VALUE-ADDED TAX ACT Act No. 2934, Dec. 22, 1976 Amended by Act No. 3016, Dec. 19, 1977 Act No. 3100, Dec. 5, 1978 Act No. 3273, Dec. 13, 1980 Act No. 4023, Dec. 26, 1988 Act No. 4164, Dec. 30, 1989 Act No. 4663, Dec. 31, 1993 Act No. 4743, Mar. 24, 1994 Act No. 4808, Dec. 22, 1994 Act No. 5032, Dec. 29, 1995 Act No. 5374, Aug. 28, 1997 Act No. 5585, Dec. 28, 1998 Act No. 6049, Dec. 28, 1999 Act No. 6136, Jan. 12, 2000 Act No. 6305, Dec. 29, 2000 Act No. 6460, Apr. 7, 2001 Act No. 6539, Dec. 29, 2001 Act No. 6905, May 29, 2003 Act No. 7007, Dec. 30, 2003 Act No. 7318, Dec. 31, 2004 Act No. 7876, Mar. 24, 2006 Act No. 8142, Dec. 30, 2006 Act No. 8826, Dec. 31, 2007

(1) Value-added taxes shall be imposed on the transactions falling under the following subparagraphs:1. Supply of goods or services; and2. Import of goods.(2) The term “goods” in paragraph (1) means all tangible things and intangible things which have property value.(3) The term “services” in paragraph (1) means all services and activities other than goods, which have property value.(4) The supply of goods or services indispensably annexed to the supply of goods which is the main transaction shall be deemed to be included in such supply of goods, and the supply of goods or services indispensably annexed to the supply of services which is the main transaction shall be deemed to be included in such supply of services.(5) Necessary matters concerning the scope of goods or services as referred to in paragraph (1) shall be prescribed by Presidential Decree.

(1) A person who independently supplies goods (referring to the goods prescribed in Article 1; hereinafter the same shall apply) or services (referring to the services prescribed in Article 1; hereinafter the same shall apply) on a business basis, regardless of whether it is on a commercial basis or not (hereinafter referred to as the “entrepreneur”) shall be liable to pay value-added taxes pursuant to this Act.(2) A person liable for tax payment under the provisions of paragraph (1) shall include any individual, juristic person (including the State, local governments, and associations established by local governments), unincorporated association and foundation, and other organizations.

(1) The taxable period of value-added taxes for entrepreneurs shall be as follows:First period: from January 1 to June 30; andSecond period: from July 1 to December 31.(2) The initial taxable period for a person starting a new business shall be from the starting date of the business to the closing date of the taxable period in which the starting date of the business is included: Provided, That in case where a registration is made under the proviso of Article 5 (1), the said initial taxable period shall be from the date of the registration to the closing date of the taxable period in which such date of registration is included.(3) When an entrepreneur closes down his business, the taxable period shall be from the starting date of the taxable period in which the date of closing down the business is included to the date of closing down the business: Provided, That if an entrepreneur does not start his business after his registration under the proviso of Article 5 (1), the taxable period shall be until the date on which he actually does not start the business.(4) If any entrepreneur becomes that entrepreneur (hereinafter referred to as a “general taxable person”) to whom the provisions of Chapter Ⅶ are not apply by waiving simplified taxation under Article 30 or the period from the beginning date of the taxable period in which the date of report on the waiver of simplified taxation or special cases of taxation under Article 30 (1) and (2) is included, to the last day of the month in which the date of report is included, and the period from the first day of the month following the month in which the date of report is included, to the date on which the taxable period in which such date of report is included is terminated, shall be one taxable period, respectively. <Newly Inserted by Act No. 4663, Dec. 31, 1993; Act No. 5032, Dec. 29, 1995; Act No. 6049, Dec. 28, 1999>

(1) The value-added tax shall be returned and paid at each business place.(2) In the event that any entrepreneur has not less than 2 business places, such entrepreneur may pay the value-added tax in a lump sum at his principal business place under the conditions as prescribed by the Presidential Decree after applying for and obtaining the approval thereof from the head of tax office having jurisdiction over his principal business place under the conditions as prescribed by the Presidential Decree.(3) Notwithstanding the provisions of paragraph (1), any entrepreneur who has 2 or more different places of business may consolidate his tax returns for such different places of business to his main office or principal place of business to file a single tax return and pay the value-added tax, if he fully satisfies the following requirements (hereinafter referred to as the “entrepreneur qualified for consolidated tax return”), subject to the approval of the head of the competent tax office as prescribed by the Presidential Decree. In this case, his main office or principal place of business shall be deemed as his single place of business for the purpose of the application of this Act in connection with the tax return and payment of the value-added tax: <Amended by Act No. 8142, Dec. 30, 2006>1. The entrepreneur is required to have the computer information-processing equipment prescribed by the Presidential Decree, which makes it possible for the entrepreneur to control the flow of logistics and goods in stock at each of his business places; and2. The entrepreneur is required to apply for and obtain the approval of his return and payment of the value-added tax in a lump sum from the head of tax office having jurisdiction over his main or principal office under the conditions as prescribed by the Presidential Decree.(4) The scope of business places referred to in paragraph (1) shall be prescribed by the Presidential Decree.[This Article Wholly Amended by Act No. 7007, Dec. 30, 2003]

(1) A person who starts a new business shall register each place of business with the head of the competent tax office having jurisdiction over each place of business if he does not fall within the category of the entrepreneur qualified for consolidated tax return, while an entrepreneur qualified for consolidated tax return shall register his main office or principal place of business with the competent tax office, within 20 days after commencement of his business as prescribed by the Presidential Decree: Provided, That a person who intends to start a new business may register it even before the commencement date of the business. <Amended by Act No. 8142, Dec. 30, 2006>(2) The head of tax office having jurisdiction over a business place shall, under the conditions as prescribed by the Presidential Decree, issue to an entrepreneur registered under paragraph (1) a registration certificate with a given registration number (hereinafter referred to as an “entrepreneur’s registration certificate”). <Amended by Act No. 5032, Dec. 29, 1995>(3) Deleted. <by Act No. 5032, Dec. 29, 1995>(4) Where an entrepreneur registered under paragraph (1) suspends or closes down his business or where any other changes in the registered matters have occurred, he shall report it without delay to the head of tax office having jurisdiction over a business place, as prescribed by the Presidential Decree. The same shall apply in case where a person who has registered under the proviso of paragraph (1) has in fact come not to start the business. <Amended by Act No. 5032, Dec. 29, 1995>(5) Where an entrepreneur has closed down his business or has in fact come not to start his business after making the registration under the proviso of paragraph (1), the head of tax office having jurisdiction over a business place shall cancel the relevant registration without delay. <Amended by Act No. 5032, Dec. 29, 1995>(6) The head of tax office having jurisdiction over a business place may, if deemed necessary, renew and issue an entrepreneur’s registration certificate under the conditions as prescribed by the Presidential Decree. <Amended by Act No. 5032, Dec. 29, 1995>

(1) The supply of goods shall be a delivery or transfer of goods pursuant to all contractual and legal grounds.(2) Where an entrepreneur directly uses or consumes for his own business the goods produced or acquired in connection with his own business, those as prescribed by the Presidential Decree shall be considered as the supply of goods. <Amended by Act No. 3016, Dec. 19, 1977>(3) Where an entrepreneur uses or consumes the goods produced or acquired in connection with his own business for his own or his employees’ private purposes or for any other purposes, or where he donates the goods to his customers or to many and unspecified persons, those prescribed by the Presidential Decree shall be considered as the supply of goods. <Amended by Act No. 3016, Dec. 19, 1977>(4) The goods (excluding the goods for which the input tax amount is not deductible pursuant to the provisions of subparagraphs of Article 17 (2)) left over in stock at the time when an entrepreneur closes down a business shall be considered as those supplied to himself. The same shall also apply where an entrepreneur concludes to not start new business, although he completed the registration under the proviso of Article 5 (1). <Amended by Act No. 8142, Dec. 30, 2006>(5) In selling and buying on consignment or through an agent, the consignor or the principal shall be considered to have supplied or received goods directly: Provided, That this provision shall not apply to cases where the consignor or the principal is not identified.(6) A case that falls under any of the following subparagraphs shall not be deemed the supply of goods: <Amended by Act No. 6049, Dec. 28, 1999; Act No. 8142, Dec. 30, 2006>1. Offering any goods as security, which is prescribed by the Presidential Decree;2. Transferring any business, which is prescribed by the Presidential Decree; and3. Paying any tax in kind pursuant to the provisions of Acts, which is prescribed by the Presidential Decree.(7) Necessary matters pertaining to the supply of goods as prescribed in paragraph (1) shall be determined by the Presidential Decree.

(1) The supply of services shall be either the supply of services or having others use the goods, facilities or rights, pursuant to all contractual and legal grounds.(2) Where an entrepreneur supplies services directly for his own business, it shall be considered to have supplied services to himself, under the conditions as prescribed by the Presidential Decree.(3) The supply of services to others without compensation or the supply of labor under an employment relationship shall not be considered as the supply of services.(4) Necessary matters pertaining to the supply of services as provided in paragraph (1) shall be determined by the Presidential Decree.

The import of goods shall be an introduction into the Republic of Korea of goods falling under any of the following subparagraphs (an introduction from the bonded area, in the case of goods passing through a bonded area): Provided, That the case of receiving from the bonded area the goods prescribed in subparagraph 2, and which are not yet loaded on vessels or aircraft, shall be excluded: <Amended by Act No. 5585, Dec. 28, 1998; Act No. 6049, Dec. 28, 1999>1. Goods arriving in the Republic of Korea from a foreign country (including marine products caught and collected in high seas by a foreign vessel); and2. Goods for which a declaration on export is accepted.

(1) The time when the goods are supplied shall be the time as provided in the following subparagraphs:1. When the goods are delivered, in case where the moving of goods is required;2. When the goods are made available, in case where the moving of goods is not required; and3. When the supply of goods is decided, in case where the provisions of subparagraphs 1 and 2 are not applicable.(2) The time when the services are supplied shall be the time when the services are supplied or when the goods, facilities or rights are used.(3) In the event that any entrepreneur is paid the price for goods or services, in whole or in part and delivers a tax invoice provided for in Article 16 or a receipt provided for in Article 32 with respect to such price prior to the arrival of the time referred to in paragraph (1) or (2), the time when such tax invoice and such receipt are delivered shall be deemed the time when such goods or services are supplied or rendered. <Amended by Act No. 7007, Dec. 30, 2003>(4) Necessary matters pertaining to the time of supply provided in paragraphs (1) and (2) shall be determined by the Presidential Decree.

(1) The place of supplying goods shall be those as provided in the following subparagraphs:1. The place where the moving of the goods starts, in case where the moving of goods is required; and2. The place where the goods are located at the time of supplying the goods, in case where the moving of goods is not required.(2) The place of supplying services shall be the place as provided in the following subparagraphs:1. The place where either the services are supplied, or the goods, facilities or rights are used; and2. The place where passengers are boarded or cargoes are loaded, in case where the entrepreneur is a nonresident or a foreign juristic person in the case of international transportation for which the supply of services is made at home and abroad.(3) Necessary matters pertaining to the supply place provided in paragraphs (1) and (2) shall be prescribed by Presidential Decree.

(1) The zero tax rate shall apply to the supply of goods or services under the following subparagraphs: <Amended by Act No. 8826, Dec. 31, 2007>1. Exported goods;2. Services supplied overseas;3. International navigation services by ships or aircraft; and4. Goods or services for earning foreign currency other than those provided in subparagraphs 1 through 3, which are prescribed by Presidential Decree.(2) In applying the provisions of paragraph (1), the zero tax rate shall, in case the entrepreneur is a nonresident or a juristic person of a foreign country, apply only if a Korean resident or juristic person is identically exempted from taxes of the foreign country. <Amended by Act No. 3016, Dec. 19, 1977>(3) Necessary matters concerning the scope of goods or services provided in paragraph (1) shall be prescribed by Presidential Decree.

