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VAT Registration in South Korea

VAT Registration in South Korea

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 in 2024. 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.

Tax registration is one of the most important steps in opening a company. The procedure can be completed by our accountants in South Korea or company formation agents, depending on your needs for complementary services. Feel free to get in touch with us and ask for the support of our specialists.

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.

If you intend to immigrate to South Korea and are a citizen of another country, you must register your right to residency with your local police after arrival. Relocation can be quite simple when you decide to rely on our lawyers who can also help you in other matters, such as setting up a business here.

VAT registration in South Korea for domestic businesses in 2024

There is no minimum VAT registration threshold in South Korea for 2024 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 in 2024 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.

The investor visa is a mix between the conventional entrepreneur visa, which promotes creatives to relocate to a new country, and the startup visa, which aims to attract foreign investment. This one of the best ways to secure Korean residency on a long-term. You can rely on our specialist for support in applying for any of them.

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 in 2024, 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.

Feel free to get in touch with us if you need support in applying for South Korean residency. For this purpose, it is useful to note all foreigners who relocate with the intention of staying for more than 90 days must register with the local immigration officials. After approval, the holders can register with various authorities.

What to consider about VAT registration in Korea in 2024

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:

  • VAT 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.

Depending on the taxing authority, the tax system in Korea is divided into national tax and municipal tax. Corporate tax, value-added tax, income tax on wages and salaries, capital gains tax, securities transaction tax, and customs duty on imported goods are all types of national taxes. Acquisition tax, registration and licensing tax, property tax, vehicle tax, local income tax, and local education tax are all examples of local taxes levied by local governments.

VAT returns in Korea

Every company having a Korean VAT number must file periodic VAT returns, which must include a list of all taxable supplies (sales) and inputs (costs). There are two return periods in South Korea each year: January 1 through June 30 and July 1 through December 31. At the conclusion of the first and third calendar quarters, preliminary returns are still required.

In Korea, you have 25 days from the end of the period to make a return, and you also have to pay any associated VAT obligations by then. In situations where the business has paid more in VAT than it has earned in sales during the tax year, tax credits will be issued to the company within 30 days of the return deadline.

If you need support for VAT registration in South Korea, please contact us. We can also help in immigration matters. Permanent residency in South Korea is required before obtaining citizenship here. The procedure for the first is not complicated, however, just like other countries, Korea also has its specific requirements that need to be respected. If you want to ease your relocation here, you can use our legal services.