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REGULATIONS ON SPECIAL CASES CONCERNING VALUE-ADDED TAXES AND INDIVIDUAL CONSUMPTION TAXES FOR FOREIGN TOURISTS, ETC.

Presidential Decree No. 11844, Jan. 9, 1986

Amended by Presidential Decree No. 14438, Dec. 23, 1994

Presidential Decree No. 14472, Dec. 31, 1994

Presidential Decree No. 15974, Dec. 31, 1998

Presidential Decree No. 16607, Dec. 3, 1999

Presidential Decree No. 16655, Dec. 31, 1999

Presidential Decree No. 17042, Dec. 29, 2000

Presidential Decree No. 17466, Dec. 31, 2001

Presidential Decree No. 18631, Dec. 31, 2004

Presidential Decree No. 20516, Dec. 31, 2007

Presidential Decree No. 20720, Feb. 29, 2008

Presidential Decree No. 22581, Dec. 30, 2010

Presidential Decree No. 24370, Feb. 15, 2013

Presidential Decree No. 24638, jun. 28, 2013

Presidential Decree No. 26488, Aug. 18, 2015

Presidential Decree No. 26831, Dec. 31, 2015

Presidential Decree No. 27840, Feb. 7, 2017

Presidential Decree No. 28514, Dec. 29, 2017

Chapter 1 General Provisions
 Article 1 (Purpose)
The purpose of this Decree is to provide for the matters delegated entrusted in Article 107 (1) through (4) of the Restriction of Special Taxation Act and other matters necessary for enforcement thereof. <Amended by Presidential Decree No. 15974, Dec. 31, 1998; Presidential Decree No. 27840, Feb. 7, 2017>
 Article 2 (Scope of Foreign Tourists, Etc.)
(1) The scope of the term “foreign tourist, etc.” as prescribed in Article 107 (4) of the Restriction of Special Taxation Act (hereinafter referred to as “Act”) shall be non-residents defined under the Foreign Exchange Transactions Act: Provided, That the persons in each of the following subparagraphs shall be excluded: <Amended by Decree No. 15974, Dec. 31, 1998; Decree No. 16655, Dec. 31, 1999; Presidential Decree No. 27840, Feb. 7, 2017>
1. Corporations;
2. Diplomats stationed in the Republic of Korea (including staff working in foreign official residences);
3. United Nations forces, soldiers or civilian workers of the United States of America who are stationed in the Republic of Korea.
(2) Among the areas in the Republic of Korea occupied by the soldiers from the United Nations or the United States of America, in cases of purchasing goods from the business entities (limited to the tax-exempted sellers as prescribed in Article 4 (1)) who are engaging in retail business, tailoring, dress making or shoe-store business within the special tourist zone under the Tourism Promotion Act, paragraph (1) 3 shall not apply thereto. <Newly Inserted by Presidential Decree No. 18631, Dec. 31, 2004>
 Article 3 (Scope of Target Goods)
(1) The scope of the target goods prescribed in Article 107 (4) of the Act shall be the goods excluding the following (hereinafter referred to as “duty-free goods”): <Amended by Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 14472, Dec. 31, 1994; Presidential Decree No. 15974, Dec. 31, 1998; Presidential Decree No. 16607, Dec. 3, 1999; Presidential Decree No. 17466, Dec. 31, 1999; Presidential Decree No. 20516, Dec. 31, 2007; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 26831, Dec. 31, 2015; Presidential Decree No. 27840, Feb. 7, 2017>
1. Deleted; <by Presidential Decree No. 16655, Dec. 31, 1999>
2. Firearm, swords, and explosives as prescribed in the Act on the Safety Management of Guns, Swords, Explosives, Etc.;
3. Goods designated as heritage assets pursuant to the Cultural Heritage Protection Act;
4. Addictive and habit-forming drugs pursuant to the Pharmaceutical Affairs Act;
5. Goods with a one-time transaction price including value added tax and individual consumption tax (including the education tax and the farming and fishing villages special tax to be imposed on individual consumption tax; hereinafter the same shall apply) lesser than the amount prescribed by Ordinance of the Ministry of Strategy and Finance;
6. Goods, the transaction of which is restricted by Acts and subordinate statutes;
7. Goods, the sale of which needs to be restricted in order to prevent capital flight in foreign currency, wrongful distribution, etc. as prescribed by Ordinance of the Ministry of Strategy and Finance.
(2) Deleted. <by Presidential Decree No. 22581, Dec. 30, 2010>
 Article 4 (Scope of Tax-Exempted Sellers, Etc.)
(1) “Business entity as prescribed by Presidential Decree” in Article 107 (1) of the Act means any business entity running a tax-free shop prescribed in paragraph (2) (hereinafter referred to as “tax-exempted seller”). <Amended by Presidential Decree No. 22581, Dec. 30, 2010>
(2) “Shops prescribed by Presidential Decree” in Article 107 (2) of the Act shall mean any duty-free shop for foreign tourists designated by the head of the competent tax office pursuant to Article 5 (1) (hereinafter referred to as “duty-free shop”). <Amended by Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 15974, Dec. 31, 1998; Presidential Decree No. 17042, Dec. 29, 2000; Presidential Decree No. 22581, Dec. 30, 2010>
 Article 5 (Designation and Cancelation of Duty-Free Shops)
(1) A person who intends to obtain designation of a duty-free shop shall submit a written application for designation, as prescribed by Ordinance of the Ministry of Strategy and Finance. In such cases, if the relevant business is required to obtain certain permission, designation or registration pursuant to other Acts or subordinate statutes, he/she shall attach a copy of his/her certificate of permission, designation or registration thereto. <Amended by Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 15974, Dec. 31, 1998; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 26488, Aug. 18, 2015>
(2) The head of the competent tax office who has received an application for designation under paragraph (1) may designate a duty-free shop as requested only when the applicant satisfies each of the following requirements: Provided, That in cases of a business operator who engages in retail business, tailoring, dress making or shoe-store business within the special tourist zone under the Tourism Promotion Act among the areas occupied by the soldiers from the United Nations or United States of America, the requirement prescribed in subparagraph 1 shall not apply: <Amended by Presidential Decree No. 15974, Dec. 31, 1998; Presidential Decree No. 16655, Dec. 31, 1999; Presidential Decree No. 17042, Dec. 29, 2000; Presidential Decree No. 18631, Dec. 31, 2004; Presidential Decree No. 26488, Aug. 18, 2015>
