Obligation of issuing E-tax invoice; Comprehensive Guide
In accordance with South Korean tax law, obtaining legitimate receipts for expenditures is essential for claiming income deductible expenses. This includes credit or check card receipts, cash receipts, and tax invoices, which are pivotal in filing tax returns. Notably, these tax invoices must reflect a 10% Value-Added Tax (VAT) on the product or service purchased.
Companies registered in court, without exception, must issue tax invoices electronically, under threat of penalty. Similarly, sole proprietors with annual sales exceeding 100 million won, depending on their business scope, are also required to issue electronic tax invoices. These electronic versions necessitate a digital certificate, distinct from the one used in banking.
Essential details on an electronic tax invoice include:
Issue Date: Reflecting the recognition of sales or income, including product delivery and service provision or completion.
Amount: The cost of the product or service provided.
VAT: A 10% Value-Added Tax.
Product/Service Description: The name of the product or service provided.
Client’s Email: For sending the tax invoice.
Once issued, these invoices are uploaded to the National Tax Service (NTS) server and emailed to the client. Accountants can then download these invoices for VAT filing purposes, done quarterly for companies and biannually for sole proprietors.
For physical goods like raw meat or vegetables, a different type of tax invoice, known as a 계산서, is used. This is distinct from the standard 세금계산서 and does not include the 10% VAT. It's vital to recognize that documents such as 거래명세표 or 거래명세서, which are akin to packing or delivery lists, cannot substitute for legitimate tax receipts. Furthermore, these 계산서 cannot be downloaded from the NTS server if issued by a sole proprietor manually. It's advisable to always request these tax-compliant receipts from suppliers, even if it entails a 10% additional cost, for the benefit of tax deductions.
Issuing electronic tax invoices typically incurs a fee ranging from 200 to 1,000 won via specific websites. However, they can be issued free of charge through the "HOME TAX" website.
For more details, please send an e-mail to jz@taxjz.com or If you would like a free consultation with an English-speaking Consultant/Accountant in Korea, please schedule a call at: Schedule a Call with Jz