(1) The supply of such goods or services as provided in any of the following subparagraphs shall be exempted from value-added taxes: <Amended by Act No. 3273, Dec. 13, 1980; Act No. 4023, Dec. 26, 1988; Act No. 4663, Dec. 31, 1993; Act No. 5585, Dec. 28, 1998; Act No. 6049, Dec. 28, 1999; Act No. 6460, Apr. 7, 2001; Act No. 6905, May 29, 2003; Act No. 7007, Dec. 30, 2003; Act No. 8142, Dec. 30, 2006>1. Unprocessed foodstuffs (including agriculture, livestock, fishery and forest products which are served for food), and agriculture, livestock, fishery and forest products which are produced in the Republic of Korea and are not served for food and which are prescribed by Presidential Decree;2. Tap water;3. Briquettes and anthracite coal;3-2. Sanitary products for women’s period;4. Medical and health services (including veterinary services) as prescribed by Presidential Decree, and blood;5. Educational services as prescribed by Presidential Decree;6. Passenger transport services: Provided, That passenger transport services by aircraft, express buses, charter buses, taxis, special vehicles, special-type ships or express railroads which are prescribed by Presidential Decree, shall be excluded;7. Books (including book loan service), newspapers, magazines, official gazettes, news agencies as prescribed by the News Agency Development Act and broadcasting as prescribed by Presidential Decree: Provided, That advertisements shall be excluded;8. Postage stamps (excluding those for collection), revenue stamps, certificate stamps, lottery tickets, and public telephones;9. Tobacco under Article 2 of the Tobacco Business Act and which falls under any of the following items:(a) Tobacco whose selling price under Article 18 (1) of the Tobacco Business Act is not more than the amount of money as prescribed by Presidential Decree; and(b) Tobacco for special use under Article 19 of the Tobacco Business Act, which is prescribed by Presidential Decree;10. Financing and insurance services as prescribed by Presidential Decree;11. Leasing services of residential houses and their appurtenant lands as prescribed by Presidential Decree;12. Lands;13. Manpower services which authors, composers, or other persons as prescribed by Presidential Decree provide vocationally;14. Creative works of art, artistic events, cultural events, and amateur athletic games, as prescribed by Presidential Decree;15. Admission to libraries, science halls, museums, art galleries, zoos, or botanical gardens;16. Goods or services which are provided by any organization for religion, charity, scholarship, relief or other public interests and which are prescribed Presidential Decree;17. Goods or services that are prescribed by Presidential Decree and are provided and rendered by the State, local governments or associations established by local governments; and18. Goods or services which are, without compensation, provided to the State, local governments, associations established by local governments, or organizations for public interests as prescribed by Presidential Decree.(2) The import of such goods as provided in any of the following subparagraphs shall be exempted from value-added taxes: <Amended by Act No. 3273, Dec. 13, 1980; Act No. 4023, Dec. 26, 1988; Act No. 5585, Dec. 28, 1998; Act No. 6136, Jan. 12, 2000; Act No. 6305, Dec. 29, 2000; Act No. 7007, Dec. 30, 2003; Act No. 8142, Dec. 30, 2006; Act No. 8826, Dec. 31, 2007>1. Unprocessed foodstuffs (including agriculture, livestock, fishery and forest products which are served for food) as prescribed by Presidential Decree;2. Books, newspapers and magazines as prescribed by Presidential Decree;3. Goods which are imported by academic research organizations, educational institutions, the Educational Broadcasting System under the Korea Educational Broadcasting System Act, or cultural organizations for scientific, educational and cultural purposes and which are prescribed by Presidential Decree;4. Goods which any foreign country donates to religion, charity or relief organizations for the purpose of religious rites, charity, relief, or other public interests, and which Presidential Decree prescribes;5. Goods which any foreign country donates to the State, local governments, or associations established by local governments;6. Low-priced and duty-free goods that are received by residents;7. Goods which are imported as a result of removal, immigration, or inheritance, which are exempted from customs or to which simplified tariff as prescribed in Article 81 (1) of the Customs Act applies;8. Personal effects, separately delivered baggage, and mailed parcels of travelers, which are exempted from customs or to which a simplified tariff applies;9. Goods imported as commodity samples or advertising materials, which are exempted from customs;10. Goods which are imported, without compensation, for the purpose of a display in any fair, exhibition, prize contest, film festival or any other similar events held in the Republic of Korea, which are exempted from customs;11. Goods which are exempted from customs in accordance with treaties, international laws and rules, or international customs and which are prescribed by Presidential Decree;12. Goods reimported after their export as prescribed by Presidential Decree from among those with respect to which customs are reduced or exempted: Provided, That if reduced, this shall apply only to such reduction;13. Goods imported temporarily under the conditions of exporting them again as prescribed by Presidential Decree from among those with respect to which customs are reduced or exempted: Provided, That if reduced, this shall apply only to such reduction;13-2. Tobaccos as prescribed in paragraph (1) 9; and14. Duty-free or duty-reducible goods other than those under subparagraphs 6 through 13, as prescribed by Presidential Decree: Provided, That in the case of duty-reducible goods, tax exemption shall be limited to that portion for which customs duties are reduced.(3) The supply of goods or services necessarily auxiliary to the supply of goods and services, for which the tax is exempted under paragraph (1) shall be considered to be included in the supply of tax-exempt goods or services.(4) With respect to the supply of goods and services subject to the application of the zero tax rate under Article 11 or falling under paragraph (1)11, 13, or 16, for which value-added taxes are exempted under paragraph (1), the entrepreneur may not be exempted from value-added taxes under the conditions as prescribed by Presidential Decree. <Amended by Act No. 3016, Dec. 19, 1977>(5) Necessary matters pertaining to the scope of goods and services provided in paragraphs (1) and (2) shall be prescribed by Presidential Decree.

(1) The tax base for value-added taxes on the supply of goods and services shall be the total amount of value under the following subparagraphs (hereinafter referred to as “value of supply”): Provided, That value-added taxes shall not be included therein: <Amended by Act No. 6049, Dec. 28, 1999>1. Where payments are given in money, the payments;2. Where other payments than money are given, the current market price of goods and services supplied by the relevant supplier;3. Where payments for the supply of goods are unjustifiably low or no payments are made, the current market price of goods supplied by the relevant supplier;3-2. Where payments for the services rendered are unjustifiably low, the current market price of such services rendered by the relevant supplier; and4. Where the business is closed down, the current market price of inventory goods.(2) Amounts under the following subparagraphs shall not be included in the tax base: <Amended by Act No. 5585, Dec. 28, 1998; Act No. 6049, Dec. 28, 1999; Act No. 8142, Dec. 30, 2006>1. The amount of discount;2. The value of returned goods;3. The value of goods which are damaged, broken, or lost before they reach the person receiving the supply;4. National subsidies and public subsidies;5. Interest received due to a delay in payments for the supply, among overdue interests as prescribed by Presidential Decree; and6. Amount discounted from the value of supply after the goods or services are supplied, which is prescribed by Presidential Decree.(3) The bad debt and bounty on the value of supply after the goods and services are supplied, and other amounts similar to them, shall not be deducted from the tax base. <Amended by Act No. 8142, Dec. 30, 2006>(4) The tax base for value-added taxes on the import of goods shall be the total sum, including the taxable value for customs duties in addition to the customs duties, the individual consumption tax, the liquor tax, the education tax, the special agricultural and fishing village tax, and the tax for transportation, energy and environment. <Amended by Act No. 4663, Dec. 31, 1993; Act No. 4743, Mar. 24, 1994; Act No. 8142, Dec. 30, 2006; Act No. 8826, Dec. 31, 2007>(5) Necessary matters pertaining to the computation of tax base other than those provided in paragraphs (1) through (4) shall be prescribed by Presidential Decree. <Amended by Act No. 8826, Dec. 31, 2007>

The tax rate of value-added taxes shall be 10/100.[This Article Wholly Amended by Act No. 4023, Dec. 26, 1988]

Where an entrepreneur supplies goods and services, the value-added taxes, computed by applying the tax rate under Article 14 to the tax base under Article 13, shall be collected from the person who receives the relevant supply.

(1) Where an entrepreneur registered as a person liable for tax payment supplies goods or services, he shall issue an invoice, stating matters under the following subparagraphs (hereinafter referred to as “tax invoice”) to the person who receives the supply, under the conditions as prescribed by Presidential Decree, at the time provided in Article 9 (or the time specified otherwise by Presidential Decree, if any): Provided, That a tax invoice may be modified for replacement, as prescribed by Presidential Decree, if there occurs any event in connection with the descriptions thereof as prescribed by Presidential Decree including error and correction: <Amended by Act No. 4663, Dec. 31, 1993; Act No. 8142, Dec. 30, 2006; Act No. 8826, Dec. 31, 2007>1. Registration number and name or denomination of the entrepreneur who supplies;2. Registration number of the person who receives;3. The value of supply and the amount of value-added taxes;4. Date of preparation; and5. Matters as prescribed by Presidential Decree, other than those under subparagraphs 1 through 4.(2) Deleted. <by Act No. 4808, Dec. 22, 1994>(3) The head of customs house shall deliver to the importer a tax invoice on goods to be imported under the conditions as prescribed by Presidential Decree.(4) In the case prescribed by Presidential Decree, the provisions of paragraph (1) may not be applied. <Amended by Act No. 4808, Dec. 22, 1994>(5) Necessary matters pertaining to the preparation and issue of tax invoices other than those under paragraphs (1) and (3) shall be prescribed by Presidential Decree. <Amended by Act No. 4808, Dec. 22, 1994>

(1) The amount of value-added taxes payable by an entrepreneur (hereinafter referred to as a “payable tax amount”) shall be the amount computed by deducting the tax amount under the following subparagraphs (hereinafter referred to as an “input tax amount”) from the tax amount on the goods and services supplied by him (hereinafter referred to as “output tax amount”): Provided, That where an input tax amount exceeds the output tax amount, it shall be a refundable tax amount (hereinafter referred to as a “refundable tax amount”): <Amended by Act No. 5032, Dec. 29, 1995>1. The tax amount on the supply of goods and services either used or to be used for his own business; and2. The tax amount on the import of goods either used or to be used for his own business.(2) An input tax amount under the following subparagraphs shall not be deducted from the output tax amount: <Amended by Act No. 3273, Dec. 13, 1980; Act No. 4663, Dec. 31, 1993; Act No. 4808, Dec. 22, 1994; Act No. 5585, Dec. 28, 1998; Act No. 6049, Dec. 28, 1999; Act No. 8826, Dec. 31, 2007>1. An input tax amount, in case where the list of the total tax invoices by customer is not submitted under Article 20 (1) and (2), or the input tax amount on the portion not entered or entered differently from the fact, in case where the whole or part of the registration numbers or supply values by transaction parties is not entered or entered differently from the fact from among the entered items on the submitted list of the total tax invoices by customer: Provided, That the input tax amount in such case as prescribed by Presidential Decree shall be excluded;1-2. An input tax amount, in case where the tax invoice as provided in Article 16 (1) and (3) is not delivered, or the whole or part of the matters to be entered under Article 16 (1) 1 through 4 (hereinafter referred to as a “requisite entry item”) is not entered or entered differently from the fact on the delivered tax invoice: Provided, That the input tax amount in such case as prescribed by Presidential Decree shall be excluded;2. An input tax amount on disbursements which are not directly related to the business;3. A purchase tax amount on the purchase, lease and maintenance of non-business small automobiles;3-2. An input tax amount related to the disbursement of such expenses as are prescribed by Presidential Decree, which are entertainment expenses and similar expenditures;4. An input tax amount related to the business supplying goods or services which are exempted from the value-added taxes (including the input tax amount related to investments), and an input tax amount related to lands as prescribed by Presidential Decree; and5. An input tax amount prior to filing a registration under the provisions of Article 5 (1): Provided, That what is prescribed by Presential Decree shall be excluded.(3) In the event that the tax is imposed on the supply of goods manufactured and processed, or of services created, by an entrepreneur through using, as raw materials, the agricultural, livestock, fishery or forest products supplied with the exemption of value-added taxes (hereinafter referred to as the “tax-exempt agricultural products, etc.”) (excluding a case where such goods and services are not exempted from the value-added tax under Article 12 (4) and are subject to the application of the zero tax rate under Article 11), the amount computed under the conditions as prescribed by Presidential Decree may be deducted as an input tax amount. <Amended by Act No. 4663, Dec. 31, 1993; Act No. 7007, Dec. 30, 2003>(4) The provisions of paragraph (3) shall be applicable only to the case where the entrepreneur submits to the head of tax office having jurisdiction over a business place the documents attesting the fact that he has the tax-exempt agricultural products, etc. supplied under the conditions as prescribed by Presidential Decree, along with the report as provided in Articles 18 and 19. <Newly Inserted by Act No. 4663, Dec. 31, 1993; Act No. 5032, Dec. 29, 1995>(5) Where any goods from which an input tax amount is deducted under paragraph (1) are used or consumed for the business of supplying value-added tax-exempt goods or services, or for any other purposes, the relevant entrepreneur shall, pursuant to Presidential Decree, recalculate the payable or refundable tax amount, and make report and payment thereof to the head of competent tax office, along with a final return of the taxable period concerned prescribed in Article 19. <Amended by Act No. 5032, Dec. 29, 1995; Act No. 5585, Dec. 28, 1998>(6) When any goods for which the input tax amount was not deducted in accordance with paragraph (2) 4 are used or consumed for a taxable business, the entrepreneur may deduct an amount calculated by the formula prescribed by Presidential Decree as the input tax amount for the taxable period within which the day on which such goods are used or consumed for the taxable business falls. <Newly Inserted by Act No. 8142, Dec. 30, 2006>(7) Necessary matters pertaining to the scope of the input tax amounts which are not deducted under the provisions of paragraph (2) shall be prescribed by Presidential Decree.

