 shall enter into force on July 1, 2016.
Article 2 (General Applicability)
This Decree shall begin to apply from the goods or services supplied or received, or imported and declared after this Decree enters into force.
Article 3 (Applicability to Methods of Applying Zero Tax Rate to Goods or Services Supplied for Acquisition of Foreign Currencies)
The amended provisions of Articles 33 (2) 1 and 2 and 101 (1) 10 shall begin to apply from the first service contract concluded, revised, modified or renewed on or after July 1, 2016.
Article 4 (Applicability to Deductions, etc. of Input Tax Amounts)
The amended provisions of subparagraphs 3 and 5 of Article 75 and Article 108 (5) shall begin to apply from the goods or services supplied in the taxable period that begins on or after January 1, 2016.
Article 5 (Applicability to Proportional Distribution Calculation of Common Input Tax Amounts)
The amended provisions of Article 81 (1) shall begin to apply from the goods or services supplied in the taxable period that begins on or after January 1, 2016.
Article 6 (Applicability to Calculation of Fictitious Input Tax Amounts)
The amended provisions of Article 84 (2) and (3) shall begin to apply from the taxable period that begins on or after January 1, 2016.
Article 7 (Applicability to Tax Deductions, etc. Subsequent to Use of Credit Cards, etc.)
The amended provisions of Article 88 (2) shall begin to apply from the goods or services supplied on or after January 1, 2016.
Article 8 (Transitional Measures concerning Grounds for Issuance of Corrected Tax Invoices and Corrected Electronic Tax Invoices)
The former provisions shall apply to a corrected tax invoice or corrected electronic tax invoice issued before this Decree enters into force, notwithstanding the amended provisions of Article 70 (1) 9.
ADDENDA <Presidential Decree No. 27037, Mar. 11, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 Omitted.
ADDENDA <Presidential Decree No. 27433, Aug. 2, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on August 4, 2016.
Article 2 Omitted.
ADDENDA <Presidential Decree No. 27472, Aug. 31, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on September 1, 2016.
Articles 2 through 7 Omitted.
ADDENDA <Presidential Decree No. 27838, Feb. 7, 2017>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions of subparagraph 3 of Article 20 and Article 61 (1) 9 and 10 and (4) shall enter into force on April 1, 2017.
Article 2 (General Applicability)
This Decree shall apply to goods or services the supply of which is made or received, or to goods the importation of which is declared, after this Decree enters into force.
Article 3 (Applicability to Corrected Import Tax Invoices)
The amended provisions of Article 72 (4) shall apply to a revised return, decision or rectification filed or made after this Decree enters into force.
Article 4 (Applicability to Penalty Taxes)
The amended provisions of Article 108 (1) shall apply to a return, decision or rectification filed or made after this Decree enters into force.
ADDENDA <Presidential Decree No. 27970, Mar. 29, 2017>
Article 1 (Enforcement Date)
This Decree shall enter into force on March 30, 2017.
Articles 2 through 7 Omitted.
ADDENDA <Presidential Decree No. 28211, Jul. 26, 2017>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended portions of any Presidential Decree which was revised pursuant to Article 8 of the Addenda to the Decree on the Organization of the Ministry of the Interior and Safety and Institutions under Its Jurisdiction and promulgated before the Decree on the Organization of the Ministry of the Interior and Safety and Institutions under Its Jurisdiction enters into force, but the enforcement date of which has not arrived yet, shall enter into force on the enforcement date of such Presidential Decree.
Articles 2 through 8 Omitted.
ADDENDA <Presidential Decree No. 28475, Dec. 19, 2017>
Article 1 (Enforcement Date)
This Decree shall enter into force on December 21, 2017.
Articles 2 through 9 Omitted.