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VALUE-ADDED TAX ACT

Wholly Amended by Act No. 11873, jun. 7, 2013

Amended by Act No. 11944, Jul. 26, 2013

Act No. 12113, Dec. 24, 2013

Act No. 12167, Jan. 1, 2014

Act No. 12851, Dec. 23, 2014

Act No. 13474, Aug. 11, 2015

Act No. 13556, Dec. 15, 2015

Act No. 13805, Jan. 19, 2016

Act No. 14387, Dec. 20, 2016

Act No. 15223, Dec. 19, 2017

Act No. 16008, Dec. 24, 2018

Act No. 16101, Dec. 31, 2018

Act No. 16845, Dec. 31, 2019

CHAPTER I GENERAL PROVISIONS
 Article 1 (Purpose)
The purpose of this Act is to contribute to ensuring the fair imposition of value-added tax and the reasonable fulfillment of the obligation to pay taxes and to facilitating the raising of financial revenue by prescribing the requirements and procedures for imposition of value-added tax.
 Article 2 (Definitions)
The definitions of terms used in this Act are as follows: <Amended by Act No. 16008, Dec. 24, 2018>
1. The term “goods” means any things or rights that have property value. Necessary matters regarding the scope of things and rights shall be prescribed by Presidential Decree;
2. The term “services” means all labor and activities, other than goods, that have property value. Necessary matters regarding the scope of services shall be prescribed by Presidential Decree;
3. The term “entrepreneur” means any person who supplies goods or services independently for business, regardless of whether the business aims to make profit;
4. The term “simplified taxable person” means any sole proprietor whose total proceeds from supply in the immediately preceding calendar year fall short of the amount prescribed by Presidential Decree pursuant to Article 61 (1) and who is allowed to file and pay his or her value-added tax according to the simplified procedures under Chapter VII;
5. The term “general taxable person” means an entrepreneur who is not a simplified taxable person;
6. The term “taxable business” means any business that supplies goods or services subject to the imposition of value-added tax;
7. The term “tax-free business” means any business that supplies goods or services exempt from value-added tax;
8. The term “nonresident” means any nonresident defined in Article 1-2 (1) 2 of the Income Tax Act;
9. The term “foreign corporation” means any foreign corporation defined in subparagraph 3 of Article 2 of the Corporate Tax Act.
 Article 3 (Persons Liable to Pay Tax)
Any individual, corporation (including the State, a local government, or a local government association), unincorporated association or foundation, or other organization that falls under any of the following subparagraphs shall be liable to pay the value-added tax as prescribed by this Act:
1. An entrepreneur;
2. A person who imports goods.
 Article 3-2 (Trustees’ Liability for Tax Payment in Kind)
Where a person liable to pay tax pursuant to Article 3, who has failed to pay any of the following value-added tax, additional dues, or expenses for disposition on delinquency (hereinafter referred to as “value-added tax, etc.”), has any trust property prescribed by Presidential Decree (hereinafter referred to as “trust property”), the trustee pursuant to Article 2 of the Trust Act (hereafter in this Article, Article 10 (8) and (9) 4, and Article 52-2, referred to as “trustee”) shall be liable to pay the value-added tax, etc. of the person liable to pay tax from the trust property under this Act, if there is a shortage in the amount to be collected even after executing a disposition on delinquency against other properties of the person liable to pay tax: <Amended by Act No. 16845, Dec. 31, 2019>
1. Value-added tax or additional dues (limited to additional dues on the value-added tax) for which the statutory deadline arrives pursuant to Article 35 (2) of the Framework Act on National Taxes after the date of creating the trust, if they have arisen in relation to the trust property;
2. Expenses for disposition on delinquency incurred while executing the disposition on delinquency against the amount referred to in subparagraph 1.
[This Article Newly Inserted by Act No. 15223, Dec. 19, 2017]
 Article 4 (Taxable Objects)
Value-added taxes shall be imposed on the following transactions:
1. Supply of goods or services by entrepreneurs;
2. Importation of goods.
 Article 5 (Taxable Period)
(1) The taxable period of value-added taxes for entrepreneurs shall be as follows:
1. Simplified taxable persons: From January 1 until December 31;
2. General taxable persons:
ClassificationTaxable Period
First periodFrom January 1 until June 30
Second periodFrom July 1 until December 31
(2) The initial taxable period for a person starting a new business shall be from the commencement date of the business until the end date of the taxable period that includes the commencement date of the business: Provided, That when an application for business registration is filed prior to the commencement date of the business under the proviso of Article 8 (1), the initial taxable period shall be from the date of such application until the end date of the taxable period that includes the date of application.
(3) If an entrepreneur closes his or her business, the taxable period shall be from the commencement date of the taxable period that includes the date of closing the business until the date of closing the business. In such cases, the standards for determining the date of closing the business shall be prescribed by Presidential Decree.
(4) Notwithstanding paragraph (1) 1, if a general taxable person is converted into a simplified taxable person, or a simplified taxable person is converted into a general taxable person, as a consequence of the application or non-application of provisions concerning simplified taxable persons under Article 62 (1) and (2), the taxable period of value-added taxes in the period for which the provisions concerning simplified taxable persons apply in the year during which such conversion is made shall be determined pursuant to the following classifications: <Newly Inserted by Act No. 12167, Jan. 1, 2014>
1. Where a general taxable person is converted into a simplified taxable person: From July 1 until December 31 after such conversion;
2. Where a simplified taxable person is converted into a general taxable person: From January 1 until June 30 before such conversion.
(5) If a simplified taxable person becomes a general taxable person by waiving the application of the provisions concerning simplified taxable persons under Article 70, each of the following periods shall be deemed one taxable period. In such cases, the period referred to in subparagraph 1 shall be deemed the taxable period for simplified taxable persons; and the period referred to in subparagraph 2, the taxable period for general taxable persons: <Amended by Act No. 12167, Jan. 1, 2014>
1. The period from the commencement date of the taxable period that includes the date of report on the waiver of application of simplified taxation under Article 70 (1) until the last day of the month in which the date of report falls;
2. The period from the first day of the month following the month in which the date of report under subparagraph 1 falls until the end date of the taxable period that includes such day.
 Article 6 (Place of Tax Payment)
(1) A place of tax payment for an entrepreneur’s value-added tax shall be the location of each of his or her place of business.
(2) Any place of business under paragraph (1) shall be a fixed place at which an entrepreneur performs all or some of transactions for his or her business; and necessary matters regarding the scope of places of business shall be prescribed by Presidential Decree.
(3) If an entrepreneur has no place of business under paragraph (2), his or her domicile or residence shall be deemed his or her place of business.
(4) Notwithstanding paragraph (1), a place of tax payment for value-added tax of a per-business unit taxable entrepreneur under the latter part of Article 8 (3) shall be the location of his or her main office or principal office instead of each of his or her places of business.
(5) None of the following places shall be treated as a place of business:
1. A place that only has facilities for keeping and managing goods, which has been reported as a shed as prescribed by Presidential Decree;
2. A temporary place of business established in a place where various events, such as competitions and exhibitions, are held, which has been reported as prescribed by Presidential Decree.
(6) A place of tax payment for value-added tax of an importer of goods shall be the location of the customs house to which he or she declares his or her import under the Customs Act.
 Article 7 (Jurisdiction of Taxation)
(1) Any entrepreneur’s value-added tax shall be levied by the head of the tax office or the Commissioner of the Regional Tax Office having jurisdiction over the place of tax payment under Article 6 (1) through (5).
(2) Value-added tax of an importer of goods shall be levied by the head of the customs house having jurisdiction over the place of tax payment under Article 6 (6).
 Article 8 (Business Registrations)
(1) An entrepreneur shall file an application for business registration for each place of business with the head of the tax office having jurisdiction over each place of business, within 20 days from the commencement date of his or her business, as prescribed by Presidential Decree: Provided, That a person who intends to newly start a business may file an application for business registration even before the commencement date of the business.
(2) An entrepreneur may file an application for business registration under paragraph (1) with the head of any tax office other than the head of the tax office having jurisdiction over his or her place of business. In such cases, he or she shall be deemed to have filed an application for business registration with the head of the tax office having jurisdiction over his or her place of business.
(3) Notwithstanding paragraph (1), an entrepreneur who has at least two places of business (including entrepreneurs who have a single place of business but intend to establish an additional place of business) may file an application for registration by business unit with the head of the tax office having jurisdiction over his or her main office or principal office. In such cases, an entrepreneur so registered shall be treated as a per-business unit taxable entrepreneur. <Amended by Act No. 16101, Dec. 31, 2018>
(4) Where an entrepreneur who has filed for an application for business registration by business unit under paragraph (1) intends to be converted to a per-business unit taxable entrepreneur under paragraph (3), he or she shall file an application for modification of registration with the head of the tax office having jurisdiction over his or her main office or principal office not later than 20 days before the commencement of the taxable period during which he or she intends to be treated as a per-business unit taxable entrepreneur. The same shall also apply where a per-business unit taxable entrepreneur intends to register his or her business by business unit.
(5) Where an entrepreneur who has a single place of business, while establishing an additional place of business, intends to be treated as a per-business unit taxable entrepreneur from the taxable period that includes the commencement date of business of such additional place of business, he or she shall file an application for modification of registration with the head of the tax office having jurisdiction over his or her main office or principal office, within 20 days after the commencement of business of the additional place of business (limited to the period within the taxable period that includes the commencement date of business of the additional place of business), notwithstanding the former part of paragraph (4). <Newly Inserted by Act No. 16101, Dec. 31, 2018>
(6) The head of the tax office having jurisdiction over the place of business who has received an application filed under paragraphs (1) through (5) (referring to the head of the tax office having jurisdiction over the main office or principal office in cases falling under paragraphs (3) through (5); hereafter in this Article the same shall apply) shall, upon registration of the business, issue a certificate of registration with a registration number assigned (hereinafter referred to as “business registration certificate”) to the relevant entrepreneur, as prescribed by Presidential Decree. <Amended by Act No. 16101, Dec. 31, 2018>
(7) Where an entrepreneur registered under paragraph (6) suspends or closes his or her business or is subject to any modification of his or her registration, he or she shall report such fact to the head of the tax office having jurisdiction over his or her place of business without delay, as prescribed by Presidential Decree. The same shall also apply where a person who has filed an application for business registration under the proviso of paragraph (1), it turns out, did not start the business. <Amended by Act No. 16101, Dec. 31, 2018>
(8) If an entrepreneur registered under paragraph (6) falls under any of the following, the head of the tax office having jurisdiction over his or her place of business shall cancel his or her business registration without delay: <Amended by Act No. 16101, Dec. 31, 2018>
1. Where he or she closes his or her business;
2. Where he or she, it turns out, did not start a business after filing an application for business registration under the proviso of paragraph (1).
(9) The head of the tax office having jurisdiction over the place of business may issue a renewed business registration certificate, as prescribed by Presidential Decree, if deemed necessary. <Amended by Act No. 16101, Dec. 31, 2018>
(10) An entrepreneur liable to pay the individual consumption tax or the traffic, energy and environment tax, who has filed any of the following reports pursuant to the Individual Consumption Tax Act or the Traffic, Energy and Environment Tax Act, shall be deemed to have filed an application for registration or a report described in each of the following: <Amended by Act No. 12851, Dec. 23, 2014; Act No. 16101, Dec. 31, 2018>
1. Where he or she has reported the commencement of his or her business under the former part of Article 21 (1) of the Individual Consumption Tax Act or the former part of Article 18 (1) of the Traffic, Energy and Environment Tax Act: An application for business registration under paragraph (1) or (2);
2. Where he or she has reported the suspension or closing of his or her business or any change in his or her registered matters under the latter part of Article 21 (1) of the Individual Consumption Tax Act or the latter part of Article 18 (1) of the Traffic, Energy and Environment Tax Act: A report on the suspension or closing of his or her business or on the modification of his or her registration under paragraph (7);
3. Where he or she has reported himself or herself as a per-business unit taxable entrepreneur under Article 21 (2) or (3) of the Individual Consumption Tax Act or Article 18 (3) or (4) of the Traffic, Energy and Environment Tax Act: An application for registration as a per-business unit taxable entrepreneur under paragraph (3) or an application for registration of conversion into a per-business unit taxable entrepreneur under paragraph (4);
4. Where he or she has reported the takeover, inheritance or merger of a business under Article 21 (4) or (5) of the Individual Consumption Tax Act or Article 18 (2) of the Traffic, Energy and Environment Tax Act: A report on the modification of his or her registration under paragraph (7).
(11) Except as provided in paragraphs (1) through (10), matters necessary for the business registration, the issuance of business registration certificates, the modification or cancellation of registration, etc. shall be prescribed by Presidential Decree. <Amended by Act No. 16101, Dec. 31, 2018>
CHAPTER II TAXABLE TRANSACTIONS
SECTION 1 Transactions Subject to Taxation
 Article 9 (Supply of Goods)
(1) A supply of goods shall be a delivery or transfer of goods based on any contractual or legal grounds.
(2) Necessary matters regarding the scope of supply of goods under paragraph (1) shall be prescribed by Presidential Decree.
 Article 10 (Special Cases concerning Supply of Goods)
(1) Where an entrepreneur directly uses or consumes, for his or her own tax-free business, any of the following goods that are produced or acquired in connection with his or her own taxable business (hereafter in this Article referred to as “self-produced or acquired goods”), it shall be deemed a supply of goods: <Amended by Act No. 16101, Dec. 31, 2018>
1. Goods for which the input tax amount under Article 38 and the input tax amounts under this Act and other statutes are deductible;
2. Goods acquired through a business transfer under paragraph (9) 2, for which the business transferor is entitled to deduct the input tax amount under Article 38 and the input tax amounts under this Act and other statutes;
3. Goods to which the tax rate of zero percent applies because the supply thereof constitutes exportation under Article 21 (2) 3.
(2) Any use or consumption of self-produced or acquired goods, which falls under any of the following, shall be deemed a supply of goods: <Amended by Act No. 12167, Jan. 1, 2014>
1. Where an entrepreneur uses or consumes self-produced or acquired goods for automobiles under Article 1 (2) 3 of the Individual Consumption Tax Act or for the maintenance of such automobiles, for which the input tax amount is not deductible from the output tax amount under Article 39 (1) 5;
2. Where an entrepreneur running a transportation business, an automobile sales business, or any other type of business prescribed by Presidential Decree uses any goods, among self-produced or acquired goods, that are used for automobiles under Article 1 (2) 3 of the Individual Consumption Tax Act and for the maintenance of such automobiles, for any other purpose without using them directly for business within the relevant type of business.
(3) Where an entrepreneur having at least two places of business releases any goods produced or acquired in connection with his or her own business from one of his or her places of business to another for the purpose of sale, it shall be deemed a supply of goods: Provided, That none of the following cases shall be deemed a supply of goods:
1. Where the entrepreneur releases such goods from one of his or her places of business to another during the taxable period for which he or she is treated as a per-business unit taxable entrepreneur under the latter part of Article 8 (3);
2. Where the entrepreneur releases such goods from one of his or her places of business to another during the taxable period for which he or she is allowed to pay the value-added tax in a lump sum at his or her principal place of business under Article 51: Provided, That this shall not apply where he or she has issued a tax invoice under Article 32 and filed a return with the head of the competent tax office under Article 48 or 49.
(4) Where an entrepreneur uses or consumes self-produced or acquired goods for his or her own personal purposes or other purposes not directly related to his or her business, or where he or she allows his or her employees or other persons to use or consume such goods without any compensation or at less than the market price thereof, it shall be deemed a supply of goods. In such cases, in cases prescribed by Presidential Decree where an entrepreneur supplies goods to his or her employees without any compensation or at less than the market price thereof to reimburse actual expenses or to provide welfare, such supply shall not be deemed a supply of goods. <Amended by Act No. 16101, Dec. 31, 2018>
(5) Where an entrepreneur donates self-produced or acquired goods to his or her customers or to many unspecified persons (excluding where the price of donated goods is included in the price of the supply of goods which is the main transaction), it shall be deemed a supply of goods: Provided, That the donation made by an entrepreneur for his or her own business, as prescribed by Presidential Decree, shall not be deemed a supply of goods.
(6) Any self-produced or acquired goods left in stock at the time an entrepreneur closes his or her business shall be deemed those supplied to himself or herself. The same shall also apply where an entrepreneur filed an application for business registration prior to the commencement date of the business under the proviso of Article 8 (1), but, it turns out, in fact, did not start the business.
(7) In selling or buying goods on consignment or through an agent, the consignor or the principal shall be deemed to have supplied or received those goods directly: Provided, That when the consignor or the principal is unidentifiable, as prescribed by Presidential Decree, such goods shall be deemed to have been supplied to, or to have been received from, the consignee or agent.
(8) When trust property is traded in the name of a trustee, the trustor pursuant to Article 2 of the Trust Act (hereinafter referred to as “trustor”) shall be deemed to supply the relevant goods directly: Provided, That the trustee shall be deemed to supply the goods in any of the following cases: <Newly Inserted by Act No. 15223, Dec. 19, 2017; Act No. 16845, Dec. 31, 2019>
1. Where the trustee concludes a trust contract prescribed by Presidential Decree to secure the performance of obligation by the trustor, and where he or she disposes of trust property to perform such obligation;
2. Where the trustee disposes of trust property in the process of implementing a redevelopment or reconstruction project, a housing improvement project in a city block, or a small-scale reconstruction project as a qualified developer pursuant to Article 27 (1) of the Act on the Improvement of Urban Areas and Residential Environments or Article 19 (1) of the Act on Special Cases concerning Unoccupied House or Small-Scale Housing Improvement.
