South Korea implemented its 10% Value Added Tax on foreign providers and marketplaces of digital or electronic services to its consumers from 1 July 2015. There is no VAT registration threshold. There is a simplified electronic services registration.
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What digital services are liable to South Korean VAT?
Income from the following supplies is subject to Korean VAT:
- Any services delivered real-time to computers, mobile devices
- Streaming media
- SaaS or cloud-based services
- Images, sounds (ring tones) and electronic documents
- Intermediary or brokage services for the above
- Brokerage services for goods or services consumed in Korea
VAT registration and compliance
There is no non-resident VAT registration threshold in South Korea. Non-residents should apply within 20 days of commencement of sales to South Korea. There is a simplified business registration process available via the Korean National Tax Service’s HOMETAX portal for digital services.
Once registered, returns must be filed on a quarterly basis by the 25th of the following month. The same deadline applies to the payment of any VAT dues.
Sales by non-residents to VAT registered resident businesses do not attract VAT. Instead, the customer should account for the VAT via the reverse charge. If the foreign seller or marketplace only has B2B transactions, then they are not required to VAT register.
From 1 July 2022, non-resident digital services VAT transaction reporting will be imposed. This will require foreign providers and marketplaces to provide within 60 days’ notice full transaction details going back up to five years.
Asia Pacific VAT on digital services
|Comments (click for details)||Rate||Date||Threshold||Comments|
|Australia||10%||Jul 2017||AUD $75,000|
|Armenia||20%||Jan 2022||AMD 115million|
|Bangladesh||5% - 15%||Jul 2019||–||B2B and B2C|
|Bhutan||7%||Jul 2021||Nu 5million|
|Cambodia||10%||Mar 2022||KHR 250m|
|China||6%-13%||N/a||Nil||Withholding VAT; B2B and B2C|
|Indonesia||11%||Aug 2020||IDR600m or 12k customers|
|Japan||10%||Oct 2015||JPY 10 million|
|Laos||7%||Feb 2022||LAK 400m|
|New Zealand||15%||Oct 2016||NZD 60,000|
|Pakistan||2%||Sep 2021||Nil||Marketplace Withholding VAT|
|Singapore||7%||Jan 2020||S$ 100,000|
|South Korea||10%||Jul 2015||Nil|
|Taiwan||5%||May 2017||NTD 480,000|
|Thailand||7%||Sep 2021||1.8m Baht|