1. The applicant must not be a simplified taxable person;
2. The applicant must satisfy the standards determined by the Commissioner of the National Tax Service, taking into account expected foreign-tourist users, scale of sales personnel and facilities, financial capability and credit rating, etc. required for operating the aforementioned duty-free shop;
3. and 4. Deleted; <by Presidential Decree No. 17042, Dec. 29, 2000>
(3) The head of the competent tax office, in receipt of an application for designation of a duty-free shop under paragraph (1), shall determine, within seven days from the date of filing the application, whether or not he/she will designate the relevant duty-free shop; and when he/she has designated the duty-free shop, a certificate of a designated duty-free shop as prescribed by Ordinance of the Ministry of Strategy and Finance (hereinafter referred to as “certificate of designation”) shall be delivered to the applicant: Provided, That where not designating the duty-free shop, the head of the competent tax office shall, without delay, notify the applicant of the ground therefor. <Amended by Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 15974, Dec. 31, 1998; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 26488, Aug. 18, 2015>
(4) When a tax-exempted seller falls under any of the following subparagraphs, the head of the competent tax office may cancel designation of the duty-free shop. In such cases, the head of the competent tax office shall, without delay, notify it to the relevant business operator and withdraw his/her certificate of designation: <Amended by Presidential Decree No. 15974, Dec. 31, 1998; Presidential Decree No. 16655, Dec. 31, 1999; Presidential Decree No. 26488, Aug. 18, 2015; Presidential Decree No. 26831, Dec. 31, 2015>
1. When the permission, designation, or registration under relevant Acts and subordinate statutes is revoked;
2. When the relevant duty-free shop is transferred or leased to other persons;
3. When the tax-exempted seller is subject to any penalty or disciplinary measure due to his/her evasion of State or local government taxes of at least 500,000 won;
4. When the tax-exempted seller fails to remit money under Article 10 and thereby is punished at least on two occasions pursuant to the Punishment of Tax Offenses Act during the single taxable period as prescribed in the Value-Added Tax Act;
5. When the tax-exempted seller is punished pursuant to the Foreign Exchange Transactions Act;
6. When the tax-exempted seller becomes disqualified for non-compliance with any of the requirements for designation prescribed in paragraph (2);
7. When the tax-exempted seller requests withdrawal of designation of his/her duty-free shop;
8. When the tax-exempted seller fails to sell any duty-free goods to foreign tourists for six months from the time his/her duty-free shop was designated;
9. When the number of hand-written certificates of sales of goods issued under the latter part of Article 8 (1) during a taxable period under the Value-Added Tax Act accounts for at least 10% of the total number of sales certificates issued under Article 10 (1) during a taxable period: Provided, That this shall not apply where designation of a duty-free shop is obtained during the relevant taxable period or less than 20 sales certificates are issued under Article 10 (1) during the relevant taxable period;
10. When at least two of the following certificates are issued at least on two occasions after dividing the value of a tax-free article during a taxable period under the Value-Added Tax Act:
(a) Electronic sales certificate for prompt refund prescribed in Article 8 (4);
(b) Sales certificate prescribed in Article 10 (1).
(5) When a designation of a duty-free shop is revoked due to grounds prescribed in paragraph (4) 3 through 5 and 10, the tax-exempted seller may not have his/her duty-free shop designated for two years from the date when such designation is revoked. <Amended by Presidential Decree No. 26488, Aug. 18, 2015; Presidential Decree No. 26831, Dec. 31, 2015>
(6) Where a tax-exempted seller temporarily suspends or permanently closes his/her business or any stated matter in his/her certificate of designation is altered, he/she shall report thereon pursuant to mutatis mutandis application of Article 8 (6) of the Value-Added Tax Act or Article 21 of the Individual Consumption Tax Act; and upon reporting the same, he/she shall submit to the head of the competent tax office (when the duty-free shop is relocated, referring to the head of the competent tax office having jurisdiction over the duty-free shop after the relocation) a report on the temporary suspension or closedown of a duty-free shop for foreign tourists prescribed by Ordinance of the Ministry of Strategy and Finance or revision to matters included in a certificate of designation, along with a certificate of designation. <Amended by Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 15974, Dec. 31, 1998; Presidential Decree No. 20516, Dec. 31, 2007; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 24638, Jun. 28, 2013; Presidential Decree No. 26488, Aug. 18, 2015>
(7) The head of the competent tax office, in receipt of a report prescribed in paragraph (6), shall verify revised matters, correct the matters stated in the certificate of designation and re-issue it. <Amended by Presidential Decree No. 15974, Dec. 31, 1998; Presidential Decree No. 26488, Aug. 18, 2015>
 Article 5-2 (Operator of Refund Counter)
(1) The Commissioner of the competent Regional Tax Office may designate a person (hereinafter referred to as “refund counter operator”) who, pursuant to Articles 10-2 and 10-4, engages in the business of returning or remitting the amount of money equivalent to the value-added tax and individual consumption tax borne by foreign tourists when they purchased duty-free goods (hereinafter referred to as “amount equivalent to tax”). <Amended by Presidential Decree No. 17042, Dec. 29, 2000; Presidential Decree No. 18631, Dec. 31, 2004; Presidential Decree No. 20516, Dec. 31, 2007; Presidential Decree No. 24370, Feb. 15, 2013>