(9) None of the following cases shall be deemed a supply of goods: <Amended by Act No. 12167, Jan. 1, 2014; Act No. 15223, Dec. 19, 2017>
1. Offering any goods as security, which is prescribed by Presidential Decree;
2. Transferring any business, which is prescribed by Presidential Decree: Provided, That this shall exclude where the transferee of the business pays a value-added tax after collecting it from the recipient of the transfer price at the time of payment thereof pursuant to Article 52 (4);
3. Paying any tax in kind pursuant to statutes, which is prescribed by Presidential Decree;
4. Transferring ownership of trust property, which falls under any of the following:
(a) Transferring trust property from the trustor to the trustee;
(b) Transferring trust property from the trustee to the trustor due to the termination of trust;
(c) Transferring trust property to a new trustee due to the change of the trustee.
(10) Except as provided in paragraphs (1) through (9), necessary matters for special cases concerning a supply of goods shall be prescribed by Presidential Decree. <Amended by Act No. 15223, Dec. 19, 2017>
 Article 11 (Supply of Services)
(1) A supply of services shall be any of the following, based on any contractual or legal grounds:
1. Offering labor;
2. Allowing others to use facilities, rights, or other goods.
(2) Necessary matters regarding the scope of supply of services under paragraph (1) shall be prescribed by Presidential Decree.
 Article 12 (Special Cases concerning Supply of Services)
(1) Where an entrepreneur supplies his or her own services for his or her own business without any compensation, thereby causing inequity in taxation against other entrepreneurs, it shall be deemed a supply of services to himself or herself. In such cases, the scope of those services shall be prescribed by Presidential Decree.
(2) Where an entrepreneur supplies services to others without any compensation, it shall not be deemed a supply of services: Provided, That where he or she supplies services prescribed by Presidential Decree, such as the lease of real estate for business use, to related persons prescribed by Presidential Decree (hereinafter referred to as “related persons”), it shall be deemed a supply of services.
(3) A supply of labor under employment relationship shall not be deemed a supply of services.
(4) Other than those prescribed in paragraphs (1) through (3), necessary matters regarding a supply of services shall be prescribed by Presidential Decree.
 Article 13 (Importation of Goods)
The importation of goods shall be bringing into the Republic of Korea any of the following goods [if such goods pass through a bonded area prescribed by Presidential Decree (hereafter in this Article referred to as “bonded area”), it means bringing those goods in from the bonded area]:
1. Goods arriving in the Republic of Korea from a foreign country [including marine products collected or caught in high seas by a foreign vessel], for which an import declaration has yet to be accepted;
2. Goods for which an export declaration is accepted [excluding the cases of receiving from a bonded area any goods, for which an export declaration is accepted but which has not yet been shipped].
 Article 14 (Incidental Supply of Goods and Services)
(1) A supply of any goods or services, incidental to the supply of the main goods or services, which falls under any of the following, shall be deemed to be included in the supply of the main goods or services:
1. Goods or services the price of which is ordinarily included in the supply price of the main goods or services;
2. Goods or services which are deemed to be ordinarily incidental to the supply of the main goods or services in light of trade practices.
(2) A supply of any goods or services, incidental to the main business, which fall under any of the following, shall be deemed to be a separate supply, and the determination of whether such goods or services are subject to taxation shall follow whether the main business is subject to taxation:
1. Goods or services which are supplied accidentally or temporarily in connection with the main business;
2. Goods which are indispensably produced in the process of manufacturing the main goods or in the process of offering services, in connection with the main business.
SECTION 2 Time and Place of Supply
 Article 15 (Time of Supply of Goods)
(1) The time of supply of goods shall be as provided in each of the following. In such cases, necessary matters regarding the time of supply of goods based on specific types of transactions shall be prescribed by Presidential Decree:
1. Where moving goods is required: The time the goods are delivered;
2. Where moving goods is not required: The time the goods are made available;
3. Where none of subparagraphs 1 and 2 is applicable: The time the supply of goods is decided.
(2) Notwithstanding paragraph (1), if goods are supplied in installments or on a conditional basis, the time of supply of such goods shall be prescribed by Presidential Decree.
 Article 16 (Time of Supply of Services)
(1) The time of supply of services shall be the time provided in each of the following:
1. The time when the provision of labor is completed;
2. The time when facilities, rights, or other goods are used.
(2) Notwithstanding paragraph (1), if services are supplied in installments or on a conditional basis, the time of supply of such services shall be prescribed by Presidential Decree.
 Article 17 (Special Cases concerning Time of Supply of Goods and Services)
(1) Where an entrepreneur is fully or partly paid the price for goods or services and issues a tax invoice provided for in Article 32 or a receipt provided for in Article 36 with respect to such payment, prior to the time of supply of goods or services referred to in Article 15 or 16 (hereafter in this Article referred to as “time of supply of goods or services”), the time such tax invoice or receipt is issued shall be deemed the time of supply of such goods or services, respectively. <Amended by Act No. 15223, Dec. 19, 2017>
(2) Where an entrepreneur issues a tax invoice provided for in Article 32 prior to the time of supply of goods or services and then is paid the price for such goods or services within seven days of issuance of the tax invoice, the time the tax invoice is issued shall be deemed the time of supply of such goods or services.
(3) Notwithstanding paragraph (2), even though the entrepreneur who supplies goods or services issues a tax invoice provided for in Article 32 prior to the time of supply of such goods or services and then is paid the price for such goods or services after seven days of issuance of the tax invoice, the time the tax invoice is issued shall be deemed the time of supply of such goods or services, if the entrepreneur who pays the price falls under either of the following cases: <Amended by Act No. 15223, Dec. 19, 2017; Act No. 16101, Dec. 31, 2018>
1. Where the time the demand for payment is made (referring to the date the relevant tax invoice is issued) and the time the payment is made are separately specified in a written contract, a written agreement, or the like between the parties; and the interval between the time the demand for payment is made and the time the payment is made is not more than 30 days;
2. Where the time for supplying goods or services arrives during the taxable period that includes the date of issuance of the tax invoice (or within 30 days from the date of issuance of the tax invoice if the person to whom such goods or services are supplied receives an early refund pursuant to Article 59 (2)); and it is verified that an amount stated in the tax invoice has been paid;
(4) Where an entrepreneur who supplies goods or services in installments issues a tax invoice provided for in Article 32 or a receipt provided for in Article 36 prior to the time of supply of goods or services applicable to cases prescribed by Presidential Decree, the time such tax invoice or receipt is issued shall be deemed the time of supply of such goods or services, respectively.
 Article 18 (Time of Importation of Goods)
The time of importation of goods shall be the time when an import declaration under the Customs Act is accepted.
 Article 19 (Place of Supply for Goods)
(1) The place of supply of goods shall be a place provided in each of the following subparagraphs:
1. Where moving goods is required: The place where the movement of the goods starts;
2. Where moving goods is not required: The place where the goods are located at the time when they are supplied.
(2) Other than those provided in paragraph (1), necessary matters regarding the place of supply of goods shall be prescribed by Presidential Decree.
 Article 20 (Place of Supply of Services)
(1) The place of supply of services shall be any of the following places:
1. The place where services are supplied or facilities, rights, or other goods are used;
2. In cases of international transport for which a supply of services is made at home and abroad, if the entrepreneur is a nonresident or a foreign corporation, the place where passengers are boarded or cargoes are loaded.
(2) Other than those provided for in paragraph (1), necessary matters regarding the place of supply of services shall be prescribed by Presidential Decree.
CHAPTER III ZERO TAX RATE AND TAX EXEMPTION
SECTION 1 Application of Zero Tax Rate
 Article 21 (Exportation of Goods)
(1) If a supply of goods constitutes exportation, it shall qualify for the tax rate of zero percent (hereinafter referred to as “zero tax rate”), notwithstanding Article 30.
(2) The exportation under paragraph (1) shall be any of the following:
1. Removing domestic articles (including marine products collected or caught by a Korean vessel) from the Republic of Korea;
2. Any transaction prescribed by Presidential Decree, such as an intermediary trade transaction, for which a contract, the receipt of payments, etc. are made at a domestic place of business;
3. The supply, etc. of goods [excluding gold ingots] using a local letter of credit or a written confirmation of purchase determined by Ordinance of the Ministry of Economy and Finance, as prescribed by Presidential Decree.
 Article 22 (Services Supplied Overseas)
Any services supplied overseas shall qualify for the zero tax rate, notwithstanding Article 30.
 Article 23 (Supply of Overseas Navigation Services)
(1) A supply of overseas navigation services by ships or aircraft shall qualify for the zero tax rate, notwithstanding Article 30.
(2) Overseas navigation services under paragraph (1) mean the transportation of passengers or freight by ships or aircraft from the Republic of Korea to a foreign country, from a foreign country to the Republic of Korea, or from one foreign country to another, including goods or services supplied by overseas navigation service providers incidentally in the course of their business activities, which are prescribed by Presidential Decree.
(3) Necessary matters regarding the scope of overseas navigation services provided for in paragraph (1) shall be prescribed by Presidential Decree.
 Article 24 (Supply of Goods or Services for Acquisition of Foreign Currencies)
(1) A supply of goods or services for acquiring foreign currencies, other than a supply of goods or services under Articles 21 through 23, which falls under any of the following, shall qualify for the zero tax rate, notwithstanding Article 30:
1. A supply of goods or services to any diplomatic offices, consular agencies (excluding any consular agency the head of which is a honorary consul), the United Nations and other equivalent international organizations (limited to those entitled to privileges and immunities pursuant to treaties to which the Republic of Korea is a party and other domestic statutes and regulations), etc. (hereafter in this Article referred to as “diplomatic offices, etc.”), which are permanently stationed in the Republic of Korea;
2. A supply of goods or services to employees of diplomatic offices, etc. who are not nationals of the Republic of Korea among those qualified as public officials by relevant countries or confirmed as holding other equivalent status by the Minister of Foreign Affairs, which is made in the manner prescribed by Presidential Decree;
3. A supply of goods or services for acquiring foreign currencies, which is prescribed by Presidential Decree.
(2) Matters necessary for verifying the acquisition of foreign currencies under paragraph (1) shall be prescribed by Presidential Decree.
 Article 25 (Principle of Reciprocity in Application of Zero Tax Rate)
(1) In applying Articles 21 through 24, if an entrepreneur is a nonresident or a foreign corporation, the zero tax rate shall only apply where the relevant country grants the identical tax exemption to residents in the Republic of Korea (referring to those defined in Article 1-2 (1) 1 of the Income Tax Act; hereinafter the same shall apply) or to domestic corporations (referring to those defined in subparagraph 1 of Article 2 of the Corporate Tax Act). <Amended by Act No. 16008, Dec. 24, 2018>
(2) Where an entrepreneur supplies goods or services pursuant to Article 24 (1) 2, the zero tax rate shall only apply where the relevant foreign country grants the identical tax exemption with respect to any goods or services supplied to the staff of the diplomatic offices, consular agencies, etc. of the Republic of Korea.
(3) “Identical tax exemption” in paragraphs (1) and (2) means that the relevant foreign country grants exemption from taxes equivalent to the value-added tax or other similar taxes of the Republic of Korea or that the relevant foreign country has no provisions governing taxes equivalent to the value-added tax or other similar taxes of the Republic of Korea.
SECTION 2 Tax Exemptions
 Article 26 (Supply of Tax-Free Goods or Services)
(1) A supply of any of the following goods or services shall be exempt from value-added tax: <Amended by Act No. 13474, Aug. 11, 2015; Act No. 13805, Jan. 19, 2016; Act No. 16101, Dec. 31, 2018>
1. Unprocessed foodstuffs (including agricultural products, stock farm products, marine products, and forest products which are served for human consumption), and agricultural products, stock farm products, marine products, and forest products which are produced in the Republic of Korea and are not served for human consumption and which are prescribed by Presidential Decree;
2. Tap water;
3. Briquettes and anthracite coal;
4. Menstrual hygiene products;
5. Medical and health services (including veterinary services) prescribed by Presidential Decree, and blood;
6. Educational services prescribed by Presidential Decree;
7. Passenger transport services: Provided, That any of the following passenger transport services prescribed by Presidential Decree shall be excluded herefrom:
(a) Passenger transport services by aircraft, express buses, chartered buses, taxies, special vehicles, special-type ships, or rapid-transit trains;
(b) Passenger transport services by cable ways, cruise ships, or any other means of transportation for tourism or entertainment;
8. Books (including book-lending services), newspapers, magazines, Official Gazettes, news communications prescribed by the Act on Promotion of News Communications, and broadcasting, which are prescribed by Presidential Decree: Provided, That advertisements shall be excluded;
9. Postage stamps (excluding those for collection), revenue stamps, certificate stamps, lottery tickets, and public telephones;
10. Tobacco as defined in Article 2 of the Tobacco Business Act, which falls under any of the following:
(a) Tobacco whose selling price under Article 18 (1) of the Tobacco Business Act is not more than the amount of money prescribed by Presidential Decree;
(b) Tobacco for special use under Article 19 of the Tobacco Business Act, which is prescribed by Presidential Decree;
11. Financing and insurance services prescribed by Presidential Decree;
12. Lease of housing and its appurtenant land, which are prescribed by Presidential Decree;
13. Lease of daycare centers attached to collective housing as welfare facilities defined in subparagraph 14 of Article 2 of the Housing Act provided by the management entities defined in Article 2 (1) 10 of the Multi-Family Housing Management Act or by the councils of occupants’ representatives defined in Article 2 (1) 8 of that Act pursuant to the management rules established under Article 18 (2) of that Act;
14. Land;
15. Personal services prescribed by Presidential Decree, which authors, composers, or other persons provide professionally;
16. Creative works of art, artistic events, cultural events, or amateur athletic games, which are prescribed by Presidential Decree;
17. Admission to libraries, science halls, museums, art galleries, zoos, botanical gardens, or other places prescribed by Presidential Decree;
18. Goods or services which are supplied by any organizations for religion, charity, scholarship, relief, or other public interest and which are prescribed by Presidential Decree;
19. Goods or services which are supplied by the State, local governments, or local government associations and which are prescribed by Presidential Decree;
20. Goods or services which are supplied free of charge to the State, local governments, local government associations, or organizations for public interest prescribed by Presidential Decree.
(2) A supply of goods or services ordinarily incidental to the supply of the goods or services exempt from tax under paragraph (1) shall be deemed to be included in the supply of the tax-free goods or services.
 Article 27 (Importation of Tax-Free Goods)
An importation of any of the following goods shall be exempt from value-added tax:
1. Unprocessed foodstuffs (including agricultural products, stock farm products, marine products, and forest products which are served for human consumption) which are prescribed by Presidential Decree;
2. Books, newspapers, and magazines, which are prescribed by Presidential Decree;
3. Goods which are imported by academic research organizations, educational institutions, the Korea Educational Broadcasting System established under the Korea Educational Broadcasting System Act, or cultural organizations for scientific, educational, or cultural purposes and which are prescribed by Presidential Decree;
4. Goods which any foreign country donates to religious, charitable, or relief organizations for the purposes of religious rites, charity, relief, or other public interest and which are prescribed by Presidential Decree;
5. Goods which any foreign country donates to the State, local governments, or local government associations;
6. Low-priced and duty-free goods that are received by residents;
7. Goods imported as a result of relocation, immigration, or inheritance, which are exempt from customs duties or to which the simplified tariff rates under Article 81 (1) of the Customs Act apply;
8. Personal effects, separately delivered baggage, and mailed parcels of travelers, which are exempt from customs duties or to which the simplified tariff rates under Article 81 (1) of the Customs Act apply;
9. Goods imported as samples or advertising materials, which are exempt from customs duties;
10. Goods which are imported, free of charge, for the purpose of display in any fairs, exhibitions, prize contests, film festivals, or other similar events held in the Republic of Korea and which are exempt from customs duties;
11. Goods which are exempt from customs duties in accordance with treaties, international laws and regulations, or international customs and which are prescribed by Presidential Decree;
12. Goods re-imported after exportation, as prescribed by Presidential Decree, from among those eligible for duty reductions or exemptions: Provided, That in cases of a duty reduction, the value-added tax reduction shall only be granted in proportion to such reduction;
13. Goods imported temporarily under conditions of re-exportation, as prescribed by Presidential Decree, from among those eligible for duty reductions or exemptions: Provided, That in cases of a duty reduction, the value-added tax reduction shall only be granted in proportion to such reduction;
14. Tobacco provided for in Article 26 (1) 10;
15. Duty-free or duty-reducible goods, other than those under subparagraphs 6 through 13, which are prescribed by Presidential Decree: Provided, That in cases of a duty reduction, the value-added tax reduction shall only be granted in proportion to such reduction.
