If you’re selling digital services and products to customers in South Korea, then you might be liable for South Korea’s Value-added Tax (VAT). This guide covers two very important parts of the system:
- Registering for the tax, and then
- Filing tax returns on time.
We’ve scoured South Korea’s National Tax Service (NTS) website to provide you with all the necessary information about VAT for international businesses in one place.
How to register for VAT in South Korea
South Korea offers online VAT registration in English (and Korean, of course). This takes place in the online portal called NTS Hometax. This portal is also where you’ll file and pay your tax returns. More on that later!
The goal here is to fill out the Simplified Business registration application, but first you need to create your membership account. On the welcome page, you’ll see a whole page of options, but just follow these steps below:
Create a membership account
1. Click “Member join” in the top right.
2.. Consent to the user agreement and information privacy terms.
3. Create your membership account! So, there are a few mini-steps within this step.
First select your User ID, then click “Confirm existing ID” to make sure your username is available.
Then fill out the rest of the information. FYI, it’s fine to repeat the same phone number in both fields!
Next, you need to verify your email address directly on this page. Here’s how to do that:
- After you enter your email address, click “Verification number to e-mail.”
- You’ll receive an email with the following subject line:
간편사업자 인증번호(simple business registration Authentication number)
- Take the authentication number in the email and enter it here in the final box, then click “Confirm.”
Finally you can hit “Complete member registration!”
4. Registration complete! You’ll know it has been successful because the page will show this happy image.
Register in the Simplified Business Operator system
The next step is to actually register for VAT as a business. You can do that from the confirmation page shown above, or by clicking “Simplified Business Operator Registration” here.
1. Log in with your brand new account information. You only need your User ID and password at this point. On the screen, it seems like your business registration number is required, but it’s not. You don’t even have one yet, of course!
2. Once logged in, click on “Simplified Business Operator Registration” at the top of the site, and you’ll see the first page of information to fill out. Please note the “Help” button in the top right, if you’re confused about something in the form!
In the last section here titled “Business Type in Korea,” you need to select what type of business you are according to what products you sell. The National Tax Service offers these guidelines:
At the bottom of the page, there’s a section for tax agent information. A tax representative is not required, so you can skip this section altogether.
3. Submit and you’re done! Within 5 days, the office will contact you via email to let you know if your application is accepted.
Once accepted, you’ll receive a Simplified Business Operator Registration Number. This is a unique identifier they’ll use to identify you in the system, and which you’ll need to put on invoices, etc.
If you ever have questions about the process, you can submit a question to the NTS Help Desk and receive an answer via email.
How to file VAT returns in South Korea
You must report your taxes in the local currency, South Korean won (KRW). Your foreign currency must be converted into KRW using the standard exchange rates of Seoul Money Brokerage Services, according to the last day of the taxable period.
When to file and pay
You must file a VAT return every quarter. The deadline for declarations and payments is the 25th of the month following the end of a reporting quarter.
- 25 April, for first quarter ending 31 March
- 25 July, for second quarter ending 30 June
- 25 October, for third quarter ending 30 September
- 25 January, for fourth quarter ending 31 December
Note: It’s unclear whether you must still file a return even if you made zero sales in South Korea that quarter. This is typically called a “Nil declaration” and it follows the exact same process as a normal return. (Just a little less data entry 😉 )
How to file
Before you get started, you should collect all the information about your taxable sales in South Korea during the previous quarter. The tax website suggests having these pieces ready:
- total sales and income
- total purchases and expenses
You can file online in NTS Hometax. You can log in here and click “VAT Return” at the top of the page.
Again, if you ever have questions about the process, you can submit a question to the NTS Help Desk (a helpline especially for foreigners) and receive an answer via email.
How to pay
Payments should be made in KRW, but the tax service also accepts payments in US dollars, as long as you use the same currency exchange rate that you applied to tax reporting.
You’ll pay via transfer to the VAT bank account held by the NTS at Woori Bank. Paying by card isn’t possible.
You can find that VAT bank account number in your email (the same one you received when they got your simplified business operator registration number), or in your NTS Hometax account, on the ‘Basic information of Simplified Business Operator’ page.
Here’s some further information for sending a payment from abroad:
Note: The NTS website advises sending your payment 3 days before the deadline, to ensure the bank transfer is complete on time. Otherwise you’ll be subject to fees!
What to do in between registering and filing?
Well, you must comply with all the rules for South Korea VAT! That means charging 10% VAT on all B2C sales in the country, among other things.
For further reading that will help you stay compliant and successful as a remote seller, check out our South Korea VAT Guide for Businesses.