(2) A person who intends to be designated as the refund counter operator shall submit to the Commissioner of the competent Regional Tax Office a written application for designation prescribed by Ordinance of the Ministry of Strategy and Finance. In such cases, if a business concerned is required to obtain certain permission, designation or registration pursuant to other Acts or subordinate statutes, he/she shall attach thereto a copy of his/her certificate of permission, designation or registration. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
(3) The Commissioner of the competent Regional Tax Office who has received the application for designation pursuant to paragraph (2) may designate the applicant a refund-counter operator only when the applicant satisfies the requirements under each of the following subparagraphs: <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
1. The applicant has his/her own means and credibility required for the business concerned;
2. The applicant must have personnel and facilities required for paying refunds;
3. The applicant must satisfy other requirements prescribed by Ordinance of the Ministry of Strategy and Finance that are necessary for operating a refund counter.
(4) The Commissioner of the competent Regional Tax Office who has received the application for designation pursuant to paragraph (2) shall determine, within 30 days from the date of filing the application, whether he/she will designate the refund counter operator concerned; and when he/she has designated the refund counter operator, a certificate of designated refund counter operator shall be delivered to the applicant.
(5) In any of the following cases, the Commissioner of the competent Regional Tax Office may cancel designation of the refund counter operator: <Amended by Presidential Decree No. 22581, Dec. 30, 2010; Presidential Decree No. 24370, Feb. 15, 2013>
1. When the refund counter operator falls under any of subparagraphs 1, 3 or 5 of Article 5 (4);
2. When the refund counter operator becomes disqualified in light of the requirements for designation prescribed in paragraph (3);
3. When the refund counter operator ceases to operate his/her business concerned;
4. When the refund counter operator requests withdrawal of designation;
5. When the refund counter operator violates any of the procedures for refund or remittance as prescribed in Articles 10-2 through 10-4.
(6) The provisions of Article 5 (6) and (7) shall apply mutatis mutandis to the temporary suspension or permanent closure of the refund counter operating business and to alteration of any matters stated in the certificate of designation.
[This Article Newly Inserted by Presidential Decree No. 15974, Dec. 31, 1998]
Chapter 2 Application of Zero Tax Rating and Refund of Tax
 Article 6 (Applying Zero Tax Rating to Value-Added Tax and Refund of Individual Consumption Tax)
(1) Where a tax-exempted seller falls under any of the following subparagraphs after selling a duty-free goods, at a duty-free shop, to a foreign tourist at the price including the amount equivalent to tax thereof, the tax-exempted seller shall be entitled to application of zero-tax rating to the value-added tax concerned or refund of the amount of his/her individual consumption tax: <Amended by Presidential Decree No. 15974, Dec. 31, 1998; Presidential Decree No. 17042, Dec. 29, 2000; Presidential Decree No. 20516, Dec. 31, 2007; Presidential Decree No. 24370, Feb. 15, 2013>
1. Where, pursuant to Article 9 or 10-4, a foreign tourist is confirmed to have transferred duty-free goods to a foreign country within three months from the date when he/she purchases the goods;
2. Where a tax-exempted seller is confirmed to have remitted, pursuant to Article 10, an amount equivalent to tax to a foreign tourist or confirmed to have refunded or remitted through the refund counter operator pursuant to Article 10-2 or 10-4.
(2) Where foreign tourists purchase duty-free goods, meeting each of the following requirements, a tax-exempted seller may sell duty-free goods to foreign tourists at a duty-free shop at the price deducting the amount equivalent to tax thereof (hereinafter referred to as "prompt refund") and be entitled to application of zero-tax rating to the value-added tax or refund of the amount of his/her individual consumption tax: <Newly Inserted by Presidential Decree No. 26831, Dec. 31, 2015; Presidential Decree No. 28514, Dec. 29, 2017>
1. Where a transaction value on one occasion, including an amount equivalent to tax, is less than 300,000 won;
2. The total transaction value, including an amount equivalent to tax promptly refunded after entry, is less than one million won.
(3) Where an amount equivalent to tax is promptly refunded by a tax-exempted seller pursuant to paragraph (2), the amount, approval for which is obtained from the Commissioner of the National Tax Service by a refund window business operator may be deducted from the relevant amount equivalent to tax as miscellaneous expenses in relation to refund pursuant to Article 10-2 (2). <Newly Inserted by Presidential Decree No. 26831, Dec. 31, 2015>
(4) Where a foreign tourist has not taken any goods out of the Republic of Korea within three months from the date when he/she purchases duty-free goods (hereafter referred to as the "period for taking duty-free goods out of the Republic of Korea" in this paragraph) pursuant to paragraph (1) or (2) after his/her entry, paragraph (2) shall not apply to duty-free goods purchased by him/her after a period for taking the relevant duty-free goods out of the Republic of Korea elapses. <Newly Inserted by Presidential Decree No. 26831, Dec. 31, 2015>
 Article 7 (Exception to Application of Zero Tax Rating and Refund)
(1) Where a tax-exempted seller fails to receive delivery of the certificate of sales (including transmission via the information and communications network; hereinafter the same shall apply) prescribed in Article 10 (1) or the certificate of refund/remittance prescribed in Article 10-3 or 10-4 (5) within 20 days after termination of a taxable period of three months from the date of sale of the concerned duty-free goods (including the preliminary return period and the period for early return of zero tax rating, etc.; hereinafter the same shall apply), the zero tax rating for value-added tax as prescribed in Article 6 (1) shall not apply thereto. <Amended by Presidential Decree No. 15974, Dec. 31, 1998; Presidential Decree No. 17042, Dec. 29, 2000; Presidential Decree No. 22581, Dec. 30, 2010; Presidential Decree No. 24370, Feb. 15, 2013; Presidential Decree No. 26831, Dec. 31, 2015>