 Article 28 (Waiver of Tax Exemption)
(1) With respect to a supply of any goods or services that fall under any of the following, which are exempt from value-added tax under Article 26 of this Act, Article 106 of the Restriction of Special Taxation Act, or other provisions, an entrepreneur may choose not to be exempted from value-added tax by filing a report on waiver of such tax exemption, as prescribed by Presidential Decree:
1. A supply of goods or services eligible for the zero tax rate under Articles 21 through 24;
2. A supply of goods or services under Article 26 (1) 12, 15, and 18.
(2) Where an entrepreneur has filed a report on waiver of tax exemption under paragraph (1), he or she shall not be exempted from value-added tax for three years from the date such report has been filed.
(3) Where an entrepreneur who has filed a report on waiver of tax exemption under paragraph (1) intends to be exempted from value-added tax after expiration of a period under paragraph (2), he or she shall submit a report on the application of tax exemption, as prescribed by Presidential Decree; and if not, he or she shall be deemed to continue to waive tax exemption.
(4) Necessary matters regarding procedures for waiving tax exemption under paragraph (1) shall be prescribed by Presidential Decree.
CHAPTER IV CALCULATION OF TAX BASES AND AMOUNTS OF TAX
SECTION 1 Tax Bases and Tax Rate
 Article 29 (Tax Bases)
(1) The tax base for value-added tax on a supply of goods or services shall be the total value of all supplies of goods or services provided during the relevant taxable period.
(2) The tax base for value-added tax on the importation of goods shall be the sum of the taxable value for customs duties and the customs duties, individual consumption tax, liquor tax, education tax, special rural development tax, and traffic, energy and environment tax on such goods.
(3) The value of supply referred to in paragraph (1) means each of the following. In such cases, it shall include payments, rates, fees, or all other things of value, whatever their names are, which are provided by recipients of goods or services, but exclude value-added taxes: <Amended by Act No. 15223, Dec. 19, 2017>
1. Where payments are made in money: The payments: Provided, That when payments are made in any foreign currency or other foreign exchange, they mean the value converted in the manner prescribed by Presidential Decree;
2. Where payments other than money are made: The market price of goods or services supplied by the supplier himself or herself;
3. Where a business is closed: The market price of goods in stock at the time of closing the business;
4. Where goods or services are deemed to be supplied under Articles 10 (1), (2), (4) and (5) and 12 (1): The market price of the goods or services supplied by the supplier himself or herself;
5. Where goods are deemed to be supplied under Article 10 (3): The value prescribed by Presidential Decree based on the acquisition value, etc. of the goods;
6. Where goods or services are supplied through credit sales, installment sales, or sales in which payments are settled wholly or partly with mileage, etc. prescribed by Presidential Decree: The value prescribed by Presidential Decree based on the types, etc. of supply.
(4) Notwithstanding paragraph (3), if it is likely to unreasonably reduce tax burden on goods or services supplied to related persons, in any of the following cases, the market price of the supplied goods or services shall be deemed the value of supply thereof:
1. Where payments for a supply of goods are unreasonably low or no payments therefor are made;
2. Where payments for a supply of services are unreasonably low;
3. Where no payment is made for a supply of services and the proviso of Article 12 (2) is applicable.
(5) None of the following amounts shall be included in the value of supply:
1. The amount of discount made directly on the normal price of goods or services based on their quality, quantity, conditions of delivery, methods of making payments for supply, and other conditions of supply, at the time of supply thereof;
2. The value of returned goods;
3. The value of goods, which are broken, damaged, or lost before they reach a person to whom they are supplied;
4. National subsidies and public subsidies not directly related to the supply of goods or services;
5. Overdue interests received due to a delay in payments for supply;
6. The amount of discount by an entrepreneur from the original value of supply on grounds of receiving payments for supply in advance of the agreed date.
(6) Neither a bounty and other similar subsidy that an entrepreneur pays to a person to whom goods or services are supplied nor a bad debt amount under Article 45 (1) shall be deducted from the tax base.
(7) Where it is unclear whether payments for goods or services supplied by an entrepreneur include value-added taxes, an amount calculated by multiplying the payments by 100/110 shall be the value of supply.
(8) Where an entrepreneur supplies any goods common to a taxable business, a tax-free business, and a business of supplying goods or services exempt from value-added tax (hereinafter referred to as “tax-free business, etc.”), an amount calculated according to the formula prescribed by Presidential Decree shall be the value of supply.
(9) Where an entrepreneur supplies land with buildings, structures, etc. standing thereon, the actual transaction price of such buildings, structures, etc. shall be the value of supply: Provided, That in any of the following cases, the value of supply shall be the amount calculated on a pro rata basis as prescribed by Presidential Decree: <Amended by Act No. 16101, Dec. 31, 2018>
1. Where the distinction between the price of land and the price of any building, structure, etc. in the actual transaction price is unclear;
2. Where a difference of at least 30/100 exists between the price of any land, building, structure, etc. an entrepreneur has determined based on the actual transaction price and the amount calculated on a pro rata basis as prescribed by Presidential Decree:
(10) Where an entrepreneur leases any of the following real estate, the value of supply shall be an amount calculated according to the formula prescribed by Presidential Decree:
1. Where he or she receives security money for lease on a deposit basis or for lease in return for the lease of the real estate;
2. Where he or she provides a taxable real estate lease along with a tax-free housing lease and so the distinction between the leases or between the rents is unclear;
3. Where he or she leases real estate over at least two taxable periods on conditions of receiving the rents in advance or later.
(11) Where any goods deemed a supply of goods under Article 10 (1), (2), and (4) through (6) constitute a depreciable asset prescribed by Presidential Decree (hereinafter referred to as “depreciable asset”), an amount calculated according to the formula prescribed by Presidential Decree shall be the value of supply, notwithstanding paragraph (3) 3 and 4.
(12) Matters necessary for calculating market prices and other values of supply and tax bases shall be prescribed by Presidential Decree.
 Article 30 (Tax Rate)
The value-added tax rate shall be 10 percent.
SECTION 2 Charging in Transaction and Tax Invoices
 Article 31 (Charging in Transaction)
In supplying goods or services, an entrepreneur shall collect the value-added tax, which is computed by applying the tax rate prescribed in Article 30 to their value of supply under Article 29 (1), from the person who is supplied with such goods or services.
 Article 32 (Tax Invoices)
(1) Where an entrepreneur supplies goods or services (excluding a supply of goods or services exempt from value-added tax), he or she shall issue an invoice stating the following matters (hereinafter referred to as “tax invoice”) to the person who receives the supply:
1. Registration number and name or denomination of the supplier;
2. Registration number of the recipient: Provided, That when the recipient is not an entrepreneur nor a registered entrepreneur, the specific number prescribed by Presidential Decree or the resident registration number of the recipient;
3. The value of supply and the amount of value-added tax;
4. Date of preparation;
5. Other matters prescribed by Presidential Decree.
(2) Where any corporate entrepreneur or any sole proprietor prescribed by Presidential Decree intends to issue tax invoices under paragraph (1), he or she shall do so by electronic method (hereinafter referred to as “electronic tax invoices”) prescribed by Presidential Decree.
(3) Where electronic tax invoices have been issued under paragraph (2), the entrepreneur shall transmit a list of the issued electronic tax invoices prescribed by Presidential Decree to the Commissioner of the National Tax Service by the deadline prescribed by Presidential Decree.
(4) Notwithstanding paragraph (2), where an electric utility business entity defined in subparagraph 2 of Article 2 of the Electric Utility Act supplies electricity for industrial use, etc. as specified by Presidential Decree, the entity may issue invoices specifying that they are electronic tax invoices, as prescribed by Presidential Decree, and may transmit the electronic tax invoice file to the Commissioner of the National Tax Service. In such cases, electronic tax invoices shall be deemed to have been issued under paragraph (2), and a list of issued electronic tax invoices shall be deemed to have been transmitted under paragraph (3).
(5) Any entrepreneur other than those required to issue electronic tax invoices may issue electronic tax invoices and transmit a list of the issued electronic tax invoices, as prescribed in paragraphs (2) and (3).
(6) In cases prescribed by Presidential Decree, such as selling on consignment or through an agent, even though a person is not the supplier or recipient of the relevant goods or services, he or she may issue a tax invoice or an electronic tax invoice or have it issued as prescribed by Presidential Decree, notwithstanding paragraph (1).
(7) Where an error in the entries in a tax invoice or electronic tax invoice is found or a ground prescribed by Presidential Decree arises in connection with the entries in a tax invoice or electronic tax invoice issued, a new tax invoice (hereinafter referred to as “corrected tax invoice”) or a new electronic tax invoice (hereinafter referred to as “corrected electronic tax invoice”) in which such error, etc. is corrected may be issued, as prescribed by Presidential Decree.
(8) Matters necessary for preparing and issuing tax invoices, electronic tax invoices, corrected tax invoices, and corrected electronic tax invoices shall be prescribed by Presidential Decree.
 Article 33 (Exemption from Duty to Issue Tax Invoices)
(1) Notwithstanding Article 32, if the issuance of a tax invoice (including an electronic tax invoice; hereinafter the same shall apply) is impracticable or unnecessary or in any other cases prescribed by Presidential Decree, the issuance of the tax invoice may be omitted.
(2) Notwithstanding Article 32, if an entrepreneur prescribed by Presidential Decree issues a credit card sales slip, etc. under Article 46 (1), the issuance of a relevant tax invoice may be omitted.
 Article 34 (Time Limit for Issuing Tax Invoices)
(1) Any entrepreneur shall issue a tax invoice to any person supplied with goods or services at the time of supplying such goods or services under Article 15 or 16.
(2) Notwithstanding paragraph (1), an entrepreneur may issue a tax invoice under Article 17 even before the time of supply of goods or services under Article 15 or 16.
(3) Notwithstanding paragraph (1), a tax invoice may be issued not later than the tenth day (if the day is a holiday or Saturday, referring to the business day immediately following such day) of the month following the month in which the date of supply of goods or services falls, if any of the following is applicable:
1. Where a tax invoice is issued as of the last day of a calendar month, including the total value of supplies for the calendar month by transaction party;
2. Where a tax invoice is issued as of the last day of a period not exceeding one calendar month, which is fixed by an entrepreneur at his or her discretion by transaction party, including the total value of supplies for such a period;
3. Where a tax invoice is issued as of the date of an actual transaction, which is supported by related documentary evidence, etc.
 Article 34-2 (Special Cases concerning Deductions of Input Tax Amounts Based on Purchaser-Issued Tax Invoices)
(1) Notwithstanding Article 32, if an entrepreneur prescribed by Presidential Decree (hereafter in this paragraph referred to as “entrepreneur”), who is registered as a person liable to pay tax, fails to issue a tax invoice at the time of issuing tax invoice pursuant to Article 34 after supplying goods or services (including if such entrepreneur fails to issue a corrected tax invoice or corrected electronic tax invoice due to his or her bankruptcy or business closure, etc.), the person who is supplied with such goods or services may issue a tax invoice upon confirmation by the head of the competent tax office, as prescribed by Presidential Decree. <Amended by Act No. 15223, Dec. 19, 2017>
(2) A value-added tax amount stated on a tax invoice pursuant to paragraph (1) (hereinafter referred to as “purchaser-issued tax invoice”) shall be deemed an input tax amount deductible under Articles 37, 38, and 63 (3), as prescribed by Presidential Decree.
(3) In addition to those provided for in paragraphs (1) and (2), matters necessary for issuing purchaser-issued tax invoices, such as the subject matter and methods, shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 14387, Dec. 20, 2016]
 Article 35 (Import Tax Invoices)
(1) Where the head of a customs office collects a value-added tax (including deferring the payment of a value-added tax under Article 50-2) on any imported goods, he or she shall issue a tax invoice for the imported goods (hereinafter referred to as “import tax invoice”) to the importer, as prescribed by Presidential Decree. <Amended by Act No. 13556, Dec. 15, 2015>
(2) The head of a customs office shall issue, to an importer, an import tax invoice corrected, as prescribed by Presidential Decree (hereinafter referred to as “corrected import tax invoice”), in any of the following circumstances: <Amended by Act No. 15223, Dec. 19, 2017>
1. Where the importer files a corrected declaration, etc., as prescribed by Presidential Decree, before the head of the customs office determines or rectifies the tax base or the amount of tax pursuant to the Customs Act;
2. Where the head of the customs office determines or rectifies the tax base or the amount of tax, or the importer files a corrected declaration pursuant to the Customs Act knowing in advance that the tax base or the amount of tax will be determined or rectified following customs investigations by a customs official or other acts prescribed by Presidential Decree, in any of the following circumstances:
(a) Where the tariff classification is modified by the Customs Co-operation Council under the International Convention on the Harmonized Commodity Description and Coding System or by the Tariff Classification Committee under the Customs Act;
(b) Where the person originally liable to pay the tax and the actual taxpayer are not the same due to succession to the liability to pay taxes, etc. following a merger;
(c) Other cases prescribed by Presidential Decree, such as where an error in the entry is found to be caused by a mistake or minor negligence on the part of the importer, or where the importer proves that such error is not attributable to himself or herself.
(3) If the head of a customs office fails to issue a corrected import tax invoice notwithstanding paragraph (2), the importer may file an application with the head of the customs office for issuance of the corrected import tax invoice within the period prescribed in Article 26-2 (1) or (6) 1 of the Framework Act on National Taxes, as prescribed by Presidential Decree. <Newly Inserted by Act No. 15223, Dec. 19, 2017; Act No. 16845, Dec. 31, 2019>
(4) The head of the customs office who issues corrected import tax invoices under paragraph (2) shall submit a sum table of tax invoices by customer, which is prepared and corrected by applying mutatis mutandis Article 54, to the head of the tax office who has jurisdiction over the location of the customs office.
(5) The preparation and issuance of import tax invoices or corrected import tax invoices and other relevant matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 11944, Jul. 26, 2013]
 Article 36 (Receipts)
(1) Notwithstanding Article 32, if any of the following persons supplies goods or services (excluding a supply of goods or services exempt from value-added tax), he or she shall issue a receipt, instead of a tax invoice, to the person who receives the supply, as prescribed by Presidential Decree, at the time of supplying such goods or services under Article 15 or 16:
1. A simplified taxable person;
2. An entrepreneur prescribed by Presidential Decree, among general taxable persons, who mainly supplies goods or services to persons other than entrepreneurs.
(2) Notwithstanding Article 32, 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 in any other cases prescribed by Presidential Decree, he or she may issue receipts. In such cases, if the entity chooses not to issue a receipt, he or she shall issue a tax invoice instead.
(3) Notwithstanding paragraphs (1) and (2), if a person supplied with goods or services demands the issuance of a tax invoice, presenting his or her business registration certificate, as specified by Presidential Decree, a tax invoice shall be issued to him or her.
(4) Notwithstanding paragraphs (1) and (2), an entrepreneur issuing receipts may install a cash register to issue invoices specifying the proceeds from supply under Article 61 (1), instead of receipts. In such cases, if the entrepreneur issues invoices and keeps the relevant audit tapes, he or she shall be deemed to issue receipts under paragraph (1) and to fulfill the preparation of an account book under Article 71, and value-added tax may be imposed on him or her on the basis of cash income.
(5) Any credit card sales slip, etc. under Article 46 (1) shall be deemed a receipt under paragraph (1).
(6) Necessary matters regarding the entries in and the preparation of receipts and invoices shall be prescribed by Presidential Decree.
SECTION 3 Amounts of Tax Payable
 Article 37 (Calculation of Amounts of Tax Payable)
(1) An output tax amount shall be an amount calculated by applying the tax rate under Article 30 to the tax base under Article 29.
(2) An amount of tax payable shall be an amount computed by subtracting the input tax amount under Article 38 and other input tax amounts deducted under this Act and other statutes from the output tax amount (referring to the amount, minus the bad debt tax amount under Article 45 (1)) under paragraph (1). In such cases, an input tax amount exceeding the output tax amount shall be included in the amount of tax refundable.
(3) The amount of tax to be finally paid by or refunded to an entrepreneur on the basis of the amount of tax payable under paragraph (2) shall be calculated according to the following formula:
The amount of tax to be paid or refunded = A - B + C
A: The amount of tax payable or the amount of tax refundable under paragraph (2)
B: The amount of tax to be deducted pursuant to the provisions of this Act, including Articles 46 and 47, and other statutes
C: Penalty under Article 60 of this Act and Articles 47-2 through 47-5 of the Framework Act on National Taxes
 Article 38 (Input Tax Amounts to be Deducted)
(1) An input tax amount to be deducted from an output tax amount shall be the following amounts: <Amended by Act No. 12167, Jan. 1, 2014>
1. The value-added tax amount (including any value-added tax amount paid under Article 52 (4)) on goods or services used by an entrepreneur for his or her own business or supplied to him or her for such use;
2. The value-added tax amount on the importation of goods used by an entrepreneur for his or her own business or imported by him or her for such use.
(2) An input tax amount under paragraph (1) 1 shall be deducted from an output tax amount for the taxable period during which goods or services are supplied.
(3) An input tax amount under paragraph (1) 2 shall be deducted from an output tax amount for the taxable period during which goods are imported.
