VAT and invoicing in South Korea (2026): e-tax invoices

South Korea’s value added tax (부가가치세) works like VAT elsewhere: you charge it on your sales, deduct the VAT on your business purchases and pay the difference. It is run by the National Tax Service (국세청, NTS), and almost everything, from business registration to returns and tax invoices, happens online in HomeTax (홈택스). Companies have had to issue electronic tax invoices since 2011, so for most businesses the e-invoice is simply how invoicing works. This guide covers what a small business needs to know in 2026. Figures are as of October 2026.

Korea’s VAT at a glance

A business that only makes exempt supplies has no VAT returns to file, but it cannot deduct the VAT on its purchases either.

Who must register: general or simplified taxpayer

Every business that independently supplies goods or services must apply for business registration (사업자등록) at the tax office for each place of business within 20 days of starting, and you may apply before you start. You register as one of two types:

The value-added ratios range from 15% for retail, restaurants and recycling to 40% for financial, professional, scientific and real estate services. Simplified taxation is cheaper, but business customers who need a tax invoice to deduct their VAT may prefer a general taxpayer.

VAT returns and payment

General taxpayers have two six-month tax periods, each with a three-month preliminary period:

• Companies usually file four times a year, sole proprietors twice.
• Sole proprietors and small companies (supplies under KRW 150 million in the previous period) do not file a preliminary return. Instead, the NTS sends a notice in April and October to pay 50% of the previous period’s tax, which is credited in the final return. You can file a preliminary return instead if business has dropped or you want an early refund.
• Simplified taxpayers file once a year, by 25 January, unless they issued tax invoices in the first half or switched type on 1 July, in which case they also file by 25 July.

Tax invoices: what they must show

A tax invoice (세금계산서) is the document your business customer needs to deduct input VAT. Article 32 of the VAT Act lists the required details:

1. 1your business registration number and your name or company name,
2. 2your customer’s business registration number (or another identification number if the customer is not a registered business),
3. 3the supply value and the VAT amount,
4. 4the date of preparation, and
5. 5other details set by presidential decree.

A missing or wrong required detail costs a 1% penalty on the supply value.

• When: at the time of supply. For a monthly consolidated tax invoice (월합계), by the 10th of the following month, or the next working day.
• Consumers: businesses selling to consumers issue receipts, card slips or cash receipts (현금영수증). Consumer-facing businesses must issue a cash receipt for any amount when the customer asks, and businesses in designated industries must issue one for cash payments of KRW 100,000 or more (including VAT) even without a request.
• Keeping records: books, tax invoices and receipts must be kept for five years after the final return deadline for the period (Article 71 of the VAT Act).

Amending a tax invoice

You never edit an issued tax invoice. You issue an amended tax invoice (수정세금계산서), and the NTS rules depend on the reason:

If the amendment changes a period you have already filed, you may also need to file an amended VAT return.

Electronic tax invoices (전자세금계산서)

Korea introduced electronic tax invoices in 2010 and made them mandatory step by step:

Once a sole proprietor crosses the threshold, the obligation continues from 1 July of the following year onwards, and the NTS sends a notice in advance.

• How: through HomeTax or mobile HomeTax free of charge, through a registered issuing service provider, or through a standard-certified in-house system. The file must be the signed XML in the national standard; a PDF or a link alone is not issuance.
• Transmission: the invoice must reach the NTS by the day after it is issued. HomeTax sends it automatically.
• Benefit: if all your electronic tax invoices for a period reached the NTS by the 11th of the month after the period, you only report totals in your return, without the customer-by-customer list.
• Penalties on the supply value: 2% for not issuing, 1% for issuing late (within the final return deadline) or on paper instead of electronically, 0.3% for late transmission and 0.5% for no transmission.

Worked example in won

A general taxpayer, a small furniture maker, has this six-month period:

Customers paid KRW 55,000,000 in total. VAT payable for the period: KRW 5,000,000 − KRW 3,000,000 = KRW 2,000,000, less any amount already paid on the April or October preliminary notice.

A simplified taxpayer running a café (value-added ratio 15%) with annual sales of KRW 80,000,000 and purchases of KRW 30,000,000 would pay roughly KRW 80,000,000 × 15% × 10% = KRW 1,200,000, minus 0.5% of purchases (KRW 150,000) = KRW 1,050,000, before any other credits.

Paying late

• Late payment penalty: unpaid VAT accrues 0.022% per day (22/100,000) until you pay.
• Return penalties: failing to file costs 20% of the tax due (40% if fraudulent), and under-reporting 10% (40% if fraudulent).
• Zero-rated sales reported late or not at all cost 0.5% of the zero-rated amount.

For your own customers, agree the payment term in writing and follow up as soon as an invoice is overdue; our guide on getting paid faster has a practical routine.

Common mistakes

1. 1Registering late. An unregistered business pays a penalty of 1% of its supplies (0.5% for simplified taxpayers).
2. 2Sending a PDF instead of an electronic tax invoice when you are obliged to issue electronically: that is the 1% paper-issuance penalty.
3. 3Transmitting late when you issue through software rather than HomeTax.
4. 4Correcting an invoice by editing it instead of issuing an amended tax invoice with the right date.
5. 5Mixing up exempt and taxable sales, for example on processed and unprocessed food.
6. 6Missing the 25th: the 25 January and 25 July deadlines do not wait for year-end closing.

How Clientlly helps

Clientlly numbers your invoices sequentially per series and puts South Korea’s 10% rate on every invoice, with credit notes linked to the original invoice, so your books reflect each amendment you make. You can invoice foreign customers in multiple currencies, send the PDF in your client’s language with a card payment link, see when it was opened and let automatic reminders go out 3, 14 and 30 days after the due date. Scanned receipts have the VAT read automatically, sales and purchase tax books are kept per rate, including exports, and tax reports with Excel and PDF exports are ready for you and your accountant. See invoicing and reporting.

Clientlly is not an NTS-registered electronic tax invoice service and is not connected to HomeTax. If you must issue electronic tax invoices, issue them in HomeTax or through a registered issuing service.