South Korea’s developed market economy offers a lower-risk business environment for businesses wishing to enter the Asian market. South Korea introduced the electronic tax invoice (‘e-Tax’) as its invoicing method in 2011. In this regard, a legal entity or any person with a total supply value of 300,000,000 KRW (264.5 K US Dollars) or more for the previous tax year requires to issue an e-invoice to the recipient of goods or services subject to VAT. However, there are various types of bills used in South Korea under different circumstances.
Some of the invoices that used are:
- VAT invoice
- Sales invoice
- Purchase invoice
- Commercial invoice
- Credit invoice
On the other hand, businesses registered for VAT must submit their invoices through the National Tax Service (NTS) to tax authorities in one of the following ways:
- Invoice uploading via the free portal provided by the tax office
- Using an outsourced, licensed e-invoice service provider
- Creating your e-invoice through accounting systems with a digital certificate
- Using the AVRS phone system
- Submit personally to a local tax office
E-Tax Invoice
Businesses that want to issue a tax invoice must first obtain a digital certificate. When issuing an e-tax invoice, a tax registration document is required to match the invoice with the customer. The invoice is sent to the customer by e-mail. At the same time, the e-Tax invoice sends to NTS. However, monthly bulk invoice notification is allowed until the 10th of the following month.
Ultimately, failure to deliver the e-Tax invoice to NTS could result in a fine of 1% of the taxable amount.
