How vat / sales tax works in South Korea
Korean VAT runs at a single 10% on domestic supplies, with businesses charging output tax, deducting input tax on valid invoices, and filing preliminary and final returns through HomeTax.
Exports, qualifying foreign-currency services to non-residents, and international transport are zero-rated, while finance, insurance, medical, education, and residential leases are largely exempt.
Small traders use simplified taxation with reduced effective burdens, and foreign e-service suppliers register and remit under the simplified B2C regime.
Tax rates at a glance
- Standard VAT
- 10%
- Zero-rated supplies
- 0%
- Exempt supplies
- Exempt
- Simplified small traders
- Reduced
- Foreign e-services
- 10%
- E-invoicing threshold
- Mandatory
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
E-commerce sellersSaaS foundersManufacturersExpatsCross-border traders
Watch out for
- Single-rate simplicity ends at classification: zero-rated foreign-currency services need reciprocity and documentation, not just a non-resident customer.
- Exempt finance, medical, and education supplies block input credits, which reprices mixed businesses against fully taxable competitors.
- E-invoicing duties phase by turnover and entity type, so growing firms cross into mandatory issuance mid-year without a reminder.
- Simplified-trader status caps growth planning, since breaching the line converts the whole compliance posture at once.
Frequently asked questions
What is the VAT rate in South Korea?
South Korea applies a single 10% VAT in 2026 on domestic supplies, with zero-rating for exports and qualifying international services and exemptions for finance, medical, and education.
Do foreign digital sellers charge Korean VAT?
Yes for B2C e-services, through simplified registration and remittance without full domestic establishment. B2B supplies generally reverse-charge to the Korean customer.
What is simplified taxation in Korea?
A reduced-burden track for small traders below the turnover line, with simplified computation and filing. Breaching the threshold moves traders into standard 10% accounting.