 Article 39 (Input Tax Amounts Not to Be Deducted)
(1) Notwithstanding Article 38, none of the following input tax amounts shall be deducted from an output tax amount: <Amended by Act No. 15223, Dec. 19, 2017; Act No. 16845, Dec. 31, 2019>
1. If a sum table of tax invoices by customer is not submitted, the relevant input tax amount pursuant to Article 54 (1) and (3); or if a sum table of tax invoices by customer is submitted, but all or any of the registration numbers or the values of supply by transaction party, among the items to be entered on the list, are omitted or misrepresented, an input tax amount on the omitted or misrepresented portion: Provided, That in cases prescribed by Presidential Decree, the input tax amount involved shall be excluded;
2. If neither a tax invoice nor an import tax invoice is issued, or if all or any of the items to be entered under Article 32 (1) 1 through 4 (hereinafter referred to as “requisite entry items”) on a tax invoice or import tax invoice issued are omitted or misrepresented, the relevant input tax amount (where the value of supply is misrepresented, referring to a tax amount equivalent to the difference between the actual value of supply and the misrepresented amount): Provided, That in cases prescribed by Presidential Decree, the input tax amount involved shall be excluded;
3. Deleted; <by Act No. 12167, Jan. 1, 2014>
4. An input tax amount on expenditure, as prescribed by Presidential Decree, which is not directly related to business;
5. An input tax amount on purchasing, leasing, and maintaining vehicles (excluding those directly used for operating a transportation business, a vehicle sales business, or any other business within the types of business prescribed by Presidential Decree) under Article 1 (2) 3 of the Individual Consumption Tax Act;
6. An input tax amount related to the disbursement of entertainment expenses and other similar expenses prescribed by Presidential Decree;
7. An input tax amount related to a tax-free business, etc. (including an input tax amount related to investments in the tax-free business, etc.), and an input tax amount related to land prescribed by Presidential Decree;
8. An input tax amount before filing an application for business registration under Article 8: Provided, That when such application for registration is filed within 20 days after the end of the taxable period during which the supply was made, it shall exclude an input tax amount in a period calculated from the date of the registration application back to the date from which the taxable period during which the supply was made is reckoned (referring to the initial date for reckoning the taxable period pursuant to Article 5 (1)).
(2) Matters necessary in relation to the scope of the input tax amounts not to be deducted under paragraph (1) shall be prescribed by Presidential Decree.
 Article 40 (Pro Rata of Common Input Tax Amounts)
Where an entrepreneur runs both a taxable business and a tax-free business, etc., an input tax amount related to the taxable business, tax-free business, etc. shall be calculated based on the actual attribution; and an input tax amount for which the actual attribution is not clear (hereinafter referred to as “common input tax amount”) shall be calculated on a pro rata basis, as prescribed by Presidential Decree, by applying the criteria prescribed by Presidential Decree (hereinafter referred to as “pro rata criteria for common input tax amount”) including the ratio of the value of tax-free supplies to the total value of supplies.
 Article 41 (Recalculation of Common Input Tax Amounts)
Where there is at least five percent difference in depreciable assets between the ratio under the pro rata criteria for common input tax amount less an input tax amount based on the pro rata calculation of common input tax amount and the ratio under the pro rata criteria for common input tax amount applied for the taxable period (if it is recalculated for a subsequent taxable period, the recalculated taxable period) in which the acquisition date of the depreciable assets is included, the amount of tax payable or the amount of tax refundable shall be recalculated as prescribed by Presidential Decree and returned and paid to the head of the competent tax office along with a final return for the relevant taxable period under Article 49.
 Article 42 (Special Cases concerning Deductions of Fictitious Input Tax Amounts for Tax-Free Agricultural Products)
(1) Where value-added tax is imposed on a supply of goods manufactured or processed, or of services created, by an entrepreneur through using, as raw materials, the agricultural products, stock farm products, marine products, or forest products which he or she has been supplied with or has imported with an exemption from value-added tax (hereinafter referred to as “tax-free agricultural products, etc.”) under Article 26 (1) 1 or subparagraph 1 of Article 27 (excluding where he or she waives tax exemption for application of the zero tax rate under Article 28), an amount computed by multiplying the value of the tax-free agricultural products, etc. (within the limits of the amount prescribed by Presidential Decree) by a ratio classified in the following table may be deducted as an input tax amount, as if the input tax amount exists when he or she has been supplied with or has imported the tax-free agricultural products, etc. <Amended by Act No. 15223, Dec. 19, 2017; Act No. 16101, Dec. 31, 2018; Act No. 16845, Dec. 31, 2019>
ClassificationRatio
1. Food service business(a) Operator of a taxable entertainment place under Article 1 (4) of the Individual Consumption Tax Act2/102
(b) Sole proprietor who operates an eating establishment other than those provided for in item (a)8/108 (9/109 until December 31, 2021 if a tax base does not exceed two 200 million won)
(c) Entrepreneur other than those provided for in items (a) and (b)6/106
2. Manufacturing business(a) Sole proprietor who operates a rice cake gristmill, among confectionery store business, pounding business, milling business, and rice cake manufacturing business 6/106
(b) Small or medium enterprise provided for in Article 5 (1) of the Restriction of Special Taxation Act as well as a sole proprietor, among entrepreneurs who operate manufacturing business other than those provided for in item (a) 4/104
(c) Entrepreneur other than those provided for in items (a) and (b) 2/102
3. Business other than those provided for in subparagraphs 1 and 22/102
(2) An entrepreneur who wishes to be eligible for the application of paragraph (1) shall submit, to the head of the tax office having jurisdiction over his or her place of tax payment, a document attesting to the fact that he or she has been supplied with tax-free agricultural products, etc. as prescribed by Presidential Decree, along with any return under Articles 48 and 49. <Amended by Act No. 16845, Dec. 31, 2019>
(3) In addition to those provided for in paragraphs (1) and (2), matters necessary for calculating deductions of fictitious input tax amounts for tax-free agricultural products, etc., such as the scope of tax-free agricultural products, shall be prescribed by Presidential Decree. <Newly Inserted by Act No. 15223, Dec. 19, 2017>
 Article 43 (Special Cases concerning Deductions of Input Tax Amounts in Cases of Converting Depreciable Assets from Tax-Free Business to Taxable Business Use)
Where an entrepreneur uses or consumes for a taxable business any depreciable assets for a tax-free business, etc. for which the input tax amount is not deducted under Article 39 (1) 7, he or she may deduct an amount calculated according to the formula prescribed by Presidential Decree as an input tax amount for the taxable period that includes the date such assets are used or consumed for the taxable business.
 Article 44 (Special Cases concerning Deductions of Input Tax Amounts for Goods in Stock in Cases of being Converted to General Taxable Persons)
(1) Where a simplified taxable person is converted to a general taxable person, an amount calculated according to the formula prescribed by Presidential Decree regarding the goods in stock, assets under construction, and depreciable assets (hereafter in this Article referred to as “goods in stock, etc.”) at the time of such conversion may be deducted as an input tax amount.
(2) Matters necessary for the deductions of input tax amounts for goods in stock, etc., such as the scope of the goods in stock, etc. and the time of the application, shall be prescribed by Presidential Decree.
 Article 45 (Special Cases concerning Tax Deductions for Bad Debts)
(1) Where an entrepreneur supplies goods or services subject to value-added tax, if all or some of relevant credit sales or other sales claims (referring to those which include value-added tax) become irrecoverable as bad debt due to the bankruptcy of or compulsory execution against the person who receives the supply or any other cause prescribed by Presidential Decree, an amount computed according to the following formula (hereinafter referred to as “bad debt tax amount”) may be deducted from the output tax amount for the taxable period that includes the date the bad debt becomes fixed: Provided, That when the entrepreneur recovers the whole or part of the amount irrecoverable as bad debt (hereinafter referred to as “bad debt amount”), a bad debt tax amount related to the recovered bad debt amount shall be added to the output tax amount for the taxable period that includes the date of recovery:
Bad debt tax amount = bad debt amount × 10/110
(2) An entrepreneur who wishes to be eligible for the application of paragraph (1) shall submit a document attesting to the fact that a bad debt amount has occurred, as prescribed by Presidential Decree, along with the return under Article 49. <Amended by Act No. 16845, Dec. 31, 2019>
(3) In applying paragraphs (1) and (2), where an entrepreneur in receipt of a supply of goods or services has the whole or part of a bad debt tax amount deducted as an input tax amount under Article 38, if the supplier of such goods or services has the bad debt tax amount deducted under paragraph (1) before the relevant entrepreneur closes his or her business, the entrepreneur in receipt of the supply of the goods or services shall deduct the relevant bad debt tax amount from his or her own input tax amount for the taxable period that includes the date the bad debt becomes definite: Provided, That when the entrepreneur in receipt of the supply fails to make such deduction, the head of the tax office having jurisdiction over the entrepreneur shall correct such failure through a decision or rectification, as prescribed by Presidential Decree.
(4) Where the entrepreneur who has deducted a bad debt tax amount from an input tax amount (including where such deduction is made through a decision or rectification by the head of the competent tax office) under paragraph (3) refunds the whole or part of the bad debt amount, the bad debt tax amount involved in the refunded bad debt amount shall be added to the input tax amount for the taxable period that includes the date of refund, as prescribed by Presidential Decree.
(5) Necessary matters regarding the scope of and procedures for bad debt tax deductions, other than those prescribed in paragraphs (1) through (3), shall be prescribed by Presidential Decree.
SECTION 4 Tax Deductions
 Article 46 (Tax Deductions Subsequent to Use of Credit Cards)
(1) Where an entrepreneur falling under subparagraph 1 supplies any goods or services subject to value-added tax and subsequently issues documents evidencing such transaction under subparagraph 2 (hereafter in this Article referred to as “credit card sales slips, etc.”) during the time limit for issuing tax invoices under Article 34 (1) or receives payments by any means of electronic settlement prescribed by Presidential Decree, the amount specified in subparagraph 3 shall be deducted from the amount of tax payable: <Amended by Act No. 16845, Dec. 31, 2019>
1. Entrepreneur: Any of the following entrepreneurs:
(a) Any entrepreneur running a business prescribed by Presidential Decree, which supplies goods or services mainly to general taxable persons other than entrepreneurs (excluding both corporate entrepreneurs and sole proprietors whose total proceeds from supply of goods or services in the immediately preceding year exceed an amount prescribed by Presidential Decree);
(b) Any simplified taxable person;
2. Documents evidencing transactions: Any of the following documents:
(a) Credit card sales slips under the Specialized Credit Finance Business Act;
(b) Cash receipts under Article 126-3 of the Restriction of Special Taxation Act;
(c) Other similar documents prescribed by Presidential Decree;
3. The amount deducted (the ceiling of which shall be 5 million won a year, but shall be 10 million won a year until December 31, 2021): The amount determined under the following classifications:
(a) In the case of a simplified taxable person operating a restaurant business or a lodging business: 2 percent of the amount issued or the amount of settlement (2.6 percent until December 31, 2021);
(b) In cases other than item (a): 1 percent of the amount issued or the amount of settlement (1.3 percent until December 31, 2021).
(2) In applying paragraph (1), if an amount deducted exceeds the amount of tax payable prior to the deduction of the relevant amount [referring to the tax amount computed by the deduction or addition of the tax amount (excluding the penalty imposed under Article 60 of this Act and Articles 47-2 through 47-4 of the Framework Act on National Taxes) that shall be deducted or added under this Act, the Framework Act on National Taxes, and the Restriction of Special Taxation Act from the amount of tax payable under Article 37 (2), and if the tax amount calculated is less than “zero,” it shall be deemed “zero”], the portion of such excess shall be deemed zero.
(3) Where an entrepreneur receives any goods or services supplied by a general taxable person prescribed by Presidential Decree and a credit card sales slip, etc. in which the value-added tax amount is identifiable separately, the value-added tax amount shall be deemed the input tax amount deductible under Article 38 (1) or 63 (3), if he or she satisfies all of the following requirements:
1. He or she shall submit a statement on the receipts of the credit card sales slip, etc. prescribed by Presidential Decree;
2. He or she shall keep the credit card sales slip, etc. by applying mutatis mutandis Article 71 (3). In such cases, the credit card sales slip, etc. deemed to have been duly kept if the evidentiary materials have been kept in accordance with the method prescribed by Presidential Decree.
(4) Where deemed necessary to manage tax payment, the Commissioner of the National Tax Service may designate any entrepreneur prescribed by Presidential Decree, who supplies goods or services mainly to consumers other than entrepreneurs, as a person required to be a credit card merchant under the Specialized Credit Finance Business Act or as a person required to be a cash receipt merchant under Article 126-3 of the Restriction of Special Taxation Act and direct him or her to become such merchant.
(5) Except as otherwise provided in paragraphs (1) through (4), the scope of tax deductions based on credit card sales slips, etc., the designation of persons required to be credit card merchants or persons required to be cash receipt merchants, and other necessary matters shall be prescribed by Presidential Decree.
 Article 47 (Special Cases concerning Tax Deductions Subsequent to Issuance and Transmission of Electronic Tax Invoices)
(1) Where a sole proprietor issues electronic tax invoices by December 31, 2015 (limited to where he or she transmits a list of the issued electronic tax invoices to the Commissioner of the National Tax Service by the deadline under Article 32 (3)), he or she may deduct an amount prescribed by Presidential Decree according to the number of the issued electronic tax invoices from the amount of tax payable for the value-added tax of the relevant taxable period. In such cases, the limit on deduction shall be prescribed by Presidential Decree. <Amended by Act No. 12167, Jan. 1, 2014>
(2) Any sole proprietor who intends to obtain a tax deduction under paragraph (1) shall submit a return on tax deduction subsequent to issuance of electronic tax invoices prescribed by Ordinance of the Ministry of Economy and Finance to the head of the tax office having jurisdiction over his or her place of tax payment, when he or she files a return under Articles 48 and 49. <Amended by Act No. 12167, Jan. 1, 2014>
CHAPTER V RETURNS AND PAYMENTS
SECTION 1 Returns and Payments
 Article 48 (Preliminary Returns and Payments)
(1) Within 25 days after the end of a period set forth in the table below (hereinafter referred to as “preliminary return period”) in each taxable period, an entrepreneur shall return the tax base and the amount of tax payable or the amount of tax refundable for each preliminary return period to the head of the tax office having jurisdiction over his or her place of tax payment, as prescribed by Presidential Decree: Provided, That the first preliminary return period for a person who starts or intends to start a new business shall be from the start date of the business (if an application for business registration is filed prior to the start date of the business under the proviso of Article 8 (1), the date of application) until the end date of the preliminary return period that includes the start date.
Classification Preliminary return period
First periodFrom January 1 until March 31
Second periodFrom July 1 until September 30
(2) Where an entrepreneur makes a return under paragraph (1) (hereinafter referred to as “preliminary return”), he or she shall pay the amount of tax payable for the relevant preliminary return period either to the head of a tax office having jurisdiction over each place of tax payment (in cases falling under Article 51, referring to the head of the tax office having jurisdiction over the principal place of business) along with a preliminary return on value-added tax or to the Bank of Korea (including branches thereof) or postal agencies (hereinafter referred to as the “Bank of Korea, etc.”) along with a statement of payment prepared under the National Tax Collection Act.
(3) Notwithstanding paragraphs (1) and (2), the head of a tax office having jurisdiction over a place of tax payment shall, with respect to any sole proprietor and corporate entrepreneur prescribed by Presidential Decree, determine an amount (where there is a fractional amount below 1,000 won, it shall be rounded down) equivalent to 50 percent of the amount of tax payable for the immediately preceding taxable period in each preliminary return period (if any tax amount is deducted or reduced from the amount of tax payable under Article 46 (1) or 47 (1) of this Act or Article 104-8 (2) or 106-7 (1) of the Restriction of Special Taxation Act, referring to an amount remaining after balancing the relevant tax amount; and if there exists any decision or rectification under Article 57 of this Act or any decision on the revised return or the request for correction under Article 45 or 45-2 of the Framework Act on National Taxes, referring to an amount which reflects the details thereof) and collect it by not later than 25 days after the end of the relevant preliminary return period, as prescribed by Presidential Decree: Provided, That when the collectable amount is less than 300,000 won or a simplified taxable person is converted to a general taxable person as of the commencement date of the relevant taxable period, the amount shall not be collected. <Amended by Act No. 12851, Dec. 23, 2014; Act No. 14387, Dec. 20, 2016; Act No. 16101, Dec. 31, 2018>
(4) Notwithstanding paragraph (3), if the deterioration of business performance is caused by the suspension of or a slump in business operations or if any cause prescribed by Presidential Decree exists, the relevant entrepreneur may make a preliminary return under paragraph (1) and then pay the amount of tax payable for the preliminary return period under paragraph (2). In such cases, the determination under the main clause of paragraph (3) shall be considered not to have been made.
 Article 48 (Preliminary Returns and Payments)
(1) Within 25 days after the end of a period set forth in the table below (hereinafter referred to as “preliminary return period”) in each taxable period, an entrepreneur shall return the tax base and the amount of tax payable or the amount of tax refundable for each preliminary return period to the head of the tax office having jurisdiction over his or her place of tax payment, as prescribed by Presidential Decree: Provided, That the first preliminary return period for a person who starts or intends to start a new business shall be from the start date of the business (if an application for business registration is filed prior to the start date of the business under the proviso of Article 8 (1), the date of application) until the end date of the preliminary return period that includes the start date.