(2) Where a tax-exempted seller fails to receive delivery of the certificate of sales prescribed in Article 10 (1) or the certificate of refund/remittance prescribed in Article 10-3 or 10-4 (5) by the 20th day of the month immediately following the month in which three months from the date of sale of the concerned duty-free goods belongs, or where he/she fails to file an application for refund of the individual consumption tax prescribed in Article 12 (1) (where he/she failed to submit attached documents, including the amount of refundable tax concerned), the refund of individual consumption tax pursuant to Article 6 (1) shall not be made.
<Amended by Presidential Decree No. 15974, Dec. 31, 1998; Presidential Decree No. 17042, Dec. 29, 2000; Presidential Decree No. 20516, Dec. 31, 2007; Presidential Decree No. 22581, Dec. 30, 2010; Presidential Decree No. 24370, Feb. 15, 2013; Presidential Decree No. 26831, Dec. 31, 2015>
Chapter 3 Sale/Transfer of Duty-Free Goods and Payment Procedure
 Article 8 (Procedure for Sale of Duty-Free Goods)
(1) When a tax-exempted seller sells duty-free goods to a foreign tourist, the tax-exempted seller shall issue to the foreign purchaser two copies of the certificate of sale of goods for foreign tourists prescribed by Ordinance of the Ministry of Strategy and Finance (hereinafter referred to as “certificate of sales of goods”) and a stamped self-addressed envelope, after verifying the purchaser’s identification by checking his/her passport, etc. In such cases, he/she may deliver a hand-written certificate of sales of goods for foreign tourists (hereinafter referred to as "hand-written certificate of sales of goods") prescribed by Ordinance of the Ministry of Strategy and Finance, instead of a certificate of sales where any extenuating circumstances, including computer problems, exist. <Amended by Presidential Decree No. 26488, Aug. 18, 2015>
(2) Notwithstanding paragraph (1), where a tax-exempted seller transmits certificate of sales of goods to foreign tourists by electronic means (hereinafter referred to as "electronic certificate of sales") using the information and communications network to a refund counter business operator or head of the customs office having jurisdiction over a port of departure, he/she need not deliver a certificate of sales of goods or hand-written certificate of sales of goods and a stamped self-addressed envelope. <Newly Inserted by Presidential Decree No. 26488, Aug. 18, 2015>
(3) Where a tax-exempted seller sells duty-free goods pursuant to paragraph (1), he/she shall inform the relevant foreign tourist of procedures for transmission and refund.
(4) Where a tax-exempted seller sells goods to foreign tourists after prompt refund prescribed in Article 6 (2), he/she shall check passports of foreign tourists and transmit a certificate of sales of goods for prompt refund by electronic means for foreign tourists prescribed by Ordinance of the Ministry of Strategy and Finance (hereinafter referred to as "electronic certificate of sales for prompt refund") using the information and communications network to the head of the customs office having jurisdiction over a port of departure. <Newly Inserted by Presidential Decree No. 26831, Dec. 31, 2015>
[This Article Wholly Amended by Presidential Decree No. 22581, Dec. 30, 2010]
 Article 9 (Confirmation of Transfer by the Head of Customs Office)
(1) Where a foreign tourist has already received or intends to receive a refund or transmittance of the amount equivalent to tax borne by him/her when he/she purchased a duty-free goods, he/she shall submit one copy of the certificate of sales of goods or hand-written certificate of sales of goods and the purchased goods to the head of the customs office having jurisdiction over the port of departure and shall obtain confirmation thereof: Provided, That where he/she sends the purchased goods via postal service or other methods of delivery, he/she may submit, in lieu of the purchased goods, the document prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 15974, Dec. 31, 1998; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 24370, Feb. 15, 2013; Presidential Decree No. 26488, Aug. 18, 2015>
(2) Notwithstanding paragraph (1), where the head of the customs office having jurisdiction over the port of departure has received an electronic sales certificate or electronic certificate of sales for prompt refund transmitted from a tax-exempted seller or an operator of refund counter, the head the customs office having jurisdiction over the port of departure may authorize a foreign tourist to waive submission of the certificate of sales or electronic certificate of sales for prompt refund: Provided, That where a transmitted electronic sales certificate or electronic certificate of sales for prompt refund is deemed erroneous or must be verified, the head of the customs office having jurisdiction over the port of departure may request the foreign tourist to submit the receipt, etc. of the concerned goods which was issued from the tax-exempted seller. <Newly Inserted by Presidential Decree No. 22581, Dec. 30, 2010; Presidential Decree No. 26488, Aug. 18, 2015; Presidential Decree No. 26831, Dec. 31, 2015>
(3) The head of the customs office having jurisdiction over the port of departure shall place a seal verifying the transfer of duty-free goods prescribed by Ordinance of the Ministry of Strategy and Finance (including electronic handling by using the information and communications network; hereinafter the same shall apply) on the certificate of sales of goods, hand-written certificate of sales of goods, electronic certificate of sales or electronic certificate of sales for prompt refund and deliver such certificates to each of the following persons: <Amended by Presidential Decree No. 26488, Aug. 18, 2015; Presidential Decree No. 26831, Dec. 31, 2015>
1. Tax-exempted seller;
2. Foreign tourist;
3. Operator of a refund counter.
