Foreign companies are not required to have a local presence in South Korea in order to register for VAT; however, they must appoint a Korean fiscal representative. With respect to domestic business, these can also use the services of such an agent optionally.
Below, our company formation agents in Korea offer guidance concerning the services provided by a tax agent.
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Fiscal representative services in Korea
The following are among the fiscal representation services foreign companies can obtain in Korea:
- VAT registration is the main service offered by providers;
- maintaining VAT compliance with the tax legislation;
- ensuring that the company abides by national regulations for accounting practices;
- ensuring VAT treatment, invoicing, filing, and payment are correctly completed;
- managing tax inspections and inquiries from the local VAT office.
A Korean fiscal representative is viewed by the tax authorities as the foreign trader’s local agent, which meets the national compliance requirements.
Reporting and payment of VAT to the Korean authorities are the joint responsibility of the representative and the non-resident company. Furthermore, the agent is in charge of all correspondence between the respective business and the tax authorities.
You can also rely on our local agents if you want to start a business in Korea and need such a service. This solution is more often covered by our accountant in Korea.
When does a foreign company need to register for VAT in Korea?
In terms of fiscal representation, foreign companies making taxable supplies in South Korea must comply with the statutory obligation to register for VAT for certain operations. Once registered, non-resident traders must comply with local filing rules,
Usual situations requiring Korean VAT registration include:
- delivery of goods within Korea;
- imports, installation or assembly of goods in Korea;
- export of goods from Korea;
- supply of services where the place of supply is Korea.
These are also operations that require complying with VAT paperwork drafting and which can be handled by a Korean tax agent.
Who can act as a fiscal representative in Korea?
Accountants, tax advisors and lawyers can act as fiscal representatives on behalf of non-resident businesses in South Korea. In some countries these provide general or limited fiscal representation, which would often affect the extent of obligation and responsibilities involved. In Korea, clients can choose the services they want to benefit from apart from the mandatory ones.
If you are a foreign citizen and want to immigrate to South Korea with the purpose of setting up your own business, you can also opt for such a service.
Fiscal representation for domestic businesses
As stated in the introduction, local businesses can also ease the burden of having to deal with the tax authorities in relation to tax payments. For this reason, they can hire the services of a fiscal representative. This way, they can avoid penalties and late fees associated with the non-payment of VAT and other taxes.
We are also at the service of Korean businesses with fiscal representation solutions.
VAT compliance requirements in Korea
Here are the main VAT requirements to comply with, according to the National Tax Service:
- VAT filings must be made on a quarterly basis, while payments must be done within 25 days from the end of each quarter;
- failing to file VAT returns by the deadline will attract a penalty equal to 20% of the unpaid tax;
- a 20–50% reduction in the penalty is possible if a delayed return is filed within 6 months.
Feel free to address our company registration advisors in Korea for fiscal representation services. We are also at your disposal if you want to move here and apply for Korean residency.