Classification Preliminary return period
First periodFrom January 1 until March 31
Second periodFrom July 1 until September 30
(2) Where an entrepreneur makes a return under paragraph (1) (hereinafter referred to as “preliminary return”), he or she shall pay the amount of tax payable for the relevant preliminary return period either to the head of a tax office having jurisdiction over each place of tax payment (in cases falling under Article 51, referring to the head of the tax office having jurisdiction over the principal place of business) along with a preliminary return on value-added tax or to the Bank of Korea (including branches thereof) or postal agencies (hereinafter referred to as the “Bank of Korea, etc.”) along with a statement of payment prepared under the National Tax Collection Act.
(3) Notwithstanding paragraphs (1) and (2), the head of a tax office having jurisdiction over a place of tax payment shall, with respect to any sole proprietor and any corporate entrepreneur prescribed by Presidential Decree, determine an amount (where there is a fractional amount below 1,000 won, it shall be rounded down) equivalent to 50 percent of the amount of tax payable for the immediately preceding taxable period in each preliminary return period (if any tax amount is deducted or reduced from the amount of tax payable under Article 46 (1) or 47 (1) of this Act or Article 104-8 (2) or 106-7 (1) of the Restriction of Special Taxation Act, referring to an amount remaining after balancing the relevant tax amount; and if there exists any decision or rectification under Article 57 of this Act or any decision on the revised return or the request for correction under Article 45 or 45-2 of the Framework Act on National Taxes, referring to an amount which reflects the details thereof) and collect it within 25 days after the end of the relevant preliminary return period, as prescribed by Presidential Decree: Provided, That when the collectable amount is less than 300,000 won or a simplified taxable person is converted to a general taxable person as of the commencement date of the relevant taxable period, the amount shall not be collected. <Amended by Act No. 12851, Dec. 23, 2014; Act No. 14387, Dec. 20, 2016; Act No. 16101, Dec. 31, 2018; Act No. 16845, Dec. 31, 2019>
(4) Notwithstanding paragraph (3), if the deterioration of business performance is caused by the suspension of or a slump in business operations or if any cause prescribed by Presidential Decree exists, the relevant entrepreneur may make a preliminary return under paragraph (1) and then pay the amount of tax payable for the preliminary return period under paragraph (2). In such cases, the determination under the main clause of paragraph (3) shall be considered not to have been made. <Amended by Act No. 16845, Dec. 31, 2019>
<<Enforcement Date: Jan. 1, 2021>> Article 48 (3) and (4)
 Article 49 (Final Returns and Payments)
(1) An entrepreneur shall return the tax base and the amount of tax payable or the amount of tax refundable for each taxable period to the head of the tax office having jurisdiction over his or her place of tax payment, as prescribed by Presidential Decree, within 25 days after the end of the taxable period (in cases of the closing of business, not later than the 25th day of the month following the month that includes the date business is closed under Article 5 (3)): Provided, That no entrepreneur who has made a preliminary return under Article 48 (1) and (4) or who has made a return for early refund under Article 59 (2) shall be required to return the tax base already returned and the amount of tax payable or the amount of tax refundable already paid or refunded.
(2) Where an entrepreneur makes a return under paragraph (1) (hereinafter referred to as “final return”), he or she shall pay an amount obtained by deducting each of the following amount from the amount of tax payable at the time of making the final return either to the head of a tax office having jurisdiction over each place of tax payment (in the case of Article 51, referring to the head of the tax office having jurisdiction over the principal place of business) along with the final return on value-added tax or to the Bank of Korea, etc. along with a statement of payment prepared under the National Tax Collection Act:
1. The amount of tax refundable subject to early refund under Article 59 (2) but not yet refunded;
2. The amount collected under the main sentence of Article 48 (3).
 Article 50 (Returns and Payments for Importation of Goods)
Where a person liable to pay tax under subparagraph 2 of Article 3 makes a return and payment of customs duties under the Customs Act to the head of the competent customs house regarding the importation of goods, he or she shall do so together with a return and payment of value-added tax on the importation of goods.
 Article 50-2 (Deferred Payment of Value-Added Tax on Imported Goods)
(1) Where a small or medium business owner or middle-standing business owner who meets the requirements prescribed by Presidential Decree (hereafter in this Article referred to as “small or medium business owner or middle-standing business owner”), such as the ratio of exports to sales, files in advance an application for deferred payment of value-added tax on the importation of raw materials and other goods prescribed by Presidential Decree that are used to manufacture and process articles, the head of the competent customs office may defer the payment of value-added tax on the importation of those goods, notwithstanding Article 50. <Amended by Act No. 14387, Dec. 20, 2016>
(2) A small or medium business owner or middle-standing business owner granted a deferral of the payment of value-added tax under paragraph (1) shall adjust or pay the deferred amount of tax, as prescribed by Presidential Decree, when filing a preliminary return under Article 48 or a final return under Article 49 with the head of the tax office having jurisdiction over the place of tax payment. In such cases, the amount of tax paid to the head of the tax office having jurisdiction over the place of tax payment shall be deemed paid to the head of the competent customs office. <Amended by Act No. 14387, Dec. 20, 2016>
(3) Where a small or medium business owner or middle-standing business owner granted a deferral of the payment of value-added tax under paragraph (1) falls under the grounds prescribed by Presidential Decree, such as failing to pay national taxes, the head of the competent customs office may revoke the deferral of payment. In such cases, the head of the customs house shall give notice of such revocation to the relevant small or medium business owner or middle-standing business owner. <Amended by Act No. 14387, Dec. 20, 2016>
(4) Procedures for applying for the deferral of payment and the period of deferred payment under paragraphs (1) through (3), and other matters necessary for the deferral of payment, shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 13556, Dec. 15, 2015]
 Article 51 (Lump-Sum Payments at Principal Places of Business)
(1) Where an entrepreneur having more than two places of business (including entrepreneurs who have a single place of business but intend to establish an additional place of business) files an application for lump-sum payments at his or her principal place of business with the head of the tax office having jurisdiction over his or her principal place of business, as prescribed by Presidential Decree, he or she may pay the amount of tax payable in lump sum at his or her principal place of business, as prescribed by Presidential Decree. <Amended by Act No. 16101, Dec. 31, 2018>
(2) Matters necessary for the change, non-application, etc. of lump-sum payments at the principal places of business shall be prescribed by Presidential Decree.
 Article 52 (Payments by Proxy)
(1) Any person who receives the supply (including bringing into the Republic of Korea which does not constitute an importation of goods subject to the return and payment of value-added tax with customs duties under Article 50; hereafter the same shall apply in this Article and Article 53) of services or rights (hereafter in this Article and Article 53 referred to as “services, etc.”) in the Republic of Korea from any of the following persons (excluding where the services, etc. supplied are delivered to a taxable business, but including where the services, etc. not eligible for the deduction of the input tax amount under Article 39 are supplied) shall collect value-added tax from the person receiving the payment for such services, etc. at the time of making such payment:
1. A nonresident or a foreign corporation that has no domestic place of business under Article 120 of the Income Tax Act or Article 94 of the Corporate Tax Act (hereafter in this Article referred to as “domestic place of business”);
2. A nonresident or a foreign corporation that has a domestic place of business (limited to supply of services, etc. with no relation to the domestic place of business of the nonresident or foreign corporation, as prescribed by Presidential Decree).
(2) Any person who collects value-added tax under paragraph (1) shall submit a return on value-added tax payment by proxy, as prescribed by Presidential Decree; and shall pay the value-added tax by applying Articles 48 (2) and 49 (2) mutatis mutandis.
(3) In applying paragraphs (1) and (2), matters necessary for the methods of pro rata calculation and other relevant matters where the actual attribution of the services, etc. supplied is unclear due to the common use of such services, etc. for both a taxable business and a tax-free business, etc. shall be prescribed by Presidential Decree.
(4) The transferee of a business transferred under the main clause of Article 10 (9) 2 (including where it is unclear whether a business is so transferred) may, notwithstanding the main clause of Article 10 (9) 2 and Article 31, collect a value-added tax from the recipient of the transfer price at the time of payment thereof; and may pay it to the head of the tax office having jurisdiction over his or her place of business by no later than the 25th day of the month following the month in which the payment date of the transfer price falls, as prescribed by Presidential Decree, by applying Article 49 (2) mutatis mutandis. <Newly Inserted by Act No. 12167, Jan. 1, 2014; Act No. 14387, Dec. 20, 2016; Act No. 15223, Dec. 19, 2017; Act No. 16101, Dec. 31, 2018>
 Article 52-2 (Special Cases concerning Payments under Liability for Tax Payment in Kind)
(1) Where the head of a tax office having jurisdiction over a person liable to pay tax pursuant to Article 3-2 intends to collect a value-added tax, etc. from the trustee of the person liable to pay tax, he or she shall give the trustee a notice of payment stating the following matters. In such cases, he or she shall notify both the head of a tax office having jurisdiction over the domicile or residence of the trustee and the person liable to pay tax of such fact:
1. Taxable period for the value-added tax, etc., the amount of tax, and the basis for calculation thereof;
2. Payment deadline for the value-added tax, etc., and the place of payment thereof;
3. Other matters necessary for collecting the value-added tax, etc.
(2) Even though a person liable to pay tax renounces or relinquishes the right to benefit from trust or transfers trust property after notice is given under paragraph (1), it shall not affect the liability for tax payment to the extent notified under paragraph (1).
(3) If the trustee of trust property is changed, the new trustee shall succeed to the liability for tax payment, the notice of which is given to the old trustee pursuant to paragraph (1).
(4) The head of the tax office having jurisdiction over the person liable to pay tax pursuant to paragraph (1) may collect the value-added tax, etc. of the person liable to pay tax from the present trustee of trust property pursuant to Article 3-2 based on the date trust is created for the original trustee.
(5) Where a disposition for arrears is taken against trust property according to the National Tax Collection Act, the trustee has the right to be preferentially reimbursed for necessary expenses or profitable expenses incurred in preserving and improving trust property pursuant to Article 48 (1) of the Trust Act, notwithstanding Article 35 (1) of the Framework Act on National Taxes.
(6) In addition to those provided for in paragraphs (1) through (5), matters necessary for application of the liability for tax payment in kind shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 15223, Dec. 19, 2017]
 Article 53 (Special Cases concerning Supply of Services by Foreign Entrepreneurs)
(1) Where a person referred to in any subparagraph of Article 52 (1) supplies services, etc. in the Republic of Korea through any of the following persons, who is subject to business registration under Article 8, (hereinafter referred to as “commission agent, etc.”), the services, etc. shall be deemed to be supplied by the commission agent, etc.: <Amended by Act No. 13556, Dec. 15, 2015; Act No. 14387, Dec. 20, 2016>
1. A commission agent;
2. A quasi-commission agent;
3. An agent;
4. An intermediary (only applicable to where he or she collects a transaction price from a purchaser and pays it to a seller).
(2) In cases of a supply of a right by a person referred to in any subparagraph of Article 52 (1), the location or address of the domestic place of business of the person receiving such supply shall be deemed the place of supply for the right, notwithstanding Article 19 (1).
 Article 53-2 (Special Cases concerning Supply of Services and Business Registration by Foreign Entrepreneurs Providing Electronic Services)
(1) Where a person referred to in any of the subparagraphs of Article 52 (1) supplies any of the following services (hereinafter referred to as “electronic services”), through information and communications networks (referring to the information and communications networks defined in Article 2 (1) 1 of the Act on Promotion of Information and Communications Network Utilization and Information Protection; hereafter in this Article the same shall apply), to consumers in the Republic of Korea (excluding where services are supplied for the taxable business or tax-free business of a person whose business has been registered under Article 8 of this Act, Article 168 (1) of the Income Tax Act, or Article 111 (1) of the Corporate Tax Act), by using a mobile communications terminal, computer, or the like, the electronic services shall be deemed supplied in the Republic of Korea: <Amended by Act No. 13556, Dec. 15, 2015; Act No. 16101, Dec. 31, 2018>
1. Any game, audio or video file, software, or other services prescribed by Presidential Decree;
2. Services to run advertisements;
3. Cloud computing services defined in subparagraph 3 of Article 2 of the Act on the Development of Cloud Computing and Protection of Its Users;
4. Services to broker goods or services, which are prescribed by Presidential Decree;
5. Any other services prescribed by Presidential Decree, which are similar to those specified in subparagraphs 1 through 4.
(2) Where a person referred to in any of the subparagraphs of Article 52 (1) supplies any electronic services to consumers in the Republic of Korea through any of the following third persons (including any nonresident or foreign corporation referred to in any of the subparagraphs of Article 52 (1)) (excluding where special cases concerning a supply of services, etc. by domestic entrepreneurs apply pursuant to Article 53), the third person shall be deemed to supply the electronic services in the Republic of Korea:
1. A person who operates an open market or others similar thereto to provide services to enable electronic services transactions through an information and communications network, etc.;
2. A person who acts as an intermediary, etc. in electronic services transactions in a manner that collects the payment from the purchaser and pays it to the seller;
3. A person prescribed by Presidential Decree, who participates in electronic services transactions in a manner similar to subparagraph 1 or 2.
(3) A person who supplies any electronic services to consumers in the Republic of Korea under paragraph (1) or (2) (limited to a nonresident or foreign corporation referred to in any of the subparagraphs of Article 52 (1)) shall have his or her business registered according to the simplified method prescribed by Presidential Decree (hereinafter referred to as “simplified business registration”). In such cases, the person shall file an application for simplified business registration according to the method prescribed by Presidential Decree not later than 20 days after the commencement date of the business.
(4) Notwithstanding Article 52, a person who has filed for simplified business registration shall make a return and payment under Article 48 (1) or (2) or 49 according to the method prescribed by Presidential Decree.
(5) No person who has filed for simplified business registration is entitled to any deduction from the output tax amount or the amount of tax payable, other than the input tax amount to be deducted under Articles 38 and 39, in relation to the supply of relevant electronic services.
(6) Other matters necessary for the place of tax payment of a person who has filed for simplified business registration, the determination as to the time of supply of electronic services, simplified business registration, etc., shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 12851, Dec. 23, 2014]
SECTION 2 Documents Required
 Article 54 (Submission of Sum Table of Tax Invoices)
(1) Where an entrepreneur issues or receives tax invoices or import tax invoices, he or she shall submit a sum table of tax invoices by customer and a sum table of tax invoices by seller (hereinafter referred to as “sum table of tax invoices by customer and by seller”), specifying the following matters, at the time of making the relevant preliminary return or final return (if the main clause of Article 48 (3) applies, referring to the final return for the relevant taxable period):
1. Registration number, and name or denomination, of the entrepreneur who gives or takes supplies;
2. Period of transactions;
3. Date of preparation;
4. Sum of supply values and that of tax amounts during the period of transactions;
5. Other matters prescribed by Presidential Decree.
(2) Where electronic tax invoices are issued or received under Article 32 (2) or (5) and the list of the issued electronic tax invoices under Article 32 (3) and (5) is transmitted to the Commissioner of the National Tax Service by not later than the 11th day of the month following the last day of the taxable period (in cases of a preliminary return, the preliminary return period) that includes the time the relevant goods or services are supplied, the sum table of tax invoices by customer and by seller need not be submitted at the time of the relevant preliminary return or final return (if the main clause of Article 48 (3) applies, the final return for the relevant taxable period), notwithstanding paragraph (1).
(3) Where an entrepreneur making each preliminary return under Article 48 (1) and (4) fails to submit the sum table of tax invoices by customer and by seller along with each such preliminary return, he or she may submit them at the time of making the final return for the taxable period that includes the relevant preliminary return period.
(4) The head of the customs office who has issued import tax invoices shall submit a sum table of tax invoices by customer to the head of the tax office having jurisdiction over the location of the customs office by applying paragraphs (1) and (2) mutatis mutandis.
(5) The State, a local government, a local government association, or any other person prescribed by Presidential Decree that has had tax invoices issued shall submit a sum table of tax invoices by seller to the head of the tax office having jurisdiction over the place of tax payment within 25 days after the end of the relevant taxable period.
(6) Except as provided in paragraphs (1) through (5), matters necessary for preparing and submitting the sum table of tax invoices by customer and by seller shall be prescribed by Presidential Decree.
 Article 55 (Submission of Statements of Cash Sales)
(1) Any entrepreneur engaged in a business prescribed by Presidential Decree, among the following businesses, in consideration of the characteristics of the relevant business type and the management of tax sources, shall submit a statement of cash sales prescribed by Ordinance of the Ministry of Economy and Finance, at the time of making the preliminary return or final return:
1. Real estate business;
2. Professional service business, scientific service business, and technical service business;
3. Health business;
4. Other personal service business.
(2) Any entrepreneur engaged in leasing real estate shall submit a statement of supply prices in real estate lease contracts prescribed by Ordinance of the Ministry of Economy and Finance, at the time of making the preliminary return or final return. <Amended by Act No. 12167, Jan. 1, 2014>
(3) Matters necessary for preparing and submitting the statements of cash sales and the statements of supply prices in real estate lease contracts and other relevant matters shall be prescribed by Presidential Decree.
 Article 56 (Submission of Accompanying Documents for Zero Tax Rate)
(1) Any entrepreneur who supplies any goods or services eligible for the zero tax rate under Articles 21 through 24 shall submit documents prescribed by Presidential Decree including a statement of the actual exports, along with the preliminary return or final return under Articles 48 (1) and (4) and 49, at the time of making such return.