(4) Where the head of the customs office having jurisdiction over the port of departure places a seal pursuant to paragraph (3), he/she may select some duty-free goods (in cases under the proviso to paragraph (1), referring to documents prescribed by Ordinance of the Ministry of Strategy and Finance) presented by foreign tourists to verify whether such goods correspond to certificates of sales of goods, hand-written certificate of sales of goods, electronic certificates of sales or electronic certificates of sales for prompt refund in accordance with standards prescribed by the head of the customs office having jurisdiction over the port of departure. <Newly Inserted by Presidential Decree No. 26831, Dec. 31, 2015>
(5) Where the United Nations forces, soldiers or civilian workers of the United States of America transfer, by parcel post, duty-free goods purchased under paragraph (2) 2 from areas within the Republic of Korea prescribed in paragraph (2) 2 which are occupied by the soldiers from the United Nations or United States of America, paragraphs (1) through (4) shall apply mutatis mutandis thereto, as determined by the Commissioner of the Customs. In such cases, the term "departure from a country" shall be construed as "transfer" and the term "head of the customs office having jurisdiction over the port of departure" as "the head of the competent customs office". <Newly Inserted by Presidential Decree No. 18631, Dec. 31, 2004; Presidential Decree No. 22581, Dec. 30, 2010; Presidential Decree No. 26488, Aug. 18, 2015; Presidential Decree No. 26831, Dec. 31, 2015>
 Article 10 (Transfer of Amount Equivalent to Tax)
(1) Where each tax-exempted seller receives a certificate of sales of goods, hand-written certificate of sales of goods or electronic certificate of sales (hereinafter referred to as "certificate of sales") confirmed by the head of the customs office having jurisdiction over the port of departure (referring to the head of the competent customs office, in cases under Article 2 (2); hereinafter the same shall apply) pursuant to Article 9 (3), from the head of the customs office having jurisdiction over the port of departure or foreign tourists, he/shall remit an amount equivalent to tax borne by foreign tourists when they purchase such goods to relevant foreign tourists within 20 days from the date when he/she receives a certificate of sales. <Amended by Presidential Decree No. 15974, Dec. 31, 1998; Presidential Decree No. 18631, Dec. 31, 2004; Presidential Decree No. 26831, Dec. 31, 2015>
(2) When a tax-exempted seller remits the amount equivalent to tax prescribed in paragraph (1), he/she may deduct the remittance-related expenses (referring to any remittance fee, international postal service charge for remittance and other expenses prescribed by the Commissioner of the National Tax Service) from the amount equivalent to tax.
 Article 10-2 (Refund or Transfer of Amount Equivalent to Tax)
(1) When an operator of a refund counter has received the certificate of sales confirmed by the head of the customs office having jurisdiction over the port of departure, the operator of refund counter shall without delay refund or remit, on behalf of the tax-exempted seller, the amount equivalent to tax borne by a foreign tourist when he/she purchased the duty-free goods, to the foreign tourist concerned: Provided, That this shall not apply where the amount pursuant to Article 10-4 (3) has been refunded or remitted to the relevant foreign tourist. <Amended by Presidential Decree No. 17042, Dec. 29, 2000; Presidential Decree No. 24370, Feb. 15, 2013>
(2) When an operator of refund counter refunds or remits the amount equivalent to tax pursuant to paragraph (1), he/she may deduct from the amount equivalent to tax concerned, the expenses, etc. incidental to the refund or remittance which is approved by the Commissioner of the National Tax Service at the request of the operator of refund counter. <Amended by Presidential Decree No. 17042, Dec. 29, 2000; Presidential Decree No. 17466, Dec. 31, 2001>
[This Article Newly Inserted by Presidential Decree No. 15974, Dec. 31, 1998]
 Article 10-3 (Delivery of Certificate of Refund/Transfer)
An operator of a refund counter who has refunded or remitted an amount equivalent to tax to foreign tourists pursuant to Article 10-2 shall deliver to the tax-exempted seller concerned a certificate which proves the aforementioned refund or remittance (hereinafter referred to as “certificate of refund/remittance”), as prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 17042, Dec. 29, 2000>
[This Article Newly Inserted by Presidential Decree No. 15974, Dec. 31, 1998]
 Article 10-4 (Special Cases concerning Refund, Etc. of Amount Equivalent to Tax through Electronic Certificate of Sales)
(1) Notwithstanding Article 8 (1), where the amount of a one time transaction, including value added tax and individual consumption tax, does not exceed 5 million won and a foreign tourist requests refund or remittance of the amount equivalent to tax borne by the foreign tourist when he/she purchased a duty-free goods on condition that he/she receive the confirmation of transfer by the head the customs office having jurisdiction over the port of departure pursuant to Articles 9 and 10-4 (4), a tax-exempted seller shall electronically transmit an electronic sales certificate to the operator of refund counter concerned. <Amended by Presidential Decree No. 27840, Feb. 7, 2017>
(2) An operator of refund counter who has received an electronic sales certificate pursuant to paragraph (1) shall electronically transmit it to the head the customs office having jurisdiction over the port of departure.
(3) Notwithstanding the main sentence of Article 10-2 (1), an operator of refund counter who has received an electronic sales certificate pursuant to paragraph (1) shall, upon receipt of the request of a foreign tourist, refund or remit on behalf of the tax-exempted seller the amount equivalent to tax borne by the foreign tourist when he/she purchased the duty-free goods (limited to where the amount of one time transaction including its value added tax and individual consumption tax is not more than 5 million won) to the foreign tourist concerned. In this case, the operator of refund counter may, in order to ensure the confirmation of transfer by the head of the customs office having jurisdiction over the port of departure prescribed in Article 9 and 10-4 (4), request the concerned foreign tourist to provide a security up to the amount equivalent to tax. <Amended by Presidential Decree No. 27840, Feb. 7, 2017>