(1) In case where an entrepreneur supplies goods or services on which the value-added taxes are levied, if the whole or part of the credit sales and other sales claims (referring to one which includes value-added taxes) on the supply of relevant goods or services has become a bad debt and irrecoverable due to a bankruptcy of or compulsory execution against the person receiving the supply, or by such other causes as prescribed by Presidential Decree, the amount computed by the following formula (hereinafter referred to as a “bad debt tax amount”) may be deducted from the output tax amount for the taxable period whereto the day when a relevant bad debt becomes definite belongs: Provided, That if the entrepreneur recovers the whole or part of the bad debt amount, a bad debt tax amount related to the recovered bad debt amount shall be added to the output tax amount for the taxable period whereto the date of recovery belongs:Bad debt tax amount = bad debt amount × 10/110.(2) The provisions of paragraph (1) shall apply only to the case where the entrepreneur submits the documents attesting the fact that the bad debt amount has occurred, along with the report under Article 19, under the conditions as prescribed by Presidential Decree.(3) In application of the provisions of paragraphs (1) and (2), where the entrepreneur in receipt of the supply of goods or services has the whole or part of the bad debt tax amount deducted as an input tax amount under Article 17, and where the bad debt of the supplier becomes definite before the cessation of business by the entrepreneur in receipt of the relevant supply, the amount equivalent to the related bad debt tax amount shall be deducted from an input tax amount for the taxable period whereto the day when the bad debt becomes definite belongs: Provided, That where the relevant entrepreneur fails to make such deduction, the head of a tax office having jurisdiction over a person who has received the supply shall correct such failure under the conditions as prescribed by Presidential Decree. <Amended by Act No. 6049, Dec. 28, 1999>(4) Deleted. <by Act No. 8826, Dec. 31, 2007>(5) Where the relevant entrepreneur who has deducted an input tax amount (including the correction made by the head of the competent tax office) under paragraph (3) refunds the whole or part of the bad debts, a bad debt tax amount relating to the refunded bad debts shall be added to an input tax amount for the taxation period whereto the date of refund belongs, under the conditions as prescribed by Presidential Decree. <Newly Inserted by Act No. 6049, Dec. 28, 1999>(6) Matters necessary for the scope of and the procedures for the bad debt tax amount, other than paragraphs (1) through (3), shall be prescribed by Presidential Decree. <Amended by Act No. 8826, Dec. 31, 2007>[This Article Newly Inserted by Act No. 4663, Dec. 31, 1993]

(1) Where a simplified taxable person as provided in Article 25 is changed to a general taxable person, an amount calculated according to what is prescribed by Presidential Decree with respect to the inventory and depreciable assets at the time of such a change may be deducted as an input tax amount. <Amended by Act No. 5032, Dec. 29, 1995; Act No. 6049, Dec. 28, 1999>(2) The scope and applicable time of the inventory and other necessary matters, concerning the deduction of the inventory input tax amount as provided in paragraph (1), shall be prescribed by Presidential Decree. <Newly Inserted by Act No. 5032, Dec. 29, 1995>[This Article Newly Inserted by Act No. 4663, Dec. 31, 1993]

(1) An entrepreneur shall return the tax base and the payable or refundable tax amount for each scheduled return period to the head of tax office having jurisdiction over the business place, under the conditions as prescribed by Presidential Decree, within 25 days (50 days in the case of any foreign corporation) after termination of the below-mentioned period (hereinafter referred to as a “scheduled return period”) in each taxable period: Provided, That the first scheduled return period for a person who starts or intends to start a new business shall be from the date of starting the business or of making the registration under the proviso of Article 5 (1), to the date of termination of the scheduled return period whereto the date of such a registration belongs: <Amended by Act No. 5032, Dec. 29, 1995; Act No. 5585, Dec. 28, 1998; Act No. 6049, Dec. 28, 1999; Act No. 7007, Dec. 30, 2003>Scheduled return period for the first term: From January 1 to March 31; and Scheduled return period for the second term: From July 1 to September 30.(2) Notwithstanding the provisions of paragraph (1), the head of tax office having jurisdiction over the business place shall, with respect to any individual entrepreneur, determine the amount equivalent to half of the payable tax amount for the immediately preceding taxable period in each scheduled return period (if there exists any tax amount which is deducted or reduced from the tax amount payable under Article 32-2 (1) of this Act or Articles 104-8 (2), 106-4 (1), and 122-2 of the Special Tax Treatment Control Act, it shall be the amount remained after balancing the relevant tax amount; and if there exists any decision or rectification under Article 21 of this Act or any decisions on a revised return and a request for rectification under Articles 45 and 45-2 of the Basic Act for National Taxes, it shall be the amount in which the contents thereof are reflected), and collect it within the relevant scheduled return period under the conditions as prescribed by Presidential Decree: Provided, That in the event that the collectable amount is less than 100,000 won, such amount shall not be collected, and any individual entrepreneur as prescribed by the Presidential Decree may make a return as provided in paragraph (1). <Amended by Act No. 5032, Dec. 29, 1995; Act No. 5585, Dec. 28, 1998; Act No. 6049, Dec. 28, 1999; Act No. 7007, Dec. 30, 2003; Act No. 8142, Dec. 30, 2006>(3) Where the determination under the text of paragraph (2) is made, if any individual entrepreneur makes a return under the proviso of the said paragraph, the relevant determination shall be considered not to have been made.(4) An entrepreneur shall pay the payable tax amount for the relevant scheduled return period to the head of tax office having jurisdiction over the business place, along with the return under paragraphs (1) and paragraph (2) (proviso) (hereinafter referred to as a “scheduled return”), under the conditions as prescribed by Presidential Decree. <Amended by Act No. 5032, Dec. 29, 1995>[This Article Wholly Amended by Act No. 4663, Dec. 31, 1993]

(1) An entrepreneur shall, within 25 days (50 days in the case of any foreign corporation) after termination of the relevant taxable period, report the tax base, the payable or refundable tax amount for each taxable period to the head of tax office having the jurisdiction over the business place, under the conditions as prescribed by Presidential Decree. <Amended by Act No. 3016, Dec. 19, 1977; Act No. 5032, Dec. 29, 1995; Act No. 5585, Dec. 28, 1998; Act No. 6049, Dec. 28, 1999; Act No. 7007, Dec. 30, 2003>(2) An entrepreneur shall pay the payable tax amount for the relevant taxable period to the head of tax office having jurisdiction over the business place along with the tax return under paragraph (1) (hereinafter referred to as a “final tax return”), under the conditions as prescribed by Presidential Decree. <Amended by Act No. 5032, Dec. 29, 1995>

(1) Where an entrepreneur has delivered or received tax invoices under Article 16 (1) and (3), he shall submit a list of the total tax invoices by customer and that by buyer stating the following matters (hereinafter referred to as a “list of the total tax invoices by customer and buyer”) along with the scheduled or final return: Provided, That in case where the provisions of the text of Article 18 (2) are applied, it shall be submitted along with the final return for the current taxable period: <Amended by Act No. 4663, Dec. 31, 1993; Act No. 4808, Dec. 22, 1994; Act No. 8826, Dec. 31, 2007>1. Registration number and name or denomination of the entrepreneur who supplies or is supplied;2. Period of transaction;3. Date of preparation;4. Total of the supply value and that of the tax amount during such transaction period; and5. Matters other than those provided in subparagraphs 1 through 4, which are prescribed by Presidential Decree.(2) Where an entrepreneur who makes a provisional return provided in the proviso of Article 18 (1) and (2) is unable to submit the list of total tax invoice by customer and buyer, together with each provisional return, he may submit it with the final return in the taxable period in which the provisional return period is included. <Amended by Act No. 4663, Dec. 31, 1993; Act No. 4808, Dec. 22, 1994>(3) The head of the customs house who issues tax invoices shall submit the list of total tax invoice by a customer to the head of tax office having jurisdiction over the business place by applying mutatis mutandis the provisions of paragraphs (1) and (2). <Amended by Act No. 5585, Dec. 28, 1998>(4) The State, a local government, a local government association, or any other entity as prescribed by Presidential Decree which received tax invoices shall, if they do not have any duty to pay a value-added tax, submit the list of total tax invoice by a buyer to the head of tax office having jurisdiction over the business place within twenty-five days after the expiration of the taxable period concerned. <Newly Inserted by Act No. 5585, Dec. 28, 1998>(5) Matters other than those as provided in paragraphs (1) through (4), which are necessary for the preparation and submission of the list of total tax invoice by customer and buyer, shall be prescribed by Presidential Decree. <Newly Inserted by Act No. 4663, Dec. 31, 1993; Act No. 4808, Dec. 22, 1994; Act No. 5585, Dec. 28, 1998; Act No. 8826, Dec. 31, 2007>

(1) An entrepreneur who engages in a business enumerated by Presidential Decree, considering the characteristics of the business and the management of tax sources among service businesses, shall submit an income statement along with the provisional or final tax return.(2) Necessary matters concerning the preparation and submission of the income statement shall be prescribed by Presidential Decree.[This Article Newly Inserted by Act No. 8142, Dec. 30, 2006]

(1) Only where an entrepreneur falls under any of the following subparagraphs, the head of tax office or the head of the regional national tax office, having jurisdiction over the business place, or the Commissioner of the National Tax Service, shall decide or rectify the tax base of value-added taxes and tax amount payable or tax amount refundable for the taxable period by investigation: <Amended by Act No. 3016, Dec. 19, 1977; Act No. 4808, Dec. 22, 1994; Act No. 5032, Dec. 29, 1995; Act No. 7007, Dec. 30, 2003; Act No. 8826, Dec. 31, 2007>1. Where the final tax return is not filed;2. Where there are any mistakes or omissions in details of the final tax return;3. Where in filing the final tax return, the list of the total tax invoices by buyer or customer is not submitted, or the whole or part of the entries in such submitted list are not entered or entered differently from the fact; and4. In the events other than those provided in subparagraphs 1 through 3, where value-added taxes are likely to be evaded for reasons as prescribed by Presidential Decree.(2) In the event of a decision or rectification of the tax base and payable tax amount or refundable tax amount for each taxable period under paragraph (1) is made, the head of tax office or the head of the regional national tax office, having jurisdiction over the business place, or the Commissioner of the National Tax Service, shall decide or rectify them on the basis of tax invoices, accounting books, and any other evidence: Provided, That in the case falling under any of the following subparagraphs, the estimation may be made as prescribed by Presidential Decree: <Amended by Act No. 5032, Dec. 29, 1995; Act No. 7007, Dec. 30, 2003>1. If the tax invoices, accounting books, and any other evidence necessary for the calculation of the tax base are either missing or incomplete in their major portion;2. If details of the tax invoices, accounting books, and any other evidence are obviously false in view of the capacity of facilities, number of employees, and the current market prices of raw materials, commodities, products, or various charges; and3. If details of the tax invoices, accounting books, and any other evidence are obviously false in view of the quantities of raw materials used, electric power used, and other operating situations.(3) Where any mistake or omission is found in the tax base and payable tax amount or refundable tax amount that is decided and rectified under paragraphs (1) and (2), the head of tax office or the head of the regional national tax office, having jurisdiction over the business place, or the Commissioner of the National Tax Service, shall immediately rectify again them. <Amended by Act No. 5032, Dec. 29, 1995; Act No. 7007, Dec. 30, 2003>