(2) No return that lacks any of the documents under paragraph (1) shall be deemed to be the preliminary return or final return under Articles 48 (1) and (4) and 49.
(3) Matters necessary for the preparation, submission, etc. of the documents under paragraph (1) shall be prescribed by Presidential Decree.
CHAPTER VI DECISIONS, RECTIFICATION, COLLECTION, AND REFUNDS
SECTION 1 Decisions
 Article 57 (Decisions and Rectification)
(1) Only when an entrepreneur falls under any of the following, the head of the tax office or the commissioner of a regional tax office having jurisdiction over the place of tax payment or the Commissioner of the National Tax Service (hereafter in this Article referred to as the “head of the tax office having jurisdiction over the place of tax payment, etc.”) shall conduct investigations to decide or rectify the tax base and the amount of tax payable or the amount of tax refundable for value-added tax in the relevant preliminary return period and taxable period:
1. Where he or she fails to file the preliminary return or final return;
2. Where there are any errors or omissions in details of the preliminary return or final return;
3. Where, in filing the final return, he or she fails to submit a sum table of tax invoices by customer or by seller, or where he or she omits or misrepresents all or some of the items to be entered in the sum table of tax invoices by customer or by seller;
4. Where he or she is likely to evade value-added tax on the grounds prescribed by Presidential Decree.
(2) In deciding or rectifying the tax base and the amount of tax payable or the amount of tax refundable for each preliminary return period and taxable period through an investigation under paragraph (1), the head of the tax office having jurisdiction over the place of tax payment, etc. shall do so on the basis of tax invoices, import tax invoices, account books, and other evidentiary materials: Provided, That in any of the following cases, an estimation may be made as prescribed by Presidential Decree:
1. Where tax invoices, import tax invoices, account books, or other evidentiary materials necessary for calculating the tax base are either missing or incomplete in material particulars;
2. Where details of tax invoices, import tax invoices, account books, or other evidentiary materials are obviously false in view of the capacity of facilities, the number of employees, and the market prices of raw materials, commodities, products, or various charges;
3. Where details of tax invoices, import tax invoices, account books, or other evidentiary materials are obviously false in view of the quantity of raw materials used, the amount of electric power used, and other operating situations.
(3) Where any error or omission is found in the tax base, the amount of tax payable, or the amount of tax refundable that is decided or rectified under paragraphs (1) and (2), the head of the tax office having jurisdiction over the place of tax payment, etc. shall immediately re-rectify such error or omission.
 Article 58 (Collection)
(1) If an entrepreneur fails to pay the amount of tax payable stated in his or her preliminary return or final return or his or her paid amount is less than the amount of tax payable, the head of the tax office having jurisdiction over the place of tax payment shall collect the amount of tax in arrears in accordance with the National Tax Collection Act, and if a decision or rectification is made under Article 57, the head of the tax office shall collect the amount of tax payable additionally in accordance with said Act.
(2) The value-added tax on an importation of goods shall be collected by the head of a customs office in accordance with the Customs Act.
 Article 59 (Refunds)
(1) If an entrepreneur makes a final return on the amount of tax refundable for each taxable period, the head of the tax office having jurisdiction over the place of tax payment shall refund such amount to the entrepreneur within 30 days (in cases falling under any subparagraph of paragraph (2), within 15 days) of the end of the final return period, as prescribed by Presidential Decree.
(2) Notwithstanding paragraph (1), if an entrepreneur makes a return on tax refund on any of the following grounds, the head of the tax office having jurisdiction over the place of tax payment may early refund the amount of tax refundable to the entrepreneur, as prescribed by Presidential Decree: <Amended by Act No. 14387, Dec. 20, 2016>
1. Where the entrepreneur qualifies for the zero tax rate prescribed in Articles 21 through 24;
2. Where the entrepreneur newly constructs, acquires, expands, or extends any of the business facilities prescribed by Presidential Decree;
3. Where the entrepreneur is in the process of implementing a financial restructuring plan prescribed by Presidential Decree.
SECTION 2 Penalties
 Article 60 (Penalties)
(1) If an entrepreneur falls under any of the following cases, the amount indicated in each corresponding subparagraph shall be added to the amount of tax payable or deducted from the amount of tax refundable: <Amended by Act No. 12167, Jan. 1, 2014; Act No. 14387, Dec. 20, 2016>
1. Where he or she fails to file an application for registration within the time limit prescribed in the main clause of Article 8 (1), one percent of the total value of supplies during the period from the commencement date of the business to the date immediately preceding the date the registration application is filed;
2. Where it is confirmed that he or she is engaged in his or her business after completing the business registration under Article 8 in the name of another person specified by Presidential Decree or through using the business registration under Article 8 in the person’s name, one percent of the total value of supplies during the period from the commencement date of business in the person’s name to the date immediately preceding the date the fact that he or she is actually engaged in the business is confirmed.
(2) Where an entrepreneur falls under any of the following cases, the amount under each corresponding subparagraph shall be added to the amount of tax payable or deducted from the amount of tax refundable. In such cases, subparagraphs 3 through 5 shall not apply to the portion covered by subparagraph 1 or 2, and subparagraphs 3 and 4 shall not apply to the portion covered by subparagraph 5: <Amended by Act No. 12851, Dec. 23, 2014; Act No. 14387, Dec. 20, 2016; Act No. 16101, Dec. 31, 2018; Act No. 16845, Dec. 31, 2019>
1. Where a tax invoice is issued by the deadline for filing a final return for the taxable period during which the relevant goods or services are supplied after the elapse of the time limit for issuing tax invoices under Article 34, one percent of the value of supply;
2. Where a tax invoice is not issued by the deadline for filing a final return for the taxable period during which the relevant goods or services are supplied after the elapse of the time limit for issuing tax invoices under Article 34, two percent of the value of supply: Provided, That it shall be one percent of the value of supply in any of the following cases:
(a) Where a person who is required to issue electronic tax invoices under Article 32 (2) does not issue an electronic tax invoice but issues a tax invoice other than the electronic tax invoice during the time limit for issuing tax invoices under Article 34;
(b) Where an entrepreneur who has at least two places of business does not issue a tax invoice in the name of the place of business that supplied the relevant goods or services, but instead issues a tax invoice in the name of another place of business he or she has during the time limit for issuing tax invoices under Article 34;
3. Where a list of the electronic tax invoices issued is transmitted to the Commissioner of the National Tax Service by the deadline for filing a final return for the taxable period during which the relevant goods or services are supplied after the deadline under Article 32 (3) passes, 0.3 percent of the value of supply;
4. Where a list of the electronic tax invoices issued is not transmitted to the Commissioner of the National Tax Service by the deadline for filing a final return for the taxable period during which the relevant goods or services are supplied after the deadline under Article 32 (3) passes, 0.5 percent of the value of supply;
5. Where all or any of the requisite entry items in a tax invoice are omitted or misrepresented by mistake or negligence, one percent of the value of supply: Provided, That the same shall not apply where transactions are confirmed, as prescribed by Presidential Decree.
(3) Where an entrepreneur falls under any of the following cases, the amount under each corresponding subparagraph shall be added to the amount of tax payable or deducted from the amount of tax refundable: <Amended by Act No. 14387, Dec. 20, 2016; Act No. 15223, Dec. 19, 2017; Act No. 16845, Dec. 31, 2019>
1. Where he or she issues a tax invoice or a credit card sales slip, etc. provided for in Article 46 (3) (hereinafter referred to as “tax invoice, etc.”) without supplying any goods or services: Three percent of the value of supply stated in the tax invoice, etc.;
2. Where he or she is issued a tax invoice, etc. without being supplied with any goods or services: Three percent of the value of supply stated in the tax invoice, etc.;
3. Where he or she supplies any goods or services, but issues a tax invoice, etc. in any name other than that of the person actually supplying or supplied with the goods or services: Two percent of the value of supply;
4. Where he or she is supplied with any goods or services, but is issued a tax invoice, etc. in any name other than that of the person actually supplying the goods or services: Two percent of the value of supply;
5. Where he or she supplies any goods or services, but overstates the value of supply in a tax invoice, etc.: Two percent of the value of supply regarding the overstated portion;
6. Where he or she is supplied with any goods or services, but is issued a tax invoice, etc. as prescribed in subparagraph 5: Two percent of the value of supply regarding the overstated portion.
(4) Where a person, other than an entrepreneur, issues a tax invoice without supplying goods or services or has a tax invoice issued without being supplied with goods or services, the head of the tax office who issues a business registration certificate to the person who issues the tax invoice or to whom the tax invoice is issued shall collect, as a penalty, three percent of the value of supply which is entered in the tax invoice, deeming that such person is an entrepreneur. In such cases, the amount of tax payable under Article 37 (2) shall be deemed zero. <Amended by Act No. 14387, Dec. 20, 2016; Act No. 15223, Dec. 19, 2017>
(5) Where an entrepreneur has his or her input tax amount deducted not by having a credit card sales slip, etc. under Article 46 (3) issued and presenting them at the time he or she makes a preliminary return or final return pursuant to Article 48 (1) and (4) or 49 (1), but on any of the grounds prescribed by Presidential Decree, 0.5 percent of the value of supply shall be added to the amount of tax payable or deducted from the amount of tax refundable. <Amended by Act No. 14387, Dec. 20, 2016; Act No. 16101, Dec. 31, 2018>
(6) Where an entrepreneur falls under any of the following cases, an amount provided for in each corresponding subparagraph shall be added to the amount of tax payable or deducted from the amount of tax refundable: Provided, That when there is an error in entries on a sum table of tax invoices by customer submitted under Article 54 (1), the same shall not apply to the supply value of the portion for which the relevant transactions are confirmed based on tax invoices issued by the entrepreneur: <Amended by Act No. 14387, Dec. 20, 2016>
1. Where a sum table of tax invoices by customer under Article 54 (1) and (3) is not submitted, 0.5 percent of the supply value of the portion for which the sum table of tax invoices by customer is not submitted;
2. Where all or any of the registration numbers or supply values by transaction parties in entries on a sum table of tax invoices by customer submitted under Article 54 (1) and (3), are omitted or misrepresented, 0.5 percent of the supply value of the portion for which the items to be entered on the sum table of tax invoices by customer are omitted or misrepresented;
3. Where a sum table of tax invoices by customer is submitted at the time of making a final return in the taxable period that includes a preliminary return period under Article 54 (3) because it is not submitted at the time of making the preliminary return, to which subparagraph 2 is not applicable, 0.3 percent of the supply value.
(7) Where an entrepreneur falls under any of the following cases, an amount provided for in each corresponding subparagraph shall be added to the amount of tax payable or deducted from the amount of tax refundable: Provided, That when there is an error in entries on a sum table of tax invoices by seller, the same shall not apply to the supply value of the portion for which the relevant transactions are confirmed based on tax invoices or import tax invoices received by the entrepreneur: <Amended by Act No. 14387, Dec. 20, 2016>
1. Where an input tax amount is deducted pursuant to the proviso of Article 39 (1) 2, as prescribed by Presidential Decree, 0.5 percent of the supply value corresponding to the input tax amount deducted based on tax invoices or import tax invoices, not the sum table of tax invoices by seller;
2. Where a sum table of tax invoices by seller under Article 54 (1) and (3) is not submitted, or all or any of the registration numbers or supply values by transaction parties in entries on a sum table of tax invoices by seller submitted are omitted or misrepresented, 0.5 percent of the supply value corresponding to the input tax amount deducted based on tax invoices or import tax invoices, not the sum table of tax invoices by seller: Provided, That this shall not apply to cases prescribed by Presidential Decree;
3. Where the supply value in entries on a sum table of tax invoices by seller submitted under Article 54 (1) and (3) is an overstated misrepresentation, 0.5 percent of the supply value overstated in the entries on the sum table of tax invoices by seller.
(8) If an entrepreneur fails to submit a statement of cash sales under Article 55 (1) or a statement of supply prices in real estate lease contracts under Article 55 (2) or the amount of income (for a statement of cash sales, referring to cash sales; hereafter in this paragraph the same shall apply) entered in such statement is misrepresented, one percent of either the amount of income omitted or the difference between the amount of income entered in the statement and the actual amount of income shall be added to the amount of tax payable or deducted from the amount of tax refundable. <Amended by Act No. 14387, Dec. 20, 2016>
(9) In applying paragraphs (1) through (7), the corresponding provisions described in each of the following shall not apply to the portion covered by any of paragraphs (1) through (3): <Amended by Act No. 12851, Dec. 23, 2014; Act No. 14387, Dec. 20, 2016; Act No. 15223, Dec. 19, 2017; Act No. 16101, Dec. 31, 2018; Act No. 16845, Dec. 31, 2019>
1. For the portion covered by paragraph (1): Paragraphs (2) (excluding subparagraph 2 thereof), (5), and (6);
2. For the portion covered by paragraph (2) (excluding subparagraph 2): Paragraph (6);
3. For the portion covered by paragraph (2) 2 or (3): Paragraphs (1), (6), and (7);
4. For the portion covered by paragraph (3) 3: The main clause of paragraph (2) 2;
5. For the portion covered by paragraph (3) 5: The main clause of paragraph (2) 5.
(10) The penalties specified in paragraphs (2) 2 and (6) 2 shall not apply to the portion subject to penalties under Article 75-6 (2) 3 of the Corporate Tax Act or Article 81-9 (2) 3 of the Income Tax Act. <Newly Inserted by Act No. 16101, Dec. 31, 2018; Act No. 16845, Dec. 31, 2019>
CHAPTER VII SIMPLIFIED TAXATION
 Article 61 (Scope of Application of Simplified Taxation)
(1) With respect to any sole proprietor, the sum of whose proceeds (referring to proceeds including value-added tax; hereinafter referred to as “proceeds from supply”) from a supply of goods and services in the immediately preceding calendar year falls short of the amount prescribed by Presidential Decree within the limit of at least 48 million won and not more than an amount equal to 130 percent of said amount, this Chapter shall apply, notwithstanding the provisions of Chapters IV through VI, except as otherwise provided in this Act: Provided, That none of the following entrepreneurs shall be deemed a simplified taxable person:
1. An entrepreneur who has another place of business not subject to the application of simplified taxation;
2. An entrepreneur who is prescribed by Presidential Decree in consideration of the business type, business size, district, etc.
(2) With respect to any sole proprietor starting a new business during the immediately preceding taxable period, paragraph (1) shall apply based on the annualized total amount of the proceeds from supply from the start date of the business to the end date of the taxable period. In such cases, a period of less than a month shall be deemed a month.
(3) Where a sole proprietor starting a new business expects that the aggregate amount of his or her proceeds from supply in a calendar year in which he or she starts his or her business will be short of the amount under paragraphs (1) and (2), he or she shall declare whether to apply simplified taxation to the head of the tax office having jurisdiction over his or her place of tax payment, as prescribed by Presidential Decree, at the time of filing an application for registration under Article 8 (1) or (3).
(4) Any sole proprietor who makes a declaration under paragraph (3) shall be deemed a simplified taxable person for the first taxable period: Provided, That the same shall not apply to any entrepreneur who falls under the proviso of paragraph (1). <Amended by Act No. 12167, Jan. 1, 2014>
(5) Any sole proprietor who fails to register under Article 8 (1) or (3) shall be deemed a simplified taxable person for the first taxable period if the aggregate amount of his or her proceeds from supply in a calendar year in which he or she starts his or her business falls short of the amount under paragraphs (1) and (2): Provided, That the same shall not apply to any entrepreneur who falls under the proviso of paragraph (1).
(6) Any sole proprietor, the aggregate amount of whose proceeds from supply, which is decided or rectified under Article 68 (1), equals or exceeds the amount under paragraphs (1) and (2) shall be deemed a simplified taxable person until the taxable period that includes the date of such decision or rectification.
 Article 62 (Period of Application of Simplified Taxation and General Taxation)
(1) A period for which provisions concerning simplified taxable persons apply or do not apply under Article 61 shall be from July 1 of the first year to June 30 of the second year after the year in which the sum of proceeds from supply in one calendar year falls short of, or equals or exceeds, the amount prescribed by Presidential Decree. <Amended by Act No. 12167, Jan. 1, 2014>
(2) Notwithstanding paragraph (1), in cases of an entrepreneur who starts a new business, a period for which provisions concerning simplified taxable persons apply or do not apply under Article 61 shall be from July 1 of the first year to June 30 of the second year after the year in which he or she starts a new business. <Amended by Act No. 12167, Jan. 1, 2014>
(3) Matters necessary regarding the time of application of simplified taxation and general taxation, shall be prescribed by Presidential Decree.
 Article 63 (Tax Bases and Tax Amounts for Simplified Taxable Persons)
(1) The tax base for a simplified taxable person shall be the sum of his or her proceeds from supply in the relevant taxable period (in cases of the return and payment under Article 66 (2), it refers to the preliminary imposition period under paragraph (1) of that Article; hereafter in this Article the same shall apply).
(2) The amount of tax payable by a simplified taxable person shall be an amount calculated according to the following formula. In such cases, if a simplified taxable person runs concurrently two or more types of businesses, a total of amounts calculated by each business type shall be the amount of tax payable.