(4) The head of the customs office having jurisdiction over the port of departure who has received an electronic certificate of sales pursuant to Article 8 (2) or 10-4 (2), shall place a confirmation seal on such certificate pursuant to Article 9 (3), transmit results of such confirmation to a refund counter business operator and notify the Commissioner of the National Tax Service of results thereof by no later than the 10th day of the month next to the month to which belongs the date when such confirmation is made. <Amended by Presidential Decree No. 26831, Dec. 31, 2015>
(5) Where an operator of refund counter who has refunded or remitted the amount equivalent to tax to a foreign tourist pursuant to Article 10-2 or 10-4 (3) has received from the head the competent customs office, the results of confirmation in accordance with paragraph (4), the operator of refund counter shall electronically transmit the certificate of refund/remittance to the tax-exempted seller.
(6) Where an operator of refund counter refunds or remits an amount equivalent to tax to a foreign tourist pursuant to paragraph (3), Article 10-2 (2) shall apply mutatis mutandis.
[This Article Newly Inserted by Presidential Decree No. 24370, Feb. 15, 2013]
Chapter 4 Procedures for Report and Refund
 Article 11 (Report of Value-Added Tax)
(1) Where a tax-exempted seller intends to be subject to zero-tax relating to the value-added tax pursuant to Article 6 (1), he/shall submit the relevant certificate of sales accompanied with a certificate of remittance prescribed in Article 10 (hereinafter referred to as "certificate of remittance") or a certificate of refund/remittance, in reporting the tax base during a taxable period to which belongs the date when a certificate of sales or a certificate of refund or remittance is received, as well as the amount of tax or refund to the head of the competent tax office: Provided, That where a certificate of remittance cannot be attached due to extenuating circumstances after remitting the amount equivalent to tax, a document determined by the Commissioner of the National Tax Service may be attached in lieu of such certificate. <Amended by Presidential Decree No. 15974, Dec. 31, 1998; Presidential Decree No. 16655, Dec. 31, 1999; Presidential Decree No. 17042, Dec. 29, 2000; Presidential Decree No. 26831, Dec. 31, 2015>
(2) Notwithstanding paragraph (1), a tax-exempted seller who has received a certificate of refund/remittance electronically transmitted from an operator of refund counter pursuant to Article 10-4 (5) shall, to be entitled to application of the zero tax rating for value-added tax pursuant to Article 6 (1), submit a detailed written record of sales and refund of duty-free goods to foreign tourists as prescribed by Ordinance of the Ministry of Strategy and Finance (hereinafter referred to as “detailed written record of sales and refunds of duty-free goods”) when he/she reports to the head of the competent tax office pursuant to the front part of paragraph (1). <Newly Inserted by Presidential Decree No. 24370, Feb. 15, 2013; Presidential Decree No. 26831, Dec. 31, 2015>
(3) Where a tax-exempted seller reports the tax base governed by zero-tax rate pursuant to Article 6 (1), if a document prescribed in paragraph (1) or (2) is not attached thereto, the relevant tax base shall not be deemed a report prescribed in paragraph (1) or (2). <Amended by Presidential Decree No. 24370, Feb. 15, 2013; Presidential Decree No. 26831, Dec. 31, 2015>
(4) Where a tax-exempted seller falls under Article 7 (1), he/she shall report the tax base for value-added tax and pay the tax thereof by no later than the due date of reporting for the taxable period to which the date of third month from the date of sale of the duty-free goods belongs.
(5) Where a tax-exempted seller intends to be subject to the zero-tax relating to the value-added tax pursuant to Article 6 (2), he/she shall attach a detailed record of sales of goods for prompt refund for foreign tourists prescribed by Ordinance of the Ministry of Strategy and Finance, when reporting the tax base of the taxable period during which the duty-free goods are sold, and the amount of tax or refund, to the head of the competent tax office. <Newly Inserted by Presidential Decree No. 26831, Dec. 31, 2015>
 Article 12 (Application for Refund of Individual Consumption Tax)
(1) Where a tax-exempted seller intends to be refunded his/her individual consumption tax pursuant to the provisions in Article 6, he/she shall submit, by no later than the end of the month immediately following the month to which the date of receipt of his/her certificate of sales or refund/remittance belongs, the written application for refund of individual consumption tax as prescribed by Ordinance of the Ministry of Strategy and Finance with each of the following documents: Provided, That in cases of falling under subparagraph 1 and where the certificate of remittance cannot be attached for inevitable reasons, a document determined by the Commissioner of the National Tax Service may be attached thereto, in lieu of the certificate of remittance: <Amended by Presidential Decree No. 15974, Dec. 31, 1998; Presidential Decree No. 17042, Dec. 29, 2000; Presidential Decree No. 20516, Dec. 31, 2007; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 24370, Feb. 15, 2013; Presidential Decree No. 26831, Dec. 31, 2015>
1. Where he/she remitted the amount equivalent to tax to a foreign tourist, the certificates of sales and remittance;
2. Where he/she refunded or remitted an amount through an operator of refund counter, the certificate of sales or refund/remittance: Provided, That where a tax-exempted seller has received a certificate of refund/remittance electronically transmitted from an operator of refund counter pursuant to Article 10-4 (5), referring to the detailed written record of sales and refund of duty-free goods;
3. Where he/she makes a prompt refund for foreign tourists, referring to an electronic certificate of sales for prompt refund.