(1) If an entrepreneur falls under any of the following subparagraphs, the amount indicated in each corresponding subparagraph shall be added to the payable tax amount or deducted from the refundable tax amount: <Amended by Act No. 8142, Dec. 30, 2006; Act No. 8826, Dec. 31, 2007>1. An amount equivalent to one percent of the value of supply from the commencement date of business to the time period for the provisional tax return within which the day on which the application for registration is filed falls(or the corresponding taxable period, if the time period for the provisional tax return has elapsed), where any entrepreneur fails to file an application for registration within the limit time as prescribed in Article 5 (1); and2. An amount equivalent to one percent of the value of supply from the commencement date of business to the time period for the provisional tax return (or the corresponding taxable period, if the time period for the provisional tax return has elapsed) during which the day on which the fact that he has actually engaged in the business is confirmed, where it is confirmed that the entrepreneur completed the registration under the provisions of Article 5 in the name of another person as specified by Presidential Decree but has actually engaged in the business.(2) Where an entrepreneur falls under any of the following subparagraphs, the amount equivalent to 1/100 of the value of supply shall either be added to the payable tax amount or deducted from the refundable tax amount: <Amended by Act No. 3273, Dec. 13, 1980; Act No. 4663, Dec. 31, 1993; Act No. 4808, Dec. 22, 1994; Act No. 5585, Dec. 28, 1998; Act No. 7007, Dec. 30, 2003; Act No. 8142, Dec. 30, 2006>1. If there are requisite entry items omitted partially or completely by mistake or negligence in a tax invoice issued in accordance with the provisions of Article 16 (1), or if there is any description different from the truth;2. Deleted; and <by Act No. 4663, Dec. 31, 1993>3. If he has the input tax amount deducted not by having the credit card sales slips as provided in Article 32-2 (3) and so on delivered, and presenting them to the Government at the time he makes a report as provided in Article 18 (1) and (2) (proviso) or 19 (1), but by such reason as prescribed by Presidential Decree.(3) If any entrepreneur falls under any of the following subparagraphs, an amount equivalent to two percent of the value of supply (or an amount stated in the tax invoice in the case set forth in subparagraph 2) shall be added to the tax amount payable or deducted from the tax amount refundable: <Newly Inserted by Act No. 8142, Dec. 30, 2006; Act No. 8826, Dec. 31, 2007>1. When the entrepreneur has not issued a tax invoice under the provisions of Article 16 (1);2. When the entrepreneur delivered a tax invoice under the provisions of Article 16 (1) without supplying any goods or service; or2-2. When the entrepreneur was delivered a tax invoice under Article 16 (1) without being supplied with any goods or service;3. When the entrepreneur supplied any goods or service, but delivered a tax invoice in any name other than the name of the actual supplier; and3-2. When the entrepreneur was supplied with any goods or service, but was delivered a tax invoice in any name other than the name of the actual supplier.(4) Where an entrepreneur falls under subparagraphs 1 and 2, the amount equivalent to 1/100 of the supply value of the portion which is not entered or entered differently from the fact in the entries of the unsubmitted or submitted list of the total tax invoice by buyer, and if he falls under subparagraph 3, the amount equivalent to 5/1,000 of the supply value shall be added to the payable tax amount or deducted from the refundable tax amount: Provided, That in case where the entries of the list of the total tax invoice by buyer are entered by mistake (excluding the case where it is submitted under Article 20 (2)), and the supply value of the portion for which the fact of trade is confirmed under the conditions as prescribed by Presidential Decree shall not apply: <Newly Inserted by Act No. 4663, Dec. 31, 1993; Act No. 4808, Dec. 22, 1994; Act No. 5032, Dec. 29, 1995; Act No. 7007, Dec. 30, 2003>1. Where the list of the total tax invoice by buyer is not submitted under Article 20 (1) and (2);2. Where the registration number by each customer, or the whole or part of the supply value, of the matters to be entered in the list of the total tax invoice by buyer submitted under Article 20 (1) and (2), is not entered, or is entered differently from the fact; and3. Where the list of the total tax invoice by buyer is submitted under Article 20 (2), and it does not fall under subparagraph 2.(5) In case where an entrepreneur falls under any of the following subparagraphs, the amount equivalent to 1/100 of the supply value corresponding to the input tax amount deducted not by the list of the total tax invoices by customer, but by the tax invoices, or 1/100 of the supply value returned by entering excessively differently from the fact in the entries of the submitted list of the total tax invoices by customer, shall be added to the payable tax amount, or deducted from the refundable tax amount: Provided, That in case where the entries of the list of the total tax invoices by customer are entered by mistake, and the supply value of the portion for which the fact of trade is confirmed under the conditions as prescribed by Presidential Decree, this shall not be applicable: <Newly Inserted by Act No. 4808, Dec. 22, 1994; Act No. 5032, Dec. 29, 1995; Act No. 6049, Dec. 28, 1999; Act No. 7007, Dec. 30, 2003>1. Where an input tax amount is deducted pursuant to the provisions of the proviso of Article 17 (2) 1-2 as prescribed by Presidential Decree;2. Where the list of the total tax invoices by customer as provided in Article 20 (1) and (2) is not submitted, or the whole or part of the registration numbers by customer or supply values in the entry of the submitted list of the total tax invoices by customer, is not entered, or entered differently from the fact: Provided, That case as prescribed by Presidential Decree shall be excluded; and3. Where the supply value in the entry of the list of the total tax invoice by customer submitted under Article 20 (1) and (2), which is entered excessively differently from the fact, is returned.(6) If any entrepreneur does not submit the income statement under the provisions of Article 20-2 (1) or if the income amount stated in a tax return is different from the truth, an amount equivalent to 0.5 percent of the amount not stated in the tax return or the difference between the income amount stated in the tax return and the actual income amount shall be added to the tax amount payable or deducted from the tax amount refundable. <Newly Inserted by Act No. 8142, Dec. 30, 2006>(7) Where any tax base to which the zero tax rate is applicable has not been reported as provided in Article 18 (1) and (2) (proviso) or 19 (1), or where the reported tax base falls short of the tax base be duly reported, an amount equivalent to 1/100 of the tax base not reported (in the case of having reported it in short, the tax base in short) shall either be added to the payable tax amount or deducted from the refundable tax amount. <Newly Inserted by Act No. 3100, Dec. 5, 1978; Act No. 4663, Dec. 31, 1993>(8) The provisions of paragraphs (2) and (4) shall not apply to the parts to which the provisions of paragraph (1) apply, the provisions of paraaphs (1), (4) and (5) shall not apply to the parts to which paragraph (3) apply and the provisions of paragraph (2) shall not apply to the parts to which the provisions of paragraph (4) apply. <Amended by Act No. 8826, Dec. 31, 2007>(9) In the application of the provisions of paragraph (7), the additional tax shall not be levied on the portion on which the additional tax is levied in connection with a provisional return payment as provided in Article 18, in connection with the final return payment as provided in Article 19. <Newly Inserted by Act No. 4663, Dec. 31, 1993; Act No. 4808, Dec. 22, 1994; Act No. 8142, Dec. 30, 2006>

(1) The head of tax office having jurisdiction over the business place shall collect, according to the examples of the collection of national taxes, the tax amount unpaid in case an entrepreneur has paid in short of the reported payable tax amount in his provisional tax return or his final tax return, and the payable tax amount additionally in the case of decision or rectification made under the provisions of Article 21 (1) through (3). <Amended by Act No. 5032, Dec. 29, 1995; Act No. 7007, Dec. 30, 2003; Act No. 8826, Dec. 31, 2007>(2) Where an entrepreneur fails to file a provisional tax return or where details of his tax return filed have any mistake or omission, and in other cases where there are reasons as prescribed by Presidential Decree, the head of tax office having jurisdiction over the business place may decide or rectify by the check of the tax base and the payable tax amount or the refundable tax amount by applying mutatis mutandis the provisions of Article 21, and collect the tax amount according to the examples of collection of national taxes. <Amended by Act No. 3016, Dec. 19, 1977; Act No. 5032, Dec. 29, 1995; Act No. 7007, Dec. 30, 2003>(3) The value-added tax on the importation of goods shall be collected by the head of a customs house according to the examples of the collection of customs duties.

(1) The head of tax office having jurisdiction over the business place shall refund, in each taxable period, the refundable tax amount for the respective taxable period to the entrepreneur as prescribed by Presidential Decree. <Amended by Act No. 5032, Dec. 29, 1995>(2) Where an entrepreneur falls under any of the following subparagraphs, the head of tax office having jurisdiction over the business place may refund the refundable tax amount to the entrepreneur under the conditions as prescribed by Presidential Decree, notwithstanding the provisions of paragraph (1): <Amended by Act No. 5032, Dec. 29, 1995>1. Where the provisions of Article 11 are applicable; and2. Where the business facilities are newly constructed, acquired, expanded, or extended.

(1) With respect to any individual entrepreneur (hereinafter referred to as a “simplified taxable person”) whose proceeds (referring to proceeds including the value added tax; hereinafter referred to as “proceeds from supply”) from the supply of goods and services in the immediately preceding calender year fall short of the amount prescribed by Presidential Decree within the limit of not less than 48 million won and of not more than the amount equivalent to 130/100 of such amount, the value added tax shall be imposed and collected pursuant to the provisions of this Chapter, notwithstanding the provisions of Chapters Ⅳ through Ⅵ: Provided, That the same shall not apply to the entrepreneur falling under each of the following items: <Amended by Act No. 6049, Dec. 28, 1999; Act No. 7007, Dec. 30, 2003; Act No. 8826, Dec. 31, 2007>1. The entrepreneur who has other business place that is not subject to the application of the simplified taxation; and2. The entrepreneur who is prescribed by Presidential Decree taking into account business type, business size and district, etc.(2) With respect to any individual entrepreneur who has started a new business during the immediate preceding year or the immediate preceding taxable period, the provisions of paragraph (1) shall apply on the basis of an amount computed by converting the total amount of the proceeds from supply from the starting date of the business to the closing date of the taxable period in 12 months. In this case, any fraction of one month shall be considered as one month.(3) Any individual entrepreneur who begins a new business shall report it to the director of tax office having jurisdiction over the principal business place, with the registration as provided in Article 5 (1), under the conditions as prescribed by Presidential Decree, if the total amount of the proceeds from supply in a calendar year in which the beginning date of the business is included, is anticipated to be in short of the amount as provided in paragraphs (1) and (2). <Newly Inserted by Act No. 4663, Dec. 31, 1993; Act No. 5032, Dec. 29, 1995>(4) Any individual entrepreneur who has filed a tax return under the provisions of paragraph (3) shall be made a simplified taxable person for the first taxation period: Provided, That the same shall not apply to the case of any entrepreneurs falling under the proviso to paragraph (1). <Amended by Act No. 3100, Dec. 5, 1978; Act No. 4663, Dec. 31, 1993; Act No. 5032, Dec. 29, 1995; Act No. 5585, Dec. 28, 1998; Act No. 6049, Dec. 28, 1999>(5) Where any individual entrepreneur who has failed to register under the provisions of Article 5 (1), and the aggregate of his proceeds from supply in a calendar year whereto the day of commencing a business belongs falls short of the amount prescribed in the provisions of paragraphs (1) and (2), he shall be made a simplified taxable person for the first taxation period: Provided, That the same shall not apply to any entrepreneur who falls under the proviso of paragraph (1). <Newly Inserted by Act No. 4663, Dec. 31, 1993; Act No. 5032, Dec. 29, 1995; Act No. 6049, Dec. 28, 1999; Act No. 7007, Dec. 30, 2003>(6) Any individual entrepreneur whose proceeds from supply, which are decided or rectified under the provisions of Article 28 (1), exceed the amount prescribed in paragraph (1) shall be deemed a simplified taxable person until the taxation period whereto the day of such decision or such rectification belongs. <Amended by Act No. 5032, Dec. 29, 1995; Act No. 6049, Dec. 28, 1999; Act No. 7007, Dec. 30, 2003>

