South Korea – change in the law for the supply of e-services as from 1 of July 2015

234936_web_R_K_by_Jasper J. Carton_pixelio.deThe amended VAT law for the supply of e-services from overseas has been effective since July 1st, 2015.  Foreign service providers shall apply for the simplified business registration by July 20th, 2015. The Korean tax authorities (National Tax Service (“NTS”) open the website for the application of simplified business registration.

You can reach out to the website via the LINK.

The first page introduces the general aspects of VAT taxation on overseas e-services, and from the menu at upper left side, you can find “Apply Simplified Registration” and the other menus (most of them are still under construction though). The taxpayers whose first day of business to supply e-services into Korea is prior to July 1, 2015 shall apply for the simplified business registration on the website by July 20th, 2015.

Keep in mind that

  • Currency for VAT filing: Korean won should be used. Where the payment for an e-service was made by foreign currency or foreign exchange, the payment amount should be converted into Korean won according to the basic exchange rate as of the final date of the relevant taxable period.
  • Details for VAT payment: The details for VAT payment such as account number, place for tax payment, etc. will be further notified from NTS when a simplified registration of business is informed to each taxpayer.
  • Penalty tax for unpaid VAT: it is mentioned in the notification that if VAT return is filed but VAT payment is not made by the due date, the tax payment notice will be issued by NTS, and the penalty tax is 3% of unpaid tax along with 1.2% of additional penalty tax per month from the due date. To be clear, it refers the VAT payment that has been already obliged by the relevant VAT filing rather than the VAT payment of which relevant filing or even business registration has not been completed, since tax payment obligation can be fixed following the relevant filing. Therefore, we view that there is still no explicit rule for the penalty upon the failure of registration of business or VAT filing of overseas e-service suppliers. Please note that it refers to a general rule for penalty tax pursuant to the Korean National Tax Collection Act, not a specific rule for e-services.

For further details please feel free to contact my colleague of PwC Korea: Changho Jo (

Bildquelle: Jasper J. Carton /

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