(2) The head of the competent tax office who has received an application for refund of individual consumption tax pursuant to paragraph (1) shall refund the individual consumption tax to the tax-exempted seller concerned within 20 days from the date of receipt of the application for refund. In this case, if there is any outstanding amount of tax to be paid by the tax-exempted seller, it shall be deducted from the amount of the aforementioned refund. <Amended by Presidential Decree No. 15974, Dec. 31, 1998; Presidential Decree No. 20516, Dec. 31, 2007>
(3) Where a tax-exempted seller of the goods prescribed in the proviso to Article 3 (1) 1 falls into Article 7 (2), he/she shall report the tax base for the concerned individual consumption tax and pay the tax thereof no later than the end of the month immediately following the month to which the date of third month from the date of sale of the duty-free goods belongs. <Amended by Presidential Decree No. 20516, Dec. 31, 2007>
Chapter 5 Supplemental Provisions
 Article 13 (Relationship with Other Acts and Subordinate Statutes)
With respect to the value-added tax and individual consumption tax on duty-free goods, the Acts and subordinate statutes concerning value-added tax and individual consumption tax shall apply, unless otherwise expressly provided for in this Decree. <Amended by Presidential Decree No. 20516, Dec. 31, 2007>
 Article 14 (Orders)
(1) The Commissioner of the National Tax Service, the Commissioner of the competent Regional Tax Office or the head of the competent tax office may order a tax-exempted seller each of the following matters: <Amended by Presidential Decree No. 16607, December 31, 1998>
1. An indication of a duty-free shop;
2. Posting or notifying a notice concerning the matters of which foreign tourists are required to be aware;
3. Detailed matters concerning transfer of payment such as bearing expenses for transferring payment, method of transfer of payment, etc;
4. Other matters required for enforcement.
(2) The Commissioner of the National Tax Service, the Commissioner of the competent Regional Tax Office or the head of the competent tax office may order an operator of refund counter the matters under each of the following subparagraphs: <Newly Inserted by Presidential Decree No. 15974, Dec. 31, 1998>
1. Indication of the existence of a refund counter;
2. Posting or providing a notice concerning the matters that are required to be known by foreign tourists;
3. Submission of the documents necessary for tax perpetuation, and a report concerning businesses.
 Article 15 (Delivery of Detailed Statement of Transfer/Sales of the Goods Subject to Individual Consumption Tax)
(1) Any person who intends to transfer or sell goods subject to imposition of individual consumption tax into a duty-free shop shall deliver to the concerned tax-exempted seller a detailed statement of transfer (sale) of the goods subject to imposition of individual consumption tax prescribed by Ordinance of the Ministry of Strategy and Finance (in cases of imported goods, referring to a copy of the certificate of completion of reporting of the import). <Amended by Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 15974, Dec. 31, 1998; Presidential Decree No. 20516, Dec. 31, 2007; Presidential Decree No. 20720, Feb. 29, 2008>
(2) A tax-exempted seller who has received a detailed statement of transfer (sale) of goods subject to imposition of individual consumption tax shall keep it at the duty-free shop. <Amended by Presidential Decree No. 20516, Dec. 31, 2007>
 Article 16 Deleted. <by Presidential Decree No. 16607, Dec. 31, 1998>
ADDENDA
(1) (Enforcement Date) This Decree shall enter into force on April 1, 1986: Provided, That Articles 5, 14 and 15 shall enter into force on the date of promulgation of this Decree.
(2) (General Applicable Case) This Decree shall begin to apply from the first portion supplied or sold after this Decree enters into force.
ADDENDA <Presidential Decree No. 14438, Dec. 23, 1994>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Articles 2 through 5 Omitted.
ADDENDA <Presidential Decree No. 14472, Dec. 31, 1994>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 1995. <Proviso Omitted>
Articles 2 through 6 Omitted.
ADDENDA <Presidential Decree No. 15974, Dec 31, 1998>
(1) (Enforcement Date) This Decree shall enter into force on July 1, 1999.
(2) (General Applicable Case) This Decree shall begin to apply from the first portion supplied or sold after this Decree enters into force.
ADDENDA <Presidential Decree No. 16607, Dec. 3, 1999>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation. <Proviso Omitted>
Articles 2 through 7 Omitted.
ADDENDA <Presidential Decree No. 16655, Dec. 31, 1999>
(1) (Enforcement Date) This Decree shall enter into force on January 1, 2000: Provided, That the amended provisions of Article 5 (2) 4 shall enter into force on July 1, 2000.
(2) (General Applicable Case) This Decree shall begin to apply from first portion supplied or sold after this Decree enters into force.
ADDENDA <Presidential Decree No. 17042, Dec. 29, 2000>
(1) (Enforcement Date) This Decree shall enter into force on January 1, 2001.
(2) (General Applicable Case) This Decree shall begin to apply from the first batch of duty-free shops designated or the first amount of money remitted by an operator of refund counter for the first time after this Decree enters into force.
ADDENDA <Presidential Decree No. 17466, Dec. 31, 2001>
(1) (Enforcement Date) This Decree shall enter into force on January 1, 2002.
(2) (General Applicable Case) This Decree shall begin to apply from the first money refunded or remitted by an operator of refund counter after this Decree enters into force.
(3) (Transitional Measures concerning Expenses, etc. for Refund or Remittance) The expenses, etc. determined by an operator of refund counter in accordance with the instruction by the Commissioner of the National Tax Service pursuant to the former provision of Article 10-2 (2) as at the time this Decree enters into force shall be deemed to be approved by the Commissioner of the National Tax Service pursuant to the amended provision of Article 10-2 (2).
ADDENDA <Presidential Decree No. 18631, Dec. 31, 2004>
(1) (Enforcement Date) This Decree shall enter into force on January 1, 2006.
