With no less than 8 years ago, Korea decided to simplify its taxation system related to indirect levies with their replacement with the value added tax (VAT) in 1977. Now, in order to sell goods and products here, one is required to apply for VAT registration in South Korea. The procedure is fairly simple and can be completed with the help of our specialists.
Below, our local agents explain how to obtain a Korean VAT number for your foreign or local business. We are also at your service if you want to open a company in South Korea.
How to register for VAT in Korea as a foreign company
Foreign businesses making taxable supplies in South Korea are required to register for VAT under certain conditions.
Here are the main situations that require VAT registration in South Korea:
- the foreign company delivers goods into South Korea;
- the company provides VAT-taxable services in Korea
- if the enterprise imports or exports goods into/from Korea;
- if a foreign business installs or assembles goods in South Korea.
An important aspect and benefit to consider when doing business in this country as a foreign company is that there is no requirement to register a legal entity here in order to obtain a Korean VAT number. However, a local representative is required.
For the purpose of reporting and paying VAT to the Korean authorities, the representative and the corporation are jointly responsible. The agent is also in charge of handling any correspondence between the business and the tax authorities.
If you are interested in company formation in South Korea as a foreign enterprise, the two legal forms under which it is possible to operate are the subsidiary and the branch office. Our local consultants can help you set up both types of entities.
VAT registration in South Korea for domestic businesses
There is no minimum VAT registration threshold in South Korea which means that local companies must obtain their VAT certificates immediately following the business incorporation procedure.
The process of obtaining a VAT number in Korea is rather simple, as it implies filing the necessary documents with the National Tax Office.
The documents to file are nearly the same as for foreign companies.
If you want to apply for a VAT certificate, our company registration advisors in Korea can do that as part of the incorporation procedure. You can also avoid complications by using our accounting services in South Korea.
Documents to file when registering for VAT in South Korea
In order to complete the registration procedure and obtain a VAT number in South Korea, a company must file the following information:
- the name of business owner or representative in the case of foreign enterprises, contact information, address, and a valid email address.
- details about the firm, such as the registered country, address, and registration number;
- the name, address, tax registration number, phone number, and email address of the tax agent (where such an agent is hired).
Our Korean accountants can act as tax representatives for both local and foreign companies.
What to consider about VAT registration in Korea
No matter if domestic or foreign, a company is required to register for VAT within 20 days from registration, respectively start making VAT-taxable supplies in Korea. Also:
- the standard VAT rate is set at 10% without other reduced rates available;
- VAT returns must be filed on a quarterly basis, no later than the 25th of the month following the end of the respective quarter;
- failing to do so will attract a 3% penalty applied to the unpaid amount, plus 1.2% for each month if still not paying.
If you need support for VAT registration in South Korea, please contact us.