(1) With respect to any simplified taxable person, his proceeds from supply shall be made a tax base. <Amended by Act No. 5032, Dec. 29, 1995; Act No. 6049, Dec. 28, 1999>(2) With respect to any simplified taxable person, an amount calculated by the following calculation formula shall be made a payable tax amount. In this case, where such simplified taxable person runs concurrently two or more types of businesses, the aggregate of amounts calculated by each business type shall be made a payable tax amount: <Amended by Act No. 6049, Dec. 28, 1999; Act No. 8826, Dec. 31, 2007>Payable tax amount = Proceeds from supply in the relevant taxation period × Value added ratio of the relevant business type as prescribed by Presidential Decree within the scope from 10/100 to 50/100 in consideration of the average value added ratio, etc. by business type whose tax return has been filed for immediately preceding three years × 10/100.(3) Where any simplified taxable person is provided with tax invoices under Article 16 (1) or credit card sales slips, etc. under Article 32-2 (3) (hereafter in this Article referred to as “tax invoices, etc.”) by other entrepreneurs, and files the list of the total tax invoices by customer provided for in Article 20 (1) or the statement showing the receipt of credit card sales slips, etc. prescribed by Presidential Decree with the head of a tax office having jurisdiction over his business place as prescribed by Presidential Decree, the amount calculated under any provision of the following subparagraphs shall be deducted from the tax amount to be paid for a taxation period: Provided, That this shall not apply to the input tax amount under any of subparagraphs of Article 17 (2): <Amended by Act No. 6049, Dec. 28, 1999; Act No. 7007, Dec. 30, 2003>1. An amount calculated by multiplying an input tax amount entered in the tax invoices, etc. received during the relevant taxation period by the value added ratio of the relevant business type under paragraph (2);2. Where any simplified taxable person runs concurrently another business type that differs in the value added ratio from the relevant business type under paragraph (2), the amount calculated by respectively applying the value added ratio of the relevant business type under the same paragraph to an input tax amount calculated proportionally under the conditions as prescribed by Presidential Decree; and3. Where any simplified taxable person runs concurrently a taxable business and a tax-free business, the amount calculated under the conditions as prescribed by Presidential Decree.(4) Deleted. <by Act No. 4808, Dec. 22, 1994>(5) The provisions of Article 13 shall apply mutatis mutandis to the calculation of a tax base for any simplified taxable person. <Amended by Act No. 5032, Dec. 29, 1995; Act No. 6049, Dec. 28, 1999>(6) In cases of a simplified taxable person, if the total amount of the amount provided for in paragraph (3) and Articles 26-3 and 32-2 (1) is in excess of the payable tax amount for each taxation period, the relevant excess portion shall be deemed to be null. <Newly Inserted by Act No. 5032, Dec. 29, 1995; Act No. 6049, Dec. 28, 1999; Act No. 7007, Dec. 30, 2003>(7) Where any simplified taxable person’s proceeds from supply for a calendar year, which were determined or rectified under the provisions of Article 28 (1) or for which a modified tax return has been filed in accordance with the provisions of Article 45 of the Basic Act for National Taxes, exceed the amount under the provisions of Article 25 (1), the tax amount to be paid for a taxation period prescribed by Presidential Decree shall be the amount calculated by applying mutatis mutandis the provisions of Article 17, notwithstanding the provisions of Article 25 (6). In such case, the value of supply shall be the amount obtained by multiplying the proceeds from supply by 100/110, and in the calculation of an input tax amount, those resulted after balancing the tax amount deducted under paragraph (3) on the received portion of the tax invoices, etc., shall be applied. <Amended by Act No. 6049, Dec. 28, 1999; Act No. 7007, Dec. 30, 2003; Act No. 8142, Dec. 30, 2006>

Where a general taxable person is converted to a simplified taxable person, the amount calculated under the conditions as prescribed by Presidential Decree with respect to the inventory and depreciable assets (limited to the case of deductions under the provisions of Article 17 (1) through (3)) at the time of the relevant conversion shall be added to the payable tax amount under the provisions of Article 26 (2). <Amended by Act No. 5032, Dec. 29, 1995; Act No. 6049, Dec. 28, 1999; Act No. 8826, Dec. 31, 2007>[This Article Newly Inserted by Act No. 4663, Dec. 31, 1993]

(1) Where any tax is imposed on the supply of goods manufactured or processed or services created by any simplified taxable person running the business type as prescribed by the Presidential Decree through making use, as raw materials, of the agricultural, livestock, fishery or forest products supplied with an exemption from the value-added tax (hereafter in this Article referred to as the “tax-free agricultural products, etc.”), the amount calculated under the conditions as prescribed by the Presidential Decree may be deducted from a tax amount to be paid.(2) The provisions of paragraph (1) shall be applied only to the cases where any simplified taxable person submits, under the conditions as prescribed by the Presidential Decree, a document attesting the fact that he has received the supply of tax-free agricultural products, etc. to the head of a tax office having jurisdiction over his business place along with a tax return under the provisions of Article 27.[This Article Newly Inserted by Act No. 6049, Dec. 28, 1999]

(1) through (4) Deleted <by Act No. 7007, Dec. 30, 2003>(5) Every simplified taxable person shall file a tax return with the head of a tax office having jurisdiction over the business place, on the tax base and the payable tax amount for each taxable period and pay it under the conditions as prescribed by the Presidential Decree within 25 days after the close of relevant taxable period. <Amended by Act No. 5032, Dec. 29, 1995; Act No. 5585, Dec. 28, 1998; Act No. 6049, Dec. 28, 1999>(6) Every simplified taxable person shall submit a list of the total tax invoices by customer provided for in Article 20 (1) when he files a final return referred to in paragraph (5) under the conditions as prescribed by the Presidential Decree. <Amended by Act No. 7007, Dec. 30, 2003>[This Article Wholly Amended by Act No. 3100, Dec. 5, 1978]

(1) The tax base and the tax amount to be paid for any simplified taxable person may be decided or rectified by applying mutatis mutandis the provisions of Article 21. <Amended by Act No. 5032, Dec. 29, 1995; Act No. 6049, Dec. 28, 1999; Act No. 7007, Dec. 30, 2003>(2) Deleted. <by Act No. 5585, Dec. 28, 1998>(3) With respect to th imposition of additional tax against any simplified taxable person, the provisions of Article 22 (1) and (7) shall apply mutatis mutandis: Provided, That “1/100” referred to in subparagraphs of Article 22 (1) shall be made “5/1,000.” <Amended by Act No. 3273, Dec. 13, 1980; Act No. 4663, Dec. 31, 1993; Act No. 4808, Dec. 22, 1994; Act No. 5032, Dec. 29, 1995; Act No. 6049, Dec. 28, 1999; Act No. 7007, Dec. 30, 2003; Act No. 8142, Dec. 30, 2006>(4) Where a person who has received a tax invoice under Article 16 (1) or a credit card sales slip under Article 32-2 (3) fails to receive the deduction as prescribed in Article 26 (3), and where he receives the deduction as an input tax amount under Article 26 (7) via the confirmation by a relevant deciding or rectifying agency under Article 21 (1), the amount equivalent to 1/100 of the value of supply shall be added to the tax amount payable or deducted from the tax amount refundable. <Newly Inserted by Act No. 5585, Dec. 28, 1998; Act No. 6049, Dec. 28, 1999; Act No. 7007, Dec. 30, 2003>(5) With respect to the collection of value-added tax from simplified taxable persons, the provisions of Article 23 shall apply mutatis mutandis. <Amended by Act No. 5032, Dec. 29, 1995; Act No. 6049, Dec. 28, 1999>

(1) Where the proceeds from supply of a simplified taxable person for the corresponding taxation period fall short of 12 million won, a liability to pay the tax amount under the provisions of Article 26 (2) shall be exempted, notwithstanding the provisions of Article 27: Provided, That the same shall not apply to any tax amount that has to be added to the payable tax amount under Article 26-2. <Amended by Act No. 7007, Dec. 30, 2003>(2) The provisions of Article 28 (3) shall not apply to the case where the liability for tax payment is exempted pursuant to the provisions of paragraph (1).(3) As to any simplified taxable person who started a new business during the relevant taxation period, the provisions of paragraph (1) shall be applied based on the amount computed by converting the aggregate of proceeds from supply during the taxation period beginning on the commencement date of business to the last day of the taxation period into an aggregate for six months, while the same provisions shall, as to any person who temporarily suspended or permanently closed down his business or any simplified taxable person who changed taxable type during the relevant taxation period, be applied based on the amount computed by converting the aggregate of the proceeds from supply during the period beginning on the first day of the taxation period to the day on which the business was temporarily suspended or permanently closed down, or the taxable type was changed into an aggregate for six months. In this case, if there is any fraction of less than one month, it shall be deemed one month. <Amended by Act No. 8142, Dec. 30, 2006>(4) If it is confirmed that any entrepreneur who is exempted from the liability for tax payment under the provisions of paragraph (1) has voluntarily paid the relevant tax, the head of the competent tax office shall refund such tax. <Amended by Act No. 8142, Dec. 30, 2006>[This Article Wholly Amended by Act No. 6049, Dec. 28, 1999]

(1) Where any simplified taxable person intends to make himself subject to the application of the provisions for a general taxable person, he may be subject to the application of the provisions of Chapters Ⅳ through Ⅵ, notwithstanding the provisions of Article 25 (1). In this case, he shall file a report thereon with the head of the tax office having jurisdiction over his business place under the conditions as prescribed by Presidential Decree not later than the last day of the month preceding the month in which he intends to be subject to such application. <Amended by Act No. 5032, Dec. 29, 1995; Act No. 6049, Dec. 28, 1999; Act No. 7876, Mar. 24, 2006; Act No. 8826, Dec. 31, 2007>(2) Deleted. <by Act No. 6049, Dec. 28, 1999>(3) Deleted. <by Act No. 4663, Dec. 31, 1993>(4) Any individual entrepreneur who has filed a report pursuant to paragraph (1) shall keep himself subject to the application of the provisions concerning the general taxable person from the first day of the month wherein he intends to make him subject to such application to a taxation period whereto the day coming to fall under the third year belongs. <Amended by Act No. 4663, Dec. 31, 1993; Act No. 5032, Dec. 29, 1995; Act No. 6049, Dec. 28, 1999>

(1) An entrepreneur shall record all facts of transactions related to his payable or refundable tax amount in his accounting books, under the conditions as prescribed by Presidential Decree, and keep them at the place of business.(2) In the event that an entrepreneur supplies concurrently any goods or services exempted from the value-added taxes with the supply of goods or services on which the value-added taxes are levied, or he is subject to the provisions of Article 17 (3), he shall enter separately in the accounting books the taxable supply, tax-exempted supply, and the fact that he has tax-exempt agricultural products, etc. supplied. <Amended by Act No. 4663, Dec. 31, 1993>(3) An entrepreneur shall preserve the accounting books kept under paragraphs (1) and (2) and tax invoices or receipts either issued or received under Articles 16 and 32, for five years from the date of filing a final tax return for the taxable period in which the facts of said transactions are included. <Amended by Act No. 4808, Dec. 22, 1994>

(1) Notwithstanding the provisions of Article 16 (1), if an entrepreneur as prescribed by Presidential Decree supplies goods or services, he shall deliver a receipt under the conditions as prescribed by Presidential Decree.(2) In the case as prescribed by Presidential Decree, the provisions of paragraph (1) may not be applicable.(3) Necessary matters for the entry articles, preparation, etc. of the receipt shall be prescribed by Presidential Decree.[This Article Newly Inserted by Act No. 4808, Dec. 22, 1994]