Amount of tax payable = Tax base referred to in paragraph (1) × Value-added rate for the relevant business type prescribed by Presidential Decree ranging from 5 to 50 percent in consideration of the average value-added rate, etc. by business type reported for the immediately preceding three years × 10 percent.
(3) Where a simplified taxable person receives tax invoices, etc. issued by other entrepreneurs and submits a sum table of tax invoices by seller prescribed in Article 54 (1) or a statement on the receipts of credit card sales slips, etc. prescribed by Presidential Decree to the head of the tax office having jurisdiction over his or her place of tax payment, as prescribed by Presidential Decree, the amount calculated according to each of the following shall be deducted from the amount of tax payable for the relevant taxable period: Provided, That this shall not apply to the input tax amount not to be deducted under Article 39:
1. An amount calculated by multiplying an input tax amount entered in the tax invoices, etc. received during the relevant taxable period by a value-added rate for the relevant business type under paragraph (2);
2. Where a simplified taxable person runs concurrently two or more types of businesses that differ from each other in the value-added rate under the latter part of paragraph (2), an amount calculated by respectively applying value-added rates for the relevant business types under the same paragraph to input tax amounts calculated on a pro rata basis, as prescribed by Presidential Decree;
3. Where a simplified taxable person runs concurrently a taxable business and a tax-free business, etc., an amount calculated according to the formula prescribed by Presidential Decree.
(4) Article 29 shall apply mutatis mutandis to the calculation of the tax base for a simplified taxable person.
(5) In cases of a simplified taxable person, if an aggregate of the amounts computed under paragraph (3) and Articles 46 (1) and 65 exceeds the amount of tax payable for each taxable period, the relevant excess portion shall be deemed zero.
(6) Where the sum of a simplified taxable person’s proceeds from supply in the pertinent year, which is decided or rectified under Article 68 (1) or for which a revised return is filed under Article 45 of the Framework Act on National Taxes, is not less than the amount prescribed in Article 61 (1), the amount of tax payable for the taxable period prescribed by Presidential Decree shall be an amount calculated by applying mutatis mutandis Article 37, notwithstanding paragraph (2). In such cases, the value of supply shall be an amount computed by multiplying the proceeds from supply by 100/110, and in the calculation of the input tax amount, no amount of tax deducted under paragraph (3) on the portion for which tax invoices, etc. are issued shall be included in the input tax deduction.
 Article 64 (Addition of Input Tax Amounts for Goods in Stock in Cases of being Converted to Simplified Taxable Persons)
Where a general taxable person is converted to a simplified taxable person, an amount calculated according to the formula prescribed by Presidential Decree regarding the goods in stock, assets under construction, and depreciable assets (limited to those eligible for deductions under Articles 38 through 43, but including those which are taken over by a business transferee through the business transfer under Article 10 (9) 2 and for which the business transferee is entitled to deduct the input tax amount) at the time of such conversion shall be added to the amount of tax payable under Article 63 (2). <Amended by Act No. 15223, Dec. 19, 2017>
 Article 65 (Deductions of Deemed Input Tax Amounts for Simplified Taxable Persons)
(1) Where any tax is imposed on a supply of goods manufactured or processed, or of services created, by a simplified taxable person running any such type of business as prescribed by Presidential Decree by using tax-free agricultural products, etc. as raw materials, an amount computed according to the formula prescribed by Presidential Decree may be deducted from the amount of tax payable.
(2) Paragraph (1) shall apply only where a simplified taxable person submits, as prescribed by Presidential Decree, a document attesting to the fact that he or she has received the supply of tax-free agricultural products, etc. to the head of the tax office having jurisdiction over his or her place of tax payment, at the time of filing a return under Articles 66 (2) and 67 (1).
 Article 66 (Preliminary Imposition and Payments)
(1) Notwithstanding Article 67, with respect to any simplified taxable person, the head of a tax office having jurisdiction over the place of business shall determine 50 percent of the amount of tax payable (if there exists any amount of tax which is deducted or reduced from the amount of tax payable under Article 46 (1), 63 (3) or 65 (1) of this Act or Article 104-8 (2) of the Restriction of Special Taxation Act, referring to an amount remaining after subtracting the relevant amount of tax; and if there exists any decision or rectification under Article 68 of this Act or any decision on the revised return or request for correction under Article 45 or 45-2 of the Framework Act on National Taxes, referring to an amount which reflects the details thereof) for the immediately preceding taxable period (if the immediately preceding taxable period is the taxable period under Article 5 (4) 1, it refers to the full amount of tax payable for the immediately preceding taxable period; and if there is a fractional amount below one thousand won, such amount shall be rounded down), as the amount of tax payable for the period between January 1 and June 30 (hereafter in this Article referred to as “preliminary imposition period”), and then collect it by no later than the 25th day after the end of the preliminary imposition period (hereinafter referred to as “preliminary imposition deadline”), as prescribed by Presidential Decree: Provided, That when the collectable amount is less than 300,000 won or the simplified taxable person is subject to application of the taxable period under Article 5 (4) 2, it shall not be collected. <Amended by Act No. 12167, Jan. 1, 2014; Act No. 12851, Dec. 23, 2014; Act No. 14387, Dec. 20, 2016; Act No. 16101, Dec. 31, 2018>
(2) Notwithstanding paragraph (1), any simplified taxable person prescribed by Presidential Decree may return the tax base and the amount of tax payable for the preliminary imposition period to the head of the tax office having jurisdiction over his or her place of business by the preliminary imposition deadline.
(3) Where a determination has been made under the main clause of paragraph (1), and where the relevant simplified taxable person makes a return under paragraph (2), the determination shall be considered not to have been made.
(4) Any simplified taxable person who makes a return under paragraph (2) shall pay the amount of tax payable for the relevant preliminary imposition period to the head of the tax office having jurisdiction over his or her place of business, as prescribed by Presidential Decree.
(5) Any simplified taxable person who makes a return under paragraph (2) shall submit a sum table of tax invoices by seller under Article 54 (1) (hereafter in this paragraph referred to as “sum table of tax invoices by seller”) at the time of making a return under paragraph (2), as prescribed by Presidential Decree: Provided, That when the sum table of tax invoices by seller is not submitted at the time of making the return under paragraph (2), it may be submitted at the time of filing a return under Article 67 (1).
 Article 67 (Returns and Payments by Simplified Taxable Persons)
(1) A simplified taxable person shall file a final return with the head of the tax office having jurisdiction over his or her place of tax payment, on the tax base and the amount of tax payable for each taxable period, and pay such amount to the head of the tax office having jurisdiction over the place of tax payment or the Bank of Korea, etc., as prescribed by Presidential Decree, within 25 days after the end of each such taxable period (in cases of closing his or her business, until the 25th day of the month following the month in which the date of closing the business falls pursuant to Article 5 (3)).
(2) In paying value-added tax under paragraph (1), any amount of tax paid pursuant to the main clause of Article 66 (1) and Article 66 (4) shall be deducted.
(3) A simplified taxable person shall submit a sum table of tax invoices by seller provided for in Article 54 (1) at the time of filing the relevant return under paragraph (1), as prescribed by Presidential Decree.
 Article 68 (Decisions, Rectification, and Collection as Regards Simplified Taxable Persons)
(1) With respect to any decision on and rectification of the tax base and the amount of tax payable for any simplified taxable person, Article 57 shall apply mutatis mutandis.
(2) With respect to the imposition of any penalty against any simplified taxable person, Article 60 (1) shall apply mutatis mutandis. In such cases, in each of the subparagraphs of Article 60 (1), the “value of supply” shall be considered as “proceeds from supply”, and “one percent” as “0.5 percent.”
(3) Where a simplified taxable person who has been issued a tax invoice, etc. fails to have the relevant amount deducted under Article 63 (3), but has it deducted as an input tax amount in calculating the amount of tax payable under the former part of Article 63 (6), upon confirmation of the relevant deciding or rectifying agency under Article 57 (1), one percent of the value of supply shall be added to the amount of tax payable or deducted from the amount of tax refundable. <Amended by Act No. 14387, Dec. 20, 2016>
(4) With respect to the collection of value-added tax from simplified taxable persons, Article 58 shall apply mutatis mutandis.
 Article 69 (Exemption of Simplified Taxable Persons from Payment Obligations)
(1) Where the aggregate amount of a simplified taxable person’s proceeds from supply in the corresponding taxable period falls short of 30 million won, he or she shall be exempted from the obligation to pay the relevant tax under Article 63 (2), notwithstanding Articles 66 and 67: Provided, That the same shall not apply to any amount of tax that must be added to the amount of tax payable under Article 64. <Amended by Act No. 16101, Dec. 31, 2018>
(2) Article 60 (1) shall not apply where the obligation for tax payment is exempted pursuant to paragraph (1): Provided, That Article 60 (1) 1 shall apply where no application for business registration is made within the deadline prescribed under Article 8 (1) (excluding where no fixed place of business prescribed by Presidential Decree exists), in which case “one percent” in Article 60 (1) 1 shall be “0.5 percent or 50,000 won, whichever is greater”. <Amended by Act No. 14387, Dec. 20, 2016>
(3) In applying paragraph (1), if any of the following is applicable, the aggregate amount of the proceeds from supply provided in each such subparagraph shall be based on the respective annualized total amounts. In such cases, a period of less than one month shall be deemed one month: <Amended by Act No. 12167, Jan. 1, 2014>
1. As to a simplified taxable person newly starting his or her business during the relevant taxable period, the aggregate amount of the proceeds from supply from the commencement date of the business to the end date of the taxable period;
2. As to a simplified taxable person who temporarily suspends or permanently closes his or her business or who changes taxable type during the relevant taxable period, the aggregate amount of the proceeds from supply from the commencement date of the taxable period to the date the business is temporarily suspended or permanently closed or the taxable type is changed;
3. As to a simplified taxable person subject to application of the taxable period under any subparagraph of Article 5 (4), the aggregate amount of the proceeds from supply during the relevant taxable period.
(4) If it is confirmed that an entrepreneur who is exempted from the obligation to pay tax under paragraph (1) has voluntarily paid the relevant tax, the head of the tax office having jurisdiction over the place of tax payment shall refund the amount paid.
 Article 70 (Waiver of Simplified Taxation)
(1) Where a simplified taxable person or a general taxable person subject to application of the provisions for simplified taxable persons under Article 62 intends to waive the application of the provisions for simplified taxable persons and to make himself or herself subject to the application of the provisions for general taxable persons, he or she may be subject to the application of the provisions of Chapters IV through VI, notwithstanding Article 61 (1). In such cases, he or she shall file a report thereon with the head of the tax office having jurisdiction over his or her place of tax payment, as prescribed by Presidential Decree, by no later than the last day of the month preceding the month in which he or she intends to be subject to such application. <Amended by Act No. 12167, Jan. 1, 2014>
(2) Where a sole proprietor starting a new business reports his or her intent to waive the application of the provisions for simplified taxable persons and to make himself or herself subject to the application of the provisions for general taxable persons to the head of the tax office having jurisdiction over his or her place of tax payment, as prescribed by Presidential Decree, at the time of filing an application for business registration under Article 8 (1) or (3), he or she may be subject to the application of the provisions of Chapters IV through VI, notwithstanding Article 61 (1). <Newly Inserted by Act No. 12167, Jan. 1, 2014>
(3) No sole proprietor who has filed a report pursuant to paragraphs (1) and (2) shall be entitled to the application of the provisions for simplified taxable persons from either of the following dates to the end of the taxable period that includes their respective third anniversary dates: <Amended by Act No. 12167, Jan. 1, 2014>
1. Where he or she has filed a report pursuant to paragraph (1): The first day of the month during which he or she intends to make himself or herself subject to the application of the provisions for general taxable persons;
2. Where he or she has filed a report pursuant to paragraph (2): The first day of the month in which the date when he or she starts his or her business falls.
CHAPTER VIII SUPPLEMENTARY PROVISIONS
 Article 71 (Keeping and Retaining Account Books)
(1) An entrepreneur shall record all facts of transactions related to his or her amount of tax payable or amount of tax refundable in his or her account books, as prescribed by Presidential Decree, and keep them at his or her place of business.
(2) Where an entrepreneur supplies goods or services exempt from value-added tax along with a supply of goods or services on which value-added tax is levied or where he or she becomes subject to Article 42 (1), he or she shall enter separately into his or her account books the taxable supply, tax-free supply, and the fact that he or she has had tax-free agricultural products, etc. supplied.
(3) An entrepreneur shall retain the account books kept under paragraphs (1) and (2) and the tax invoices, import tax invoices, and receipts that he or she has issued or has been issued under Articles 32, 35, and 36, for five years from the deadline for filing a final return for the taxable period during which the relevant transactions occur: Provided, That when the entrepreneur who has issued electronic tax invoices under Article 32 transmits a list of the electronic tax invoices issued to the Commissioner of the National Tax Service, the same shall not apply.
(4) If an entrepreneur has fulfilled the duty to keep his or her account books pursuant to Article 112 of the Corporate Tax Act and Article 160 of the Income Tax Act, he or she shall be deemed to have fulfilled the duty to keep his or her account books under paragraph (1).
 Article 72 (Special Cases concerning Amount of Value-Added Tax)
(1) Notwithstanding Articles 37 and 63, the amount of value-added tax shall be 79 percent of an amount calculated by subtracting the amount of value-added tax to be reduced, exempt, or deducted under this Act and other statutes from the amount of tax payable and then adding a penalty thereto, and the amount of local consumption tax shall be 21 percent of the calculated amount. <Amended by Act No. 12113, Dec. 24, 2013; Act No. 14387, Dec. 20, 2016; Act No. 16101, Dec. 31, 2018; Act No. 16845, Dec. 31, 2019>
(2) If the value-added tax and the local consumption tax under the Local Tax Act are to be returned, paid, rectified, or refunded, the amount calculated by combining the value-added tax and the local consumption tax shall be returned, paid, rectified, or refunded.
 Article 73 (Tax Managers)
(1) Where a sole proprietor falls under either of the following cases, a tax manager to take charge of returns, payments, refunds, and other necessary matters in connection with value-added tax shall be designated:
1. Where he or she does not ordinarily stay in his or her place of business;
2. Where he or she intends to stay abroad for at least six months.
(2) In any case other than those provided in paragraph (1), an entrepreneur may designate as a tax manager any person prescribed by Presidential Decree, to take charge of returns, payments, refunds, and other necessary matters in connection with value-added tax.
(3) An entrepreneur shall, upon designating a tax manager under paragraphs (1) and (2), report thereon to the head of the tax office having jurisdiction over his or her place of tax payment, as prescribed by the Presidential Decree. This shall also apply when the entrepreneur changes his or her tax manager.
 Article 74 (Inquiries and Investigations)
(1) Public officials engaged in the work regarding value-added tax may, if necessary for performing their duties related to value-added tax, make inquiries about matters related to the value-added tax of the persons liable to pay tax, persons conducting transactions with them, or trade associations or other similar organizations to which the persons liable to pay tax belong, or conduct investigations into their account books, documents, and other articles.
(2) The heads of tax offices having jurisdiction over the places of tax payment may, for tax perpetuation or investigations regarding value-added tax, direct the persons liable to pay such tax to submit their account books, documents, or other articles or to comply with other necessary requests.
(3) When public officials engaged in the work regarding value-added tax make any inquiry or conduct any investigation under paragraph (1), they shall carry documentscertifying their authority as investigators and present them to interested persons.
(4) In applying paragraph (1) or (2), no public officials engaged in the work regarding value-added tax shall abuse their authority for any purpose, etc. outside the scope of their duties. <Newly Inserted by Act No. 16101, Dec. 31, 2018>
 Article 75 (Submission of Materials)
Where any of the following persons acts in the Republic of Korea as a sales or settlement agent or intermediary in relation to a supply of goods or services, he or she shall submit the relevant detailed statement to the Commissioner of the National Tax Service by the end of the month following the end of each quarter, as prescribed by Presidential Decree:
1. A value-added telecommunications business entity pursuant to Article 5 of the Telecommunications Business Act, who acts as a sales agent or intermediary for a mail order distributor defined in subparagraph 3 of Article 2 of the Act on the Consumer Protection in Electronic Commerce, Etc.;
2. An agency for settlements defined in subparagraph 5 (b) of Article 2 of the Specialized Credit Finance Business Act;
3. An electronic financial business entity defined in subparagraph 4 of Article 2 of the Electronic Financial Transactions Act;
4. A specialized foreign exchange dealer defined in Article 8 (4) of the Foreign Exchange Transactions Act;
5. Other persons who perform business similar to that of any business entity pursuant to subparagraphs 1 through 4, as prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 15223, Dec. 19, 2017]
CHAPTER IX PENALTY PROVISIONS
 Article 76 (Administrative Fines)
The heads of tax offices having jurisdiction over the places of tax payment shall impose an administrative fine not exceeding 20 million won on persons who fail to comply with an order for tax perpetuation or investigations issued under Article 74 (2).
[This Article Newly Inserted by Act No. 16101, Dec. 31, 2018]
ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on July 1, 2013.
Article 2 (General Applicability)
This Act shall apply to any goods or services the supply of which is made or received, or to any imports the declaration of which is made, after this Act enters into force.
Article 3 (Applicability to Returns and Payments)
Any amended provisions governing returns and payments shall apply to any taxable period that commences after this Act enters into force.
