Following up on our previous post regarding the upcoming changes in Korean VAT legislation as of 1 July 2015, the Korean National Tax Service recently issued its notification clarifying some additional details.
The notification provides details of the VAT treatment of e-services (based on the amended law and relevant presidential decree), which are very similar what we already published on the blog. However, there are some points worth highlighting:
- Simplified registration of businesses: Where the first day of business is prior to July 1, 2015, the taxpayer may apply for the registration by 20 July 2015. (In such cases the business activities are deemed to commence on 1 July 2015 and therefore the taxpayers have 20 days to complete the simplified registration.)
- Currency for VAT filing: Korean won should be used. Where the payment for e-services was made in foreign currency, the payment amount should be converted into Korean won according to the basic exchange rate as of the final date of the relevant taxable period.
- Details for VAT payment: The details for VAT payment will be confirmed by the NTS upon completion of the simplified VAT registration.
- Penalty for unpaid VAT: If a VAT return is filed but no payment is made by the due date, a 3% penalty of the unpaid VAT along with 1.2% of additional penalty tax per month from the due date will be assessed.
Based on the informal update received from the NTS the registration website is still under construction and it is expected to go live early July 2015.