(1) Where any entrepreneur (excluding any corporation) as prescribed by Presidential Decree supplies goods or services on which valueadded taxes are levied, and issues credit card sales slips under the Specialized Credit Financial Business Act, cash receipts under Article 126-3 of the Special Tax Treatment Control Act or other ones similar thereto as prescribed by Presidential Decree (hereafter referred to as a “credit card sales slip, etc.” in this Article) at the time of delivery of the tax invoices as provided in Article 16 (1), or where he receives the settlement of prices by electronic settlement means as prescribed by the Presidential Decree, the amount equivalent to 1/100 of the issue amount or the settlement amount (2/100 in case for any simplified taxable person operating restaurant business or accommodation business) may be deducted from the payable tax amount. In this case, when the deducted amount is in excess of the payable tax amount prior to the deduction of the relevant amount [referring to the tax amount that is obtained by the deduction from or addition to the tax amount (excluding the additional tax provided for in Article 22 of this Act and Articles 47-2 through 47-5 of the Basic Act for National Taxes) that shall be deducted or added under this Act, the Basic Act for National Taxes, and the Special Tax Treatment Control Act, and if the relevant tax amount calculated is minus, such tax amount shall be deemed “zero”], the portion of such excess shall be deemed null. <Amended by Act No. 4808, Dec. 22, 1994; Act No. 5032, Dec. 29, 1995; Act No. 5374, Aug. 28, 1997; Act No. 5585, Dec. 28, 1998; Act No. 6049, Dec. 28, 1999; Act No. 6539, Dec. 29, 2001; Act No. 7007, Dec. 30, 2003; Act No. 7318, Dec. 31, 2004; Act No. 8142, Dec. 30, 2006; Act No. 8826, Dec. 31, 2007>(2) A credit card sales slip, etc. as provided in paragraph (1) shall be considered as the receipts as provided in Article 32 (1). <Amended by Act No. 4808, Dec. 22, 1994; Act No. 5585, Dec. 28, 1998>(3) In case where an entrepreneur has any goods or service supplied by a general taxable person as specified by Presidential Decree and receives a credit card sales slip, etc. in which the value-added tax amount is identifiable separately, such value-added tax amount shall be deemed input tax amount to be deductible in accordance with the provisions of Articles 17 (1) and 26 (3), if the entrepreneur fully satisfies the following requirements: <Amended by Act No. 8142, Dec. 30, 2006>1. The statement on the receipts of credit card sales slips, etc. shall be submitted as prescribed by Presidential Decree; and2. The credit card sales slips, etc. shall be preserved by applying mutatis mutandis the provisions of Article 31 (3). In this case, it shall be deemed that the evidencing materials have been duly preserved, if those materials have been preserved in accordance with the method provided for in Article 160-2 (4) of the Income Tax Act or Article 116 (4) of the Corporation Tax Act.(4) The Commissioner of the National Tax Service may, if deemed necessary for the management of tax payment, designate any entrepreneur who mainly supplies consumers who are not entrepreneurs with goods or services and who is prescribed by Presidential Decree as a person eligible for joining a credit card franchise under the Specialized Credit Financial Business Act or a cash receipt franchise under Article 126-3 of the Restriction of Special Taxation Act and urge him to run such franchise. <Newly Inserted by Act No. 5585, Dec. 28, 1998; Act No. 7007, Dec. 30, 2003; Act No. 8142, Dec. 30, 2006>(5) Except for the provisions of paragraphs (1) through (4), the scope of tax deduction on the basis of credit card sales slips, designation of persons eligible for joining credit card franchises or persons eligible for joining cash receipt franchises and other necessary matters shall be prescribed by Presidential Decree. <Amended by Act No. 5032, Dec. 29, 1995; Act No. 5585, Dec. 28, 1998; Act No. 7007, Dec. 30, 2003; Act No. 8826, Dec. 31, 2007>[This Article Newly Inserted by Act No. 4663, Dec. 31, 1993]

(1) An entrepreneur as prescribed by Presidential Decree shall install a cash register, and may issue invoices in which the proceeds from supply are recorded. <Amended by Act No. 4663, Dec. 31, 1993>(2) Deleted. <by Act No. 5032, Dec. 29, 1995>(3) Where an entrepreneur has issued invoices and kept the respective audit tapes under paragraph (1), he shall be considered to have issued receipts under Article 32 (1) and to have fulfilled the obligations for bookkeeping under Article 31. <Amended by Act No. 4808, Dec. 22, 1994; Act No. 5585, Dec. 28, 1998>(4) With respect to any person who has installed a cash register under paragraph (1), value-added taxes may be assessed on the basis of cash receipts as prescribed by Presidential Decree.(5) and (6) Deleted. <by Act No. 4663, Dec. 31, 1993>(7) Necessary matters pertaining to the installation and operation of cash registers shall be prescribed by the Presidential Decree.

(1) The Commissioner of the National Tax Service may pay compensation to any person who has received credit card sales slips under the Specialized Credit Financial Business Act or those similar to such slips which are prescribed by the Presidential Decree (hereafter referred to as the “sales slips, etc.” in this Article) along with the supply of goods or services (including those which are exempted from the value-added taxes), through a lottery for such sales slips, etc. received: Provided, That what is prescribed by the Presidential Decree shall be excluded. <Amended by Act No. 8142, Dec. 30, 2006>(2) Any person who runs the credit card business under the Specialized Credit Financial Business Act shall, notwithstanding the provisions of Article 4 of the Act on Real Name Financial Transactions and Guarantee of Secrecy and Article 24 of the Use and Protection of Credit Information Act, furnish information and data pertaining to the transactions of the sales slips, etc. necessary for the lottery under paragraph (1) to the Commissioner of the National Tax Service under the conditions as prescribed by the Presidential Decree. <Amended by Act No. 8142, Dec. 30, 2006>(3) The Commissioner of the National Tax Service may, upon receiving such information and data under paragraph (2), provide any lottery-related institution with them so as to make them available for a lottery.(4) The extinctive prescription against a right for the compensation money under paragraph (1) shall be completed unless it is exercised for three months from the date of payment, and where such prescription is completed, the relevant compensation money shall revert to the National Treasury.(5) The Act on Special Cases concerning Regulation and Punishment of Speculative Acts, etc. shall not apply to the lottery of the sales slips, etc. and the payment of compensation money under the provisions of paragraph (1). <Amended by Act No. 8142, Dec. 30, 2006>(6) In applying the provisions of paragraph (1), the method of lottery, the amount of compensation and other necessary matters shall be prescribed by the Presidential Decree.[This Article Newly Inserted by Act No. 6049, Dec. 28, 1999]

(1) Where an individual entrepreneur falls under any of the following subparagraphs, a tax manager to take care of filing returns, payment, refunds, and any other necessary matters in connection with value-added taxes shall be designated: <Amended by Act No. 4808, Dec. 22, 1994>1. Where the entrepreneur does not normally reside in the business place; and2. Where he desires to stay abroad for six months or longer.(2) In any case other than that as provided in paragraph (1), the entrepreneur may designate as tax manager any person as prescribed by the Presidential Decree, to have him manage other necessary matters, such as returns, payment, refunds, etc. on the value-added taxes. <Newly Inserted by Act No. 4808, Dec. 22, 1994>(3) The entrepreneur shall, upon designating a tax manager under paragraphs (1) and (2), report him to the head of tax office having jurisdiction over the business place, under the conditions as prescribed by the Presidential Decree. This provision shall also apply in case where he changes the reported matters. <Newly Inserted by Act No. 4808, Dec. 22, 1994; Act No. 5032, Dec. 29, 1995>

(1) Any person who receives the supply of services from a person falling under any of the following subparagraphs (excluding the case where he offers the services so furnished to a taxable business) shall collect the value-added taxes at the time of payment for such services, and pay them to the head of tax office having jurisdiction over his business place or the locality of his residence, under the conditions as prescribed by the Presidential Decree by applying mutatis mutandis the provisions of Articles 18 (4) and 19 (2): <Amended by Act No. 4663, Dec. 31, 1993; Act No. 5032, Dec. 29, 1995; Act No. 6049, Dec. 28, 1999; Act No. 8142, Dec. 30, 2006>1. A nonresident or a foreign corporation that does not have any domestic business establishment under the provisions of Article 120 of the Income Tax Act or Article 94 of the Corporation Tax Act (hereafter in this Article referred to as the “domestic business establishment”); and2. A nonresident or a foreign corporation that has the domestic business establishment (limited to what is prescribed by the Presidential Decree, in a case of providing the services with no relations with the domestic business establishment of the nonresident or foreign corporation).(2) Where a person who received the supply of services as provided in paragraph (1) has not paid the value-added taxes to the head of tax office having jurisdiction over the principal business place or locality of residence under the said paragraph, the head of tax office having jurisdiction over the principal business place or locality of residence shall collect the unpaid tax amount plus an amount equivalent to 10/100 of the said tax amount, according to the examples of collection of national taxes. <Amended by Act No. 5032, Dec. 29, 1995>

(1) Public officials engaged in the work of value-added taxes may, if it is necessary for the administrative work on value-added taxes, make an inquiry on matters related to value-added taxes to the obligors for tax payment, persons conducting transactions with them, trade associations participated in by the obligors for tax payment, or any other similar organizations, or investigate the accounting books, documents, and other articles.(2) The head of tax office having jurisdiction over the principal business place may, for the preservation of payment security for value-added taxes or for investigation, order the obligors for tax payment to submit the accounting books, documents, and any other articles, and request other necessary matters. <Amended by Act No. 5032, Dec. 29, 1995>

Necessary matters pertaining to the enforcement of this Act shall be prescribed by the Presidential Decree.

ADDENDA

This Act shall enter into force on July 1, 1977: Provided, That if it is considered necessary in view of the trends in the economic conditions, the enforcement thereof may be postponed as may be prescribed by the Presidential Decree.

(1) With respect to business tax, commodity tax, textiles tax, petroleum tax, electricity and gas tax, traffic tax, admission tax, and entertainment and food tax assessed or assessable under the previous tax Acts at the time when this Act enters into force, they shall be governed by the previous provisions: Provided, That tax withholding under Article 40 of the previous Business Tax Act shall not be conducted after this Act enters into force.(2) Business tax on business conducted prior to the enforcement of this Act shall be imposed as provided in the previous Business Tax Act by setting a period from the beginning date of the taxable period under Article 4 of the previous Business Tax Act to the date before this Act enters into force as one taxable period.(3) The payment period for a tax amount notified under Article 31 of the previous Business Tax Act for the taxable period under paragraph (2) shall be prescribed by the Presidential Decree.

(1) Any amount of tax replaced by value-added taxes of the amount of indirect tax under the previous tax Acts included in the value of the commodities for sale and raw materials for business in stock at the time when this Act enters into force, shall be deducted from the amount of value-added taxes payable under a tax return filed by the respective entrepreneur.(2) The provisions of paragraph (1) shall not apply either to special taxable persons or to any goods in foreign countries or within a bonded area.(3) In the case of paragraph (1), if the value of commodities for sale or raw materials for business is reported falsely, an amount equivalent to 10/100 of the falsely reported value shall be collected as an additional tax.(4) An amount deductible by reporting and the deduction under paragraph (1) shall be prescribed by the Presidential Decree.

With respect to the real estate acquired before this Act enters into force, the provisions of Article 6 (2) through (4) shall not apply: Provided, That this shall not apply to any increased portion where the value of real estate has substantially increased by an expansion or rebuilding after this Act enters into force.

(1) Where a contract is executed before this Act enters into force and the time of supply provided in Article 9 (1) and (2) arrives after this Act enters into force, a person who supplies goods and services shall, regardless of the original contract, collect the value-added taxes calculated by applying the tax rate provided in Article 14 to the contract amount as a standard of assessment.(2) In the case of collecting value-added taxes under paragraph (1). if commodity tax, textiles tax, or petroleum tax under the respective former tax Acts is included in the contract and no special consumption tax is imposed, the remaining balance, after the deduction of the respective previous indirect taxes from the value-added taxes, computed on the amount remaining after the deduction of the said taxes from the contract amount as a tax base, shall be collected.(3) With respect to special taxable persons, the provisions of paragraphs (1) and (2) shall not apply.

(1) A person who started his business before this Act enters into force, shall register as provided in Article 5 not later than twenty days before this Act enters into force.(2) A person who has started business later than twenty days before this Act enters into force shall register as provided in Article 5 within twenty days from the starting date of his business.

(1) During the initial year after this Act enters into force the provisions of Chapter Ⅶ shall apply to the amount of income provided in the previous Business Tax Act, by considering it as the proceeds from supply.(2) Such a person who started business before this Act enters into force and falls under a special taxable person under paragraph (1) may file a report under Article 30 (2) within 10 days after this Act enters into force.

ADDENDA <Act No. 3016, Dec. 19, 1977>(1) (Enforcement Date) This Act shall enter into force on January 1, 1978.(2) (Examples of Application) This Act shall apply from that portion of transactions conducted at the time when and after this Act enters into force: Provided, That the provisions of Articles 19 and 27 shall apply to that portion reported initially after this Act enters into force.ADDENDA <Act No. 3100, Dec. 5, 1978>(1) (Enforcement Date) This Act shall enter into force on the date of its promulgation.(2) (Examples of Application) This Act shall apply from that portion of transactions for the taxable period which initially begins on January 1, 1979: Provided, That the provision of Article 22 (4) shall apply from that portion initially reported in a final tax return after the application of this Act.ADDENDA <Act No. 3273, Dec. 13, 1980>

This Act shall enter into force on January 1, 1981.