(2) (General Applicable Case) This Decree shall begin to apply from the first portion supplied after this Decree enters into force.
ADDENDA <Presidential Decree No. 20516, Dec. 31, 2007>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2008.
Articles 2 through 7 Omitted.
ADDENDA <Presidential Decree No. 20720, Feb. 29, 2008>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That, among the Presidential Decrees to be amended pursuant to Article 8 of the Addenda, the amended provisions of those Presidential Decrees which have not yet entered into force, although promulgated before this Decree enters into force, shall enter into force on each date of enforcement of the Presidential Decree concerned.
Articles 2 through 8 Omitted.
ADDENDA <Presidential Decree No. 22581, Dec. 30, 2010>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions of Article 3 (2) and 5-2 (5) shall enter into force on April 1, 2011.
Article 2 (Applicable Case concerning the Procedure for Refund and Remittance through Transferring Electronic Sales Certificate)
The amended provisions of Articles 8 and 9 shall begin to apply from the first cases where a foreign tourist, etc. purchases a duty-free goods at a duty-free shop, after this Decree enters into force.
ADDENDA <Presidential Decree No. 24370, Feb. 15, 2013>
Article 1 (Enforcement Date)
This Decree shall enter into force on July 1, 2013: Provided, That the amended provisions of Article 9 (5) shall enter into force on the date of its promulgation.
Article 2 (General Applicable Case)
This Decree shall begin to apply from the portion of purchasing the duty-free goods by foreign tourists, etc. at duty-free shops after July 1, 2013.
Article 3 (Applicable Case concerning Confirmation of Transfer, Etc. by the Head of the Customs Office)
The amended provisions of Article 9 (5) shall begin to apply from the portion of the transfer to be confirmed by the head of the customs office having jurisdiction over the port of departure after the date of enforcement as prescribed in the proviso to Article 1 of the Addenda.
Article 4 (Applicable Case concerning Return of Value-Added Tax)
The amended provisions of Article 11 (2) and (3) shall begin to apply from the first portion of returning the value-added tax on the duty-free goods purchased after July 1, 2013 by foreign tourists, etc. at duty-free shops.
Article 5 (Applicable Case concerning Request for Refund of Individual Consumption Tax)
The amended provisions of the proviso to Article 12 (1) 2 shall begin to apply from the first requesting refund of individual consumption tax with respect to the duty-free goods purchased after July 1, 2013 by foreign tourists, etc. at duty-free shops.
ADDENDA<Presidential Decree No. 24638, Jun. 28, 2013>
Article 1 (Enforcement Date)
This Decree shall enter into force on July 1, 2013. <Proviso Omitted>
Articles 2 through 17 Omitted.
ADDENDA <Presidential Decree No. 26488, Aug. 18, 2015>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Applicability concerning Revocation of Designation of Duty-free Shops)
The amended provisions of Article 5 (4) 9 shall apply, beginning with the first certificate of sales issued after this Decree enters into force. In such cases, the taxable period where the enforcement date of this Decree belongs shall be construed as the period from the enforcement date of this Decree until December 31, 2015.
Article 3 (Applicability concerning Confirmation of Transfer by Head of Customs Office)
The amended provisions of the former part of Article 9 (5) shall also apply where duty-free goods purchased before this Decree enters into force are confirmed by the head of the customs office having jurisdiction over the port of departure after this Decree enters into force.
ADDENDA <Presidential Decree No. 26831, Dec. 31, 2015>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2016.
Article 2 (Applicability concerning Revocation of Designation of Duty-free Shops)
The amended provisions of Article 5 (4) 10 shall apply, beginning with an electronic certificate of sales for prompt refund or a certificate of sales issued after this Decree enters into force.
Article 3 (Applicability concerning Prompt Refund of Duty-free Shops)
The amended provisions of Article 6 and Article 8 (4) shall apply, beginning with a case where a foreign tourist purchases any duty-free goods at duty-free shops and obtains prompt refund thereof after this Decree enters into force.
Article 4 (Applicability concerning Confirmation of Transfer by Head of Customs Office)
The amended provisions of Article 9 and Article 10-4 (4) shall also apply where duty-free goods purchased by foreign tourists at duty-free shops before this Decree enters into force are confirmed by the head of the customs office having jurisdiction over the port of departure after this Decree enters into force.
Article 5 (Applicability concerning Reports on Value-added Tax)
The amended provisions of Article 11 (5) shall apply, beginning with a case where a foreign tourist reports the value-added tax for his/her prompt refund at duty-free shops after this Decree enters into force.
Article 6 (Applicability concerning Applications for Refund of Individual Consumption Tax)
The amended provisions of Article 12 (1) (limited to a part regarding applications for refund concerning portion of prompt refund) shall apply, beginning with a case where a foreign tourist files an application for refund of the individual consumption tax for a portion of prompt refund at duty-free shops after this Decree enters into force.
ADDENDA <Presidential Decree No. 27840, Feb. 7, 2017>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Applicability concerning Refund, Etc. of Amount Equivalent to Tax through Electronic Certificate of Sales)
The amended provisions of Article 10-4 (1) and (3) shall apply, beginning with duty free goods purchased by foreign tourists at duty-free shops after this Decree enters into force.
ADDENDA <Presidential Decree No. 28514, Dec. 29, 2017>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Applicability concerning Prompt Refund at Duty-Free Shop)
The amended provisions of Article 6 (2) 1 shall apply, beginning with cases where a foreign tourist purchases duty free goods at a duty-free shop and receives a prompt refund after this Decree enters into force.