July is the month for the first round of Value Added Tax (VAT) reporting in 2024. If you’re one of the 6.71 million people who need to file, mark your calendar for Thursday, July 25th. That’s your deadline to report and pay your VAT in Korea.

We’ve got about 260,000 more people filing this time compared to the same period last year. That includes 5.43 million individual taxpayers (up by 210,000) and 1.28 million business entities (up by 50,000).

Following VAT filing cases are announced by National Tax Service in Korea as examples of incorrect tax reporting related to Value Added Tax (VAT).

CASE 1) Clothing retailer claiming VAT deduction for non-business luxury villa purchase amount

VAT refund rejected due to a claim for non-business related expense

Circumstances:

In the case of expenses unrelated to business, they fall under the category of non-deductible input tax as specified in Article 39 of the Value-Added Tax Act.

CASE 2) : Tax-exempt business company incorrectly claiming VAT deductions for service fees paid to a third party

VAT refund rejected due to VAT exempted business

Circumstances:

Input VAT related to tax-exempt businesses should not be deducted and should be reported as non-deductible input tax.

If you would like to ask more questions on VAT filings, feel free to reach myself at www.aratax.net

Written by Ara Jung (CTA)

All information provided is of limited scope and not exhaustive or comprehensive of any subject. It is not intended to be a legal advice, and should not be used in place of consultation.