This Act shall apply from that portion supplied or supplying initially after this Act enters into force.

In the case of leasing real estate for which the lease contract was made before this Act enters into force, value-added taxes shall be imposed on that portion of the lease falling after this Act enters into force.

Where the value-added taxes shall be imposed as a result of this Act entering into force the supply of value-added tax-exempt lease of real estate or passenger transport services before this Act enters into force, if the person managing the pertinent business (hereinafter referred to as “entrepreneur converted to a taxable person”) entered into a supply contract on a deferred payment basis or interim payment basis to supply goods for business before this Act enters into force and hereby delivered (including making available for use; the same shall apply in this Article) the pertinent goods, it shall be governed by the previous provisions, and, if he received a part of the pertinent proceeds but did not deliver the pertinent goods before this Act enters into force, the provisions of this Act shall apply only to that portion of the transaction in which the time of supply arrives after this Act enters into force.

(1) Where an entrepreneur is converted to a taxable person and enters into a supply contract before this Act enters into force and becomes eligible for the value-added taxes as a result of this Act entering into force, and the amount of the pertinent contract is not amended to the value of supply or the proceeds from supply according to agreement of the parties, the amount of the pertinent contract shall be considered as the value of supply or the proceeds from supply.(2) Where an entrepreneur is converted to a taxable person and enters into a supply contract before this Act enters into force and is eligible for the value-added tax as a result of this Act entering into force, the prices of goods and services supplied after this Act enters into force shall be received or stipulated as receivable before this Act enters into force and the closing day of initial provisional tax return period after this Act enters into force shall be considered as the pertinent time of supply.

(1) An entrepreneur converted to a taxable person shall register with the Government at each business place within 20 days from the date of this Act entering into force under Article 5.(2) Where an entrepreneur converted to a taxable person has already been registered, the direct of tax office having jurisdiction over the principal business place shall issue the business registration certificate as provided prescribed in Article 5(2) on the basis of registered particulars within 10 days following the date of this Act entering into force under the conditions as prescribed by the Presidential Decree.

(1) Where it is not certain whether or not an entrepreneur converted to a taxable person falls under a special taxable person in the initial year after this Act enters into force, the provisions of Article 25 shall apply to the amount of income under the provisions of the Income Tax Act by regarding it as the proceeds from supply.(2) Where the provisions of Article 27 (1) shall apply to the special taxable person under the provisions of paragraph (1) for the initial provisional tax return period after this Act enters into force, the tax amount payable for the immediately preceding taxable period shall be the amount calculated by applying the tax rate provided in Article 26 (1) to the amount that the amount of income provided in paragraph (1) is converted into the equivalent to six months.(3) A special taxable person under paragraph (1) may file a report with the Government under Article 30 (2) within 10 days following the date this Act enters into force.(4) The provisions of the proviso of Article 28 (2) shall apply to that portion of rectification for the initial starting taxable period after enters into force.(5) The provisions of the proviso of Article 28 (3) shall apply to that portion of tax return filed initially after this Act enters into force.

The provisions of Article 17 (2) 1 and 3-2 shall apply to that portion of the tax amount payable calculated for the initial starting taxable period after this Act enters into force.

The provisions of Article 6 (2) through (4) shall not apply to real estate and special kinds of ships acquired by an entrepreneur who converted to a taxable person before this Act enters into force: Provided, That this shall not apply to the increased portion, where the value of those goods remarkably increases as a result of capital expenditure to the pertinent goods after this Act enters into force.

ADDENDA <Act No. 4023, Dec. 26, 1988>

This Act shall enter into force on January 1, 1989.

This Act shall apply to the portion which a person supplies or is supplied with for the first time after this Act enters into force: Provided, That the amended provisions of Article 29 (1) shall apply to the portion reported for the first time after this Act enters into force.

The value-added taxes which are imposed or to be imposed at the time when this Act enters into force shall be subject to the previous provisions.

ADDENDA <Act No. 4164, Dec. 30, 1989>(1) (Enforcement Date) This Act shall enter into force on January 1, 1990.(2) (Application Examples) The amended provisions of Article 29 (1) shall apply to the portion in the taxable period starting for the first time after this Act enters into force.ADDENDA <Act No. 4663, Dec. 31, 1993>

This Act shall enter into force on January 1, 1994: Provided, That the amended provisions of Articles 20 and 22 (3) shall enter into force on July 1, 1994.

This Act shall apply to the portion which a person supplies or is supplied with for the first time after this Act enters into force: Provided, That the amended provisions of Articles 20 and 22 shall apply to the portion reported for the taxable period beginning for the first time after this Act enters into force.

The amended provisions of Article 13 (4) shall apply to the portion of import reported for the first time after this Act enters into force.

The amended provisions of Article 17 (4) shall apply to the portion of the payable tax amount calculated for the taxable period reported, under Article 19, for the first time after this Act enters into force (including the portion of the scheduled return period as provided in Article 18).

The amended provisions of Article 18 (2) shall apply to the portion of the scheduled return period in the taxable period beginning for the first time after this Act enters into force.

In application of the amended provisions of Article 20, if the tax invoices to be delivered or received at the time of supplying or receiving goods or services before July 1, 1994, are submitted to the Government when the provisional return or final tax return is made under Article 18 or 19, it shall be governed by the provisions of the previous Article 20.

(1) If an entrepreneur fails to submit the tax invoices delivered upon supplying goods or services before July 1, 1994, under the previous Article 20 (1), or the requisite entries are not wholly or partly entered in the submitted tax invoices, or such entries are different from the fact, the additional tax shall be imposed under the previous Article 22.(2) If an entrepreneur submits under the previous Article 20 (2), a tax invoice delivered in the event that goods or services are supplied before July 1, 1994, the additional tax shall be imposed under the previous Article 22.(3) The provisions of paragraphs (1) and (2) shall not apply to the portion to which the amended provisions of Article 22 (2) are applied.

ADDENDA <Act No. 4743, Mar. 24, 1994>

This Act shall enter into force on July 1, 1994.

ADDENDA <Act No. 4808, Dec. 22, 1994>

This Act shall enter into force on January 1, 1995.

This Act shall apply to the portion which a person supplies or is supplied with beginning for the first time after this Act enters into force.

The amended provisions of Article 22 (3) shall apply to the portion returned for the first time after this Act enters into force.

Any value-added tax imposed or to be imposed pursuant to the previous provisions at the time when this Act enters into force, shall be subject to the previous provisions.

Notwithstanding the amended provisions of Article 32, any person who delivers the receipts under this Act, may deliver a simplified tax invoice under the previous provisions in lieu of a receipt, until June 30, 1995, and in this case, the simplified tax invoice shall be considered as receipt as provided in this Act.

ADDENDA <Act No. 5032, Dec. 29, 1995〉

This Act shall enter into force on January 1, 1996: Provided, That the amended provisions of Articles 3, 17-3, 17-4, 18 (2), 25 through 28, and 30 shall enter into force on July 1, 1996.

This Act shall apply to the portion which a person supplies or is supplied beginning for the first time after this Act enters into force: Provided, That the amended provisions of Article 22 (3) and (4) shall apply to the portion reported for the first time after this Act enters into force.

(1) With respect to any individual general taxable person whose proceeds from supply of goods or services from January 1 to December 31, 1995 (in case of a person who has commenced the new business in 1995, the amount calculated under Article 25 (2)) are under the amount as set forth by the amended provisions of Article 25 (1) 1, the provisions concerning the simplified taxable person shall apply on July 1, 1996, except in case where the entrepreneur makes the return to the head of tax office having jurisdiction over the principal business place for which he desires to have them applied, not later than June 20, 1996.(2) Where an individual entrepreneur who makes the entrepreneur registration during the first taxable period in 1996, and whose the sum of proceeds from supply from the date he commences his business, to the date the first taxable period in 1996 is determined, converted into twelve months, is estimated to be short of the amount as set forth by the amended provisions of Article 25 (1) 1, desires to have the simplified taxation applied from the second taxable period in 1996, he shall report the application of the simplified taxation to the head of tax office having jurisdiction over the principal business place, not later than June 20, 1996.(3) Where a special taxable person desires to have the provisions concerning the simplified taxable person applied from the second taxable period in 1996, he shall report the application as simplified taxable person to the head of tax office having jurisdiction over the principal business place, not later than June 20, 1996.

(1) The tax credit on tax invoice, etc. as set forth by the amended provisions of Article 26 (3), shall be applied only in case where the tax invoices, the credit card sales slips as provided in Article 32-2, and the invoices as provided in the latter sentence of Article 32-2 (3), which are delivered in connection with the goods or services supplied after this Act enters into force.(2) Notwithstanding the revised provisions of Article 26 (3), with respect to any entrepreneur the value-added rate of whose business is not less than 40/100 under Article 26 (2), and whose tax base is less than fifty million won in a taxable period, 30/100 of the imput tax amount specified in the tax invoice, etc. as to the portion supplied in 1996, and 25/100 as to that in 1997, shall be deducted from the payable tax amount for the scheduled return period or the taxable period, respectively.

The amended provisions of Article 29 shall begin to apply to the returned portion for the taxable period commencing for the first time after this Act enters into force.

Any value-added tax levied or to be levied pursuant to the previous provisions, at the time when this Act enters into force, shall be governed by the previous provisions.

In application of the amended provisions of Article 17-4, any portion supplying or supplied from January 1, 1996 to June 30, 1996, shall be subject to the previous provisions.

ADDENDA <Act No. 5374, Aug. 28, 1997>

This Act shall enter into force on January 1, 1998.

ADDENDA <Act No. 5585, Dec. 28, 1998>

This Act shall enter into force on January 1, 1999.

This Act shall apply to goods or services which a person supplies or is supplied or the import of which is reported initially after this Act enters into force: Provided, That the amended provisions of Article 12 (1) 3 shall apply to services the supply of which initially commences after this Act enters into force.

The amended provisions of Article 17 (5) shall apply where goods, the input tax amount of which is deducted, are initially used or consumed for a business of supplying value-added tax-exempt goods or services or for any other purposes after this Act enters into force.

The amended provisions of Articles 18 (2) and 27 (1) shall apply to tax amounts which are initially determined or collected after this Act enters into force.

If an entrepreneur who conducts a business on which a value-added tax is imposed under the amended provisions of Article 12 (1) 13 makes a contract to supply goods for a business before this Act enters into force, the imposition of a value-added tax on such goods shall be conformed to the previous practices with regard to the delivery thereof (including the goods which are usable; hereinafter the same shall apply), and this Act shall apply to goods supplied after this Act enters into force where part of the proceeds of goods are received but said goods are not delivered before this Act enters into force.

ADDENDA <Act No. 6049, Dec. 28, 1999>

This Act shall enter into force on January 1, 2000: Provided, That the amended provisions of Articles 3, 17-3, 25, 26, 26-2, 26-3 and 27 (the portion in which the ratio of proceeds from supply for a scheduled return period is changed to 1/3 from among the amendments to the proviso of paragraph (1) of the same Article shall be excluded) through 30 shall enter into force on July 1, 2000.

This Act shall apply starting with the portion of supplying or of being supplied or of an import declaration filed for the first time after the enforcement of this Act.

(1) The amended provisions of Article 17-2 (3) (proviso) and (4) shall apply starting with the portion in which a loss from bad loans is made definite and then such loss is deducted from the output tax amount for the first time after the enforcement of this Act.(2) The amended provisions of Article 18 (2) and Article 27 (1) (limited to the portion in which the ratio of the proceeds from supply for a scheduled return period is changed to 1/3 from among the amended provisions of the proviso of paragraph (1) of the same Article) shall apply starting with the portion that is decided on and collected for the first time after the enforcement of this Act.

(1) The amended provisions of Article 26 (3) shall apply starting with to the portion of any tax invoices, etc. that are furnished (including the case in which a list of the total tax invoices by customer is furnished under Article 20 (1) and (2)) after having received in relation to goods supplied or services rendered for the first time after the enforcement of this Act.(2) In applying the amended provisions of Article 26 (3), the value added ratio prescribed by the Presidential Decree shall apply to the portion of taxation period ranging from July 1, 2000 until December 31, 2003, notwithstanding the amended provisions of the same paragraph.

The amended provisions of Article 29 shall apply starting with a tax return filed for a taxation period that commences for the first time after the enforcement of this Act.

