Practical FAQ

 Electronic Value-added Tax (“VAT”) Invoices in Korea

1. Can a commercial invoice or an intercompany invoice issued by a foreign head office replace a Korean VAT invoice?

No. A commercial invoice or an intercompany invoice is separate from a VAT invoice required under Korean VAT Law. For a domestic taxable supply for which a Korean supplier is required to issue a VAT invoice, the supplier must issue a Korean VAT invoice in the prescribed form. A commercial invoice may be used as supporting documentation, but it does not replace the VAT invoice required for VAT reporting and input VAT recovery.


2. When should an electronic VAT invoice be issued and transmitted to the National Tax Service?

An electronic VAT invoice should generally be issued when the relevant goods or services are supplied. Where a monthly consolidated VAT invoice is issued, it must generally be issued by the 10th day of the following month. Once issued, the VAT invoice must be transmitted to the National Tax Service (“NTS”) by the following day.

When using an ERP system or an electronic VAT invoice service provider, VAT invoices are generally transmitted to the NTS automatically. However, the company should periodically check the transmission status and promptly correct and retransmit any VAT invoices that have been rejected or failed to transmit.

3. What information should be checked when issuing or receiving an electronic VAT invoice?

The mandatory information generally includes:

- The supplier’s business registration number and name;
- The customer’s business registration number;
- The taxable amount and VAT amount; and
- The date of preparation of the VAT invoice.

4. Can input VAT be recovered if an electronic VAT invoice is issued late, transmitted late, or contains incorrect information?

If a VAT invoice is issued after the statutory issuance date but by the final VAT return filing deadline for the relevant taxable period, the related input VAT may generally be recovered, although penalties may apply.

If it is issued after the final filing deadline, the input VAT is generally not recoverable. However, an exception may apply if the VAT invoice is issued within one year after the deadline and the prescribed amended filing and correction procedures are completed, or if the tax authorities confirm the underlying transaction in the course of a tax assessment or reassessment.

A transmission delay alone does not necessarily prevent the customer from recovering input VAT. Where the VAT invoice contains incorrect mandatory information, the input VAT may still be recovered if the error was inadvertent and the actual transaction can be verified from the other information stated on the VAT invoice.

5. How should transaction cancellations, price adjustments, or errors in an electronic VAT invoice be corrected?

An electronic VAT invoice that has already been issued should not simply be deleted or replaced. An amended electronic VAT invoice should be issued based on the reason for the correction.

A negative amended VAT invoice is generally issued for returned goods, a contract cancellation before the goods or services are supplied, or a decrease in the taxable amount. A positive amended VAT invoice is issued for an increase in the taxable amount. If mandatory information is incorrect, the original VAT invoice should generally be reversed by a negative amended VAT invoice and a corrected positive VAT invoice should be issued.

The applicable date and issuance deadline differ depending on the reason for the amendment. Different rules may also apply depending on whether the error was an inadvertent mistake. Issuing an amended VAT invoice does not necessarily require an amended VAT return; this should be determined based on the reason for the amendment and whether the relevant VAT return has already been filed.