Article 4 (Special Cases concerning Immediately Preceding Taxable Period)
Notwithstanding the amended provisions of Article 61 (2), the taxable period immediately preceding the taxable period that includes the enforcement date of this Act shall include both the first and second taxable periods of the immediately preceding year.
Article 5 (Special Cases concerning Period of Application of Simplified Taxation and General Taxation)
Where the proceeds from supply in one calendar year immediately preceding the enforcement date of this Act are short of or are not less than an amount under Article 61 (1), resulting in the application or non-application of provisions concerning simplified taxable persons under said Article, the period of application thereof shall be from July 1, 2013 until December 31, 2014, notwithstanding the amended provisions of Article 62.
Article 6 (Special Cases concerning Calculation of Amounts of Tax Subject to Preliminary Imposition against or Payable by Simplified Taxable Persons)
The amount of tax payable by a simplified taxable person for the immediately preceding taxable period under the amended provisions of Article 66 in the taxable period that includes the enforcement date of this Act shall be calculated by applying the value-added ratio of the relevant business type under the amended provisions of Article 63 (2) to the aggregate amount of the proceeds from supply in the first and second taxable periods of the immediately preceding year.
Article 7 (Special Cases concerning Menstrual Hygiene Products Exempt from Value-Added Tax)
Where any entrepreneur who is converted to an entrepreneur exempted from value-added tax or who additionally holds a tax-free business under Article 12 (1) 3-2 of the amended Value-Added Tax Act, Act No. 7007, uses any goods acquired before enforcement of said Act directly for any business exempt from value-added tax after enforcement of this Act, the amended provisions of Articles 10 (1) and 41 shall not apply.
Article 8 (Special Cases concerning Deductions of Input Tax Amounts in Case of Gratuitously Leasing Real Estate for Business Use to Related Persons)
Where any person who has run a business subject to value-added tax under Article 7 (3) of the partial amendment to the Value-Added Tax Act, Act No. 11129, fails to have his or her input tax amount deducted, as of the enforcement date of this Act, with respect to any depreciable assets used or to be used for the business, he or she may have the input tax amount deducted by applying the amended provisions of Article 43 mutatis mutandis.
Article 9 (Special Cases concerning Exemption from Value-Added Tax of Services of Managing and Operating Assets Entrusted to Investment Advisory Business and Korea Investment Corporation)
Where any entrepreneur who is converted to an entrepreneur exempted from value-added tax or who additionally holds a tax-free business under Article 33 (1) 4 (h) and 17-4 of the partial amendment to the Enforcement Decree of the Value-Added Tax Act, Presidential Decree No. 19892, uses any goods acquired before February 28, 2007 for any business exempt from value-added tax after this Act enters into force, the amended provisions of Article 10 (1) shall not apply.
Article 10 (Special Cases concerning Exemption from Value-Added Tax of Services Provided by Long-Term Care Institutions under the Long-Term Care Insurance Act)
Where any entrepreneur who is converted to an entrepreneur exempted from value-added tax or who additionally holds a tax-free business under subparagraph 13 of Article 29 of the partial amendment to the Enforcement Decree of the Value-Added Tax Act, Presidential Decree No. 20626, uses any goods acquired before July 1, 2008 for any business exempt from value-added tax after this Act enters into force, the amended provisions of Article 10 (1) shall not apply.
Article 11 (Special Cases concerning Exemption from Value-Added Tax of Services of Supplying Rights to Use Social Welfare Services as Compensations)
Where any entrepreneur who is converted to an entrepreneur exempted from value-added tax or who additionally holds a tax-free business under subparagraph 14 of Article 29 of the partial amendment to the Enforcement Decree of the Value-Added Tax Act, Presidential Decree No. 21304, uses any goods acquired before February 4, 2009 for any business exempt from value-added tax after this Act enters into force, the amended provisions of Article 10 (1) shall not apply.
Article 12 (General Transitional Measures)
With respect to any value-added tax imposed or to be imposed, or refunded or to be refunded, pursuant to the previous provisions as at the time this Act enters into force, the previous provisions shall apply notwithstanding the amended provisions of this Act.
Article 13 (Transitional Measures concerning General Taxable Persons and Simplified Taxable Persons)
Any person who constitutes a general taxable person or a simplified taxable person pursuant to the previous provisions as at the time this Act enters into force shall be deemed a general taxable person or a simplified taxable person under the amended provisions of this Act.
Article 14 (Transitional Measures concerning Business Registration)
(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 who can make lump-sum payments at the principal place of business; hereafter in this Article the same shall apply) is filed or business registration is made pursuant to the previous provisions as at the time this Act enters into force, the application for business registration or business registration shall be deemed to be filed or made pursuant to this Act.
(2) Where a report, etc. on the suspension or closing of business or on the change of registered matters is made pursuant to the previous provisions as at the time this Act enters into force, such report, etc. shall be deemed to be made pursuant to this Act.
Article 15 (Transitional Measures concerning Issuance of Tax Invoices)
Where tax invoices are to be issued or can be issued after enforcement of this Act with respect to any goods or services supplied, or any goods imported, before this Act enters into force, the previous provisions shall apply, notwithstanding the amended provisions of this Act.
Article 16 (Transitional Measures concerning Preliminary Returns and Final Returns on Value-Added Tax)
Any person who has made a preliminary return, final return, or other return and payment of value-added tax pursuant to the previous provisions as at the time this Act enters into force shall be deemed to have made a return and payment of value-added tax pursuant to the amended provisions of this Act.
Article 17 (Transitional Measures concerning Penalties)
With respect to any penalty regarding the value-added tax imposed or to be imposed pursuant to the previous provisions as at the time this Act enters into force, the previous provisions shall apply, notwithstanding the amended provisions of this Act.
Article 18 Omitted.
Article 19 (Relationship to Other Statutes and Regulations)
At the time this Act enters into force, references in other statutes or regulations to the previous Value-Added Tax Act or to the provisions thereof, if this Act includes any provisions corresponding thereto, shall be deemed references to the corresponding provisions of this Act in lieu of the previous provisions.
ADDENDA <Act No. 11944, Jul. 26, 2013>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Article 2 (Applicability to Issuance of Corrected Import Tax Invoices)
The amended provisions of Article 35 shall apply to any corrected declaration, decision, or rectification made on or after this Act enters into force.
ADDENDA <Act No. 12113, Dec. 24, 2013>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2014.
Article 2 (Applicability to Amount of Value-Added Tax)
The amended provisions of Article 72 (1) shall apply to any payment or refund made during the taxable period commencing after this Act enters into force.
ADDENDA <Act No. 12167, Jan. 1, 2014>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2014.
Article 2 (General Applicability)
This Act shall apply to any goods or services, the supply of which is made or received, or to any goods, the importation of which is declared, after this Act enters into force.
Article 3 (Applicability to Taxable Period for Simplified Taxable Persons)
The amended provisions of Articles 5 (4), 62 (1) and (2), and Article 66 (1) shall apply where the aggregate amount of the proceeds from supply in one calendar year is short of or is not less than an amount computed under Article 61 (1) after this Act enters into force.
Article 4 (Applicability to Special Cases concerning Supply of Goods)
The amended provisions of Article 10 (2) shall apply to any declaration, decision, or rectification made after this Act 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 the proviso of Article 10 (8) 2 and Articles 38 (1) 1 and 52 (4) shall apply to any transfer of business that occurs after this Act enters into force.
Article 6 (Applicability to Submission of Statements of Cash Sales)
The amended provisions of Article 55 (2) shall apply to any declaration, decision, or rectification made after this Act enters into force.
Article 7 (Special Cases concerning Period of Application of Simplified Taxation and General Taxation)
(1) Notwithstanding the amended provisions of Article 62 (1), if the aggregate amount of the proceeds from supply in one calendar year immediately preceding the enforcement date of this Act is not less than an amount under Article 61 (1), resulting in the non-application of provisions concerning simplified taxable persons during the period under the previous provisions of Article 62 (1), and the aggregate amount of the proceeds from supply in the calendar year that includes the enforcement date of this Act falls short of an amount under Article 61 (1), resulting in the application of provisions concerning simplified taxable persons during the period under the amended provisions of Article 62 (1), the period for which simplified taxation applies shall be from January 1, 2016 until June 30, 2016.
(2) Notwithstanding the amended provisions of Article 62 (1), if the aggregate amount of the proceeds from supply in one calendar year immediately preceding the enforcement date of this Act falls short of an amount under Article 61 (1), resulting in the application of provisions concerning simplified taxable persons during the period under the previous provisions of Article 62 (1), and the aggregate amount of the proceeds from supply in the calendar year that includes the enforcement date of this Act is not less than an amount under Article 61 (1), resulting in the non-application of provisions concerning simplified taxable persons during the period under the amended provisions of Article 62 (1), the period for which general taxation applies shall be from January 1, 2016 until June 30, 2016.
Article 8 (Transitional Measures concerning Deduction of Input Tax Amounts in Cases of Supply of Goods Exempt from Value-Added Tax)
If a supply of goods or services exempt from value-added tax (including goods or services not subject to the imposition of value-added tax) is made or received before this Act enters into force, the previous provisions shall apply, notwithstanding the amended provisions of Article 39 (1) 3.
ADDENDA <Act No. 12851, Dec. 23, 2014>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2015: Provided, That the amended provisions of Article 53-2 shall enter into force on July 1, 2015.
Article 2 (General Applicability)
This Act shall begin to apply to any goods or services, the supply of which is made or received, or any goods, the importation of which is declared, after this Act enters into force.
Article 3 (Applicability to Business Registration)
The amended provisions of Article 8 (9) 3 shall begin to apply to any report on per-business unit taxable entrepreneur under Article 21 (2) or (3) of the Individual Consumption Tax Act or under Article 18 (3) or (4) of the Traffic, Energy and Environment Tax Act that is made after this Act enters into force.
Article 4 (Applicability to Preliminary Imposition and Payments to Simplified Taxable Persons)
The amended provisions of Article 66 (1) shall apply to any taxable period for a simplified taxable person that commences on or after January 1, 2015.
Article 5 (Transitional Measures concerning Commencement of Business by Foreign Entrepreneurs Providing Electronic Services)
In applying the amended provisions of Article 53-2 (3), if the commencement date of a business that supplies any electronic services to consumers in the Republic of Korea is earlier than June 30, 2015, the business shall be deemed commenced on July 1, 2015, so an application for simplified business registration shall be filed by not later than July 20, 2015 under the latter part of Article 53-2 (3).
ADDENDA <Act No. 13474, Aug. 11, 2015>
Article 1 (Enforcement Date)
This Act shall enter into force one year after the date of its promulgation.
Articles 2 through 36 Omitted.
ADDENDA <Act No. 13556, Dec. 15, 2015>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2016: Provided, That the amended provisions of Article 53-2 (1) shall enter into force on the date of its promulgation.
Article 2 (General Applicability)
This Act 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 Act enters into force.
Article 3 (Applicability to Deferred Payment of Value-Added Tax on Imported Goods)
The amended provisions of Articles 35 (1) and 50-2 shall apply where a small or medium business owner who has filed an application for deferred payment after the enforcement date of this Act, makes a declaration of imported goods on or after July 1, 2016.
Article 4 (Applicability to Supply of Services by Foreign Entrepreneurs Providing Electronic Services)
The amended provisions of Article 53-2 (1) shall apply to services that are provided during the taxable period that includes the enforcement date of those amended provisions.
ADDENDA <Act No. 13805, Jan. 19, 2016>
Article 1 (Enforcement Date)
This Act shall enter into force on August 12, 2016.
Articles 2 through 22 Omitted.
ADDENDA <Act No. 14387, Dec. 20, 2016>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2017.
Article 2 (General Applicability)
This Act 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 Act enters into force.
Article 3 (Applicability to Deferred Payment of Value-Added Tax on Imported Goods)
The amended provisions of Article 50-2 shall apply where a middle-standing business owner whose payment is deferred upon his or her application after this Act enters into force makes a declaration of his or her imported goods on or after April 1, 2017.
Article 4 (Transitional Measures concerning Payments by Proxy)
With respect to any business transferred before this Act enters into force, the previous provisions shall apply, notwithstanding the amended provisions of Article 52 (4).
Article 5 (Transitional Measures concerning Penalties)
With respect to goods or services the supply of which is made or received, or to goods the importation of which is declared, before this Act enters into force, the previous provisions shall apply, notwithstanding the amended provisions of Article 60 (2), (6), and (7).
ADDENDA <Act No. 15223, Dec. 19, 2017>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2018.
Article 2 (General Applicability)
This Act shall begin to apply to goods or services the supply of which is made or received, or to goods the importation of which is declared, after this Act enters into force.
Article 3 (Applicability to Transfer of Trust Property Not Deemed Supply of Goods)
The amended provisions of Article 10 (9) 4 shall begin to apply where trust property is transferred after this Act enters into force.
Article 4 (Applicability to Import Tax Invoices)
The amended provisions of Article 35 (2) and (3) shall begin to apply to a determination or rectification made by the head of a customs office or to a revised return filed by an importer after this Act enters into force.
Article 5 (Applicability to Payments by Proxy)
The amended provisions of Article 52 (4) shall begin to apply where a business is transferred pursuant to the main clause of Article 10 (9) 2 after this Act enters into force.
Article 6 (Transitional Measures concerning Penalties)
With respect to goods or services the supply of which is made or received, or to goods the importation of which is declared, before this Act enters into force, the previous provisions shall apply, notwithstanding the amended provisions of Article 60 (3) and (9) 4.
ADDENDA <Act No. 16008, Dec. 24, 2018>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2019. (Proviso Omitted.)
Articles 2 through 15 Omitted.
ADDENDA <Act No. 16101, Dec. 31, 2018>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2019: Provided, That the amended provisions of Article 53-2 (1) shall enter into force on July 1, 2019.
Article 2 (General Applicability)
This Act shall begin to apply to the first goods or services, the supply of which is made or received, or to the first goods for which an import declaration is filed, after this Act enters into force.
Article 3 (Applicability to Special Cases concerning Supply of Goods)
The amended provisions of Article 10 (1) 3 shall begin to apply to the first goods used or consumed after this Act enters into force.
Article 4 (Applicability to Tax Deductions Subsequent to Use of Credit Cards)
The amended provisions of Article 46 (1) shall begin to apply to the first return filed after this Act enters into force.
Article 5 (Applicability to Preliminary Notice and Imposition and to Exemptions from Payment)
The amended provisions of the proviso of Article 48 (3) and the proviso of Article 66 (1) shall begin to apply to the first amount determined after this Act enters into force.
Article 6 (Applicability to Exemption of Simplified Taxable Persons from Payment Obligations)
The amended provisions of Article 69 (1) shall begin to apply to the first return filed after this Act enters into force.
Article 7 (Applicability to Amount of Value-Added Tax)
The amended provisions of Article 72 (1) shall begin to apply to the first payment or refund made after this Act enters into force.
Article 8 (Transitional Measures concerning Deadline for Payments by Proxy)
Notwithstanding the amended provisions of Article 52 (4), the previous provisions shall apply to the transferee of any business which is transferred under the main clause of Article 10 (9) 2 (including where it is unclear whether the relevant business activity constitutes a transfer of business) before this Act enters into force.
Article 9 (Transitional Measures concerning Commencement of Business by Foreign Entrepreneurs Providing Electronic Services)
If the commencement date of the business of a person who provides any electronic services specified in the amended provisions of Article 53-2 (1) 2 through 5 (excluding persons who have filed for simplified business registration under Article 53-2 (3) before this Act enters into force) comes before June 30, 2019, then July 1, 2019 shall be deemed the commencement date of the business; and thus Article 53-2 (3) shall apply thereto.
Article 10 (Transitional Measures concerning Penalties)
(1) Notwithstanding the amended provisions of Article 60 (2) 3 and 4, the previous provisions shall apply to any goods or services, the supply of which is made before this Act enters into force.
(2) Notwithstanding the amended provisions of Article 60 (5), the previous provisions shall apply to any goods or services, the supply of which is received before this Act enters into force.
Article 11 Omitted.
ADDENDA <Act No. 16845, Dec. 31, 2019>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2020: Provided, That the amended provisions of Article 48 (3) and (4) shall enter into force on January 1, 2021.
Article 2 (General Applicability)
This Act shall begin to apply to goods or services the supply of which is made or received, or to goods for which an import declaration is filed, after this Act enters into force.
Article 3 (Applicability to Special Cases concerning Supply of Goods)
The amended provisions of Article 10 (8) shall begin to apply to the purchase and sale of trust property in the name of the trustee after this Act enters into force.
Article 4 (Applicability to Special Cases concerning Deductions of Fictitious Input Tax Amounts for Tax-Free Agricultural Products)
The amended provisions of Article 42 (1) shall begin to apply to a taxable period which commences after this Act enters into force.
Article 5 (Applicability to Preliminary Notice and Imposition)
The amended provisions of Article 48 (3) shall begin to apply to a decision made on or after January 1, 2021.
Article 6 (Applicability to Amount of Value-Added Tax)
The amended provisions of Article 72 (1) shall begin to apply to a payment or refund which is made after this Act enters into force.
Article 7 (Transitional Measures concerning Penalties)
Notwithstanding the amended provisions of Article 60 (2) 2 (b), the previous provisions shall apply to goods or services the supply of which is made or received before this Act enters into force.