(1) The provisions concerning the general taxable person shall apply to any individual entrepreneur starting on July 1, 2000, who is equivalent to the simplified taxable person as of June 30, 2000.(2) The provisions concerning the simplified taxable person shall apply to any individual entrepreneur starting on July 1, 2000, who is equivalent to the special taxable person as of June 30, 2000.(3) The provisions concerning the simplified taxable person shall, notwithstanding the provisions of paragraph (1), apply to any previous simplified taxable person or any previous general taxable person starting on July 1, 2000, whose proceeds from supply of goods or services during the period from January 1, 1999 to December 31, 1999 (in case of a person who commences a new business in mid-1999, an amount calculated according to the provisions of Article 25 (2)) fall short of the amount described in the provisions of the text of Article 25 (1): Provided, That any person who has given up the special case of taxation or the simplified taxation under the previous provisions and any other person who runs the business excluded from the application of the provisions concerning the simplified taxation under the amended provisions of Article 25 (1) shall be excluded.(4) The provisions concerning the general taxable person shall, notwithstanding the provisions of paragraph (2), apply to any special taxable person starting on July 1, 2000, whose proceeds from supply of good and services during a period from January 1, 1999 to December 31, 1999 (in case of a person who commences a new business in mid-1999, an amount calculated according to the provisions of Article 25 (2)) exceed the amount described in the provisions of the text of Article 25 (1).(5) Any general taxable person who is made subject to the application of provisions concerning the simplified taxable person under the provisions of paragraph (3) by the enforcement of this Act, may be made subject to the application of provisons concerning the general taxable person even after July 1, 2000, in case where he files a tax return by applying mutatis mutandis the previous provisions of Article 30 prior to the enforcement of this Act.

(1) For any entrepreneur who falls under any of the following subparagraphs and is subject to the provisions concerning the general taxable person, 20% of the payable tax amount for the second taxation period of 2000, and 10% of the payable tax amount for the first and second taxation periods of 2001 shall be reduced, respectively: Provided, That the same shall not apply to the portion of taxation period not subject to the application of the provisions concerning the general taxable person:1. A person who is a simplified taxable person as of June 30, 2000, and whose proceeds from supply for the immediately preceding calendar year (an amount calculated according to the provisions of Article 25 (2) in case of a person who commences a new business in mid-1999) fall short of 150 million won, from among those slated to become the general taxable persons starting from July 1, 2000;2. A special taxable person whose proceeds from supply of goods or services from January 1, 1999 to December 31, 1999 (an amount calculated according to the provisions of Article 25 (2) in case of a person who commences a new business in mid-1999) fall short of 150 million won, and who is slated to become a general taxable person starting from July 1, 2000;3. A person whose proceeds converted to the amount for 12 months fall short of 150 million won, from among the special taxable persons who have started a new business during the first taxation period of 2000 and whose aggregate of proceeds from supply for the first taxation period of 2000, if converted to the amount for 12 months, exceeds the amount under the text of Article 25 (1), and who are to be subject to the application of provisions concerning the general taxable persons starting from January 1, 2001;4. A person who is a general taxable person who commences a new business during the second taxation period of 2000 and in mid-2001, and whose aggregate of proceeds from supply during the taxation period wherein he has started the new business, if converted to the amount for 12 months, fall short of 150 million won; and5. A person whose proceeds from supply for the immediately preceding calendar year fall short of 150 million won, from among the simplified taxable persons whose proceeds from supply of goods or services from January 1, 2000 to December 31, 2000 (an amount calculated according to the provisions of Article 25 (2) in case of those who have started a new business in mid-2000) exceed the amount under the provisons of the text of Article 25 (1) and who are to be subject to the application of provisions concerning the general taxable persons starting from July 1, 2001.(2) With respect to any simplified taxable person under the amended provisions of Article 25, the payable tax amount may be reduced according to the value added ratio prescribed by the Presidential Decree with respect to the portion of a taxation period ranging from July 1, 2000 until December 31, 2003.

Any value added taxes imposed or to be imposed in accordance with the previous provisions at the time of enforcement of this Act shall be governed by the previous provisions.

The previous provisions of Article 17-3 shall apply to the cases of any special taxable persons under the previous provisions who are to be altered to the general taxable persons from July 1, 2000 by the enforcement of this Act.

In applying the scheduled notice under the amended provisions of Article 18 (2), the calculation of payable tax amount for the immediately preceding taxation period with respect to the first scheduled notice to the special taxable person or the simplified taxable person under the previous provisions, who is to be subject to the application of provisions concerning the general taxable persons starting from July 1, 2000, shall be governed by the previous provisions of Article 27 (1).

(1) The previous provisions of Article 30 (4) shall apply to any person who has become subject to the application of provisions concerning the general taxable persons through the waiver of the simplified taxation or the special case of taxation under the provisions of Article 30 prior to the enforcement of this Act.(2) The provisions concerning the general taxable persons shall apply to any entrepreneur who has become subject to the application of the simplified taxation through the waiver of the special case of taxation prior to the enforcement of this Act and who is to be subject to the application of provisions concerning the general taxable persons starting from July 1, 2000 under the amended provisions of Article 25 (1), until the period for which he has to be subject to such application under the previous provision of Article 30 (4).

ADDENDA <Act No. 6136, Jan. 12, 2000>

This Act shall enter into force two months after the date of its promulgation.

ADDENDA <Act No. 6305, Dec. 29, 2000>

This Act shall enter into force on January 1, 2001.

ADDENDA <Act No. 6460, Apr. 7, 2001>

This Act shall enter into force on July 1, 2001.

ADDENDA <Act No. 6539, Dec. 29, 2001>(1) (Enforcement Date) This Act shall enter into force on July 1, 2002.(2) (Applicable Examples) This Act shall apply to the portion provided for the first time after the enforcement of this Act.(3) (Transitional Measures) With regard to the value-added taxes to have been levied or to be levied pursuant to the previous provisions at the time of enforcement of this Act, the previous provisions shall govern.ADDENDA <Act No. 6905, May 29, 2003>

This Act shall enter into force three months after the date of its promulgation. (Proviso Omitted.)

ADDENDA <Act No. 7007, Dec. 30, 2003>

This Act shall enter into force on January 1, 2004: Provided, That the amended provisions of Article 4 (3) and Article 25 (1) shall enter force on January 1, 2005, the amended provisions of Article 12 (1) 3-2 shall enter into force on April 1, 2004 and the amended provisions of Article 32-2 (1), (4) and (5) (limited to the matters concerning cash receipts and cash receipt franchises) shall enter into force on the date on which the amended provisions of Article 126-3 of the Special Tax Treatment Control Act enters into force.

This Act shall apply, starting with the portion that first supplies or is first supplied or the portion on which an import declaration is first filed after the enforcement of this Act.

The amended provisions of Article 9 (3) shall apply, starting with the portion on which a tax invoice or a receipt is delivered.

The amended provisions of Articles 18 (1) and (2) and 19 (1) shall apply, starting with the portion which is returned and collected during the taxation period that commences after the enforcement of this Act.

The amended provisions of the proviso of Articles 22 and 28 (3) shall apply, starting with the portion on which the additional tax is imposed during the taxation period that commences first after the enforcement of this Act.

(1) The amended provisions of Article 25 (1) shall apply, starting with the portion to which the simplified tax imposition is applied during the taxation period that commences after January 1, 2005.(2) The amended provisions of the proviso of Article 25 (5) shall apply, starting with the portion to which the simplified tax imposition is applied during the taxation period that commences after the enforcement of this Act.

The amended provisions of Article 26 (3) and (6) shall apply, starting with the portion that is first deducted during the taxation period that commences after the enforcement of this Act.

The amended provisions of Article 27 shall apply, starting with the portion that is returned or collected during the taxation period that commences after the enforcement of this Act.

The amended provisions of Article 29 (1) shall apply, starting with the portion on which any general taxable person is converted to a simplified taxable person during the taxation period that commences after the enforcement of this Act.

In the event that any entrepreneur who is shifted to an entrepreneur entitled to the exemption of the value-added tax under the amended provisions of Article 12 (1) 3-2 or any entrepreneur whose business is added with any tax-free business directly uses goods that he has acquired prior to the enforcement of this Act for any business that is exempted from the value-added tax, the provisions of Articles 6 (2) and 17 (5) shall not apply thereto.

ADDENDA <Act No. 7318, Dec. 31, 2004>(1) (Enforcement Date) This Act shall enter into force on January 1, 2005.(2) (Application Examples regarding Deduction of Tax Amount Concomitant with Use of Credit Card) The amended provisions of Article 32-2 (1) shall apply to the portion of supplying or being supplied on or after the date when this Act enters into force.ADDENDA <Act No. 7876, Mar. 24, 2006>(1) (Enforcement Date) This Act shall enter into force on the date of its promulgation.(2) (Application Examples regarding Reports on Waiver of Simplified Taxation) The amended provisions of the latter part of Article 30 (1) shall apply to the portion reported on or after the date when this Act enters into force.ADDENDA <Act No. 8142, Dec. 30, 2006>

This Act shall enter into force on January 1, 2007: Provided, That the provisions of Articles 4 (3) and 5 (1) as amended shall enter force on January 1, 2008.

This Act shall be applicable to the cases of supplying or being supplied and the cases for which an import declaration is filed on or after the enforcement date of this Act.

The provisions of Articles 4 (3) and 5 (1) as amended shall be applicable to entrepreneurs in connection with the goods and service supplied from or to another person on or after the day on which the entrepreneurs obtain an approval of the head of the competent tax office for the entrepreneur qualified for consolidated tax return after the enforcement of this Act.

The provisions of Article 17 (6) as amended shall be applicable to the cases where depreciable assets that shall be used or consumed for a tax-exempt business are used or consumed for any taxable business on or after the enforcement date of this Act.

The provisions of Articles 22 (1) 2 and 28 (3) (limited to the portion to which the provisions of Article 22 (1) 2 shall apply mutatis mutandis) as amended shall be applicable to the taxation period that commences on or after the enforcement date of this Act.

The provisions of Article 29 (3) as amended shall be applicable to the cases for which a tax return is filed on or after the enforcement date of this Act, while the provisions of Article 29 (4) as amended shall be applicable to the payments made on or after the enforcement date of this Act.

The provisions of Article 32-2 (3) as amended shall be applicable to the cases for which a tax return is filed on or after the enforcement date of this Act.

(1) Every entrepreneur who benefits from the application of consolidated tax return and payment for his businesses under the former provisions of Article 4 (3) as of the enforcement date of this Act shall obtain a new approval of the head of the competent tax office therefor in accordance with the amended provisions of Article 4 (3) within 3 months after the enforcement of this Act.(2) An entrepreneur who benefits from the application of consolidated tax return and payment for his businesses under the former provisions of Article 4 (3) as of the enforcement date of this Act shall be governed by the former relevant provisions until and unless he obtains an approval of the head of the competent tax office therefor in accordance with the amended provisions of Article 4 (3).(3) When an entrepreneur to whom the former provisions are applicable as of the enforcement date of this Act obtains a new approval of the head of the competent tax office therefor in accordance with the amended provisions of Article 4 (3), he shall file an application for deletion of the business registration of each place of business except his main office or principal place of business in accordance with the provisions of Article 5 (1) as amended, and if such an application for deletion is not filed, the head of competent tax office having jurisdiction over each place of business shall delete the business registration of each place of business by virtue of his authority.(4) If an entrepreneur to whom the former provisions are applicable as of the enforcement date of this Act does not file an application for new approval for the entrepreneur qualified for consolidated tax return in accordance with the amended provisions of Article 4 (3) and the provisions of Article 8 (1) of the Addenda or fails to obtain an approval of the head of the competent tax office after filing an application, the provisions of Article 4 (2) shall apply to such an entrepreneur.

(1) Notwithstanding the amended provisions of Article 22 (5), the additional tax already imposed or to be imposed upon value-added tax pursuant to the former provisions of Article 22 (5) before the enforcement of this Act shall be governed by the former relevant provisions.

ADDENDA <Act No. 8826, Dec. 31, 2007>

This Act shall enter into force on January 1, 2008.

The amended provisions of Article 17 (2) 3 shall apply from the portion supplying or supplied first, or the portion declaring import first after this Act enters into force.

The amended provisions of Article 22 (3) and (8) shall apply from the portion on which additional tax is imposed on the taxation period commenced after this Act enters into force.

The amended provisions of Article 32-2 (1) shall apply from the portion supplying or supplied first, or the portion declaring import first after this Act enters into force.