VAT Calculator
Calculate supply amount and 10% value-added tax.
Overview
Value Added Tax (VAT) is an indirect tax levied on the value added at each stage of the production and distribution of goods and services. South Korea applies a flat VAT rate of 10%. The VAT Calculator helps you quickly determine the supply value, VAT amount, and total price. It also supports reverse calculation from a VAT-inclusive total to extract the supply value and tax amount, making it invaluable for issuing tax invoices and reconciling transactions. Both registered businesses and freelancers have VAT filing obligations, so accurate computation is essential. Understanding the differences between general and simplified taxpayer regimes, as well as zero-rated and exempt transactions, is critical for proper tax compliance in Korea.
Formula
VAT = Supply Value x 10%. Total Price = Supply Value + VAT. Reverse calculation: Supply Value = Total Price / 1.1, VAT = Total Price - Supply Value. Example: Supply Value of KRW 1,000,000 yields VAT of KRW 100,000 and Total of KRW 1,100,000.
How to Use
- 1Enter the supply value (excluding VAT) or the total price (including VAT).
- 2Select the calculation direction (supply value to total or total to supply value).
- 3Click Calculate to see the supply value, VAT amount, and total price.
Examples
VAT Calculation from Supply Value
Calculating VAT and total price for goods with a supply value of KRW 1,000,000
Reverse Calculation from Total Price
Extracting supply value and VAT from a VAT-inclusive payment of KRW 1,100,000
Small Transaction VAT
Calculating VAT for a cafe beverage with a supply value of KRW 4,545
Background
South Korea's VAT system was introduced on July 1, 1977, and has maintained a flat 10% rate for nearly 50 years — relatively low among OECD nations. VAT accounts for approximately 25% of national tax revenue and operates under the invoice-credit method (prior-stage tax credit). Since 2010, mandatory electronic tax invoice issuance has significantly improved tax transparency. The simplified taxpayer threshold was raised from KRW 48 million to KRW 80 million in annual revenue in 2021. VAT operates as an indirect tax where the final consumer bears the cost and businesses collect and remit it to the government.
Tips
- ✔Simplified taxpayers (annual revenue under KRW 80 million) pay reduced VAT based on industry-specific value-added ratios (15-40%).
- ✔Exports qualify for a zero-rate (0%) VAT.
- ✔VAT returns are filed semi-annually: Period 1 (Jan-Jun) by July 25, Period 2 (Jul-Dec) by January 25 of the following year.
- ✔Proper tax invoices must be issued to claim input VAT credits.
- ✔Certain services like medical care and education are VAT-exempt.
FAQ
Q. Who bears the 10% VAT burden?
VAT is an indirect tax borne by the final consumer. Businesses collect VAT from consumers and remit it to the government.
Q. What is the difference between general and simplified taxpayers?
General taxpayers pay VAT by deducting input tax from output tax (10%). Simplified taxpayers multiply revenue by an industry-specific value-added ratio and then apply 10%. Businesses with annual revenue under KRW 80 million may register as simplified taxpayers.
Q. When are VAT returns due?
Period 1 final return is due by July 25, and Period 2 final return is due by January 25 of the following year. Corporate taxpayers must also file preliminary returns in April and October.
Q. How do I reverse-calculate the supply value from the total price?
Divide the total price (VAT-inclusive) by 1.1. For example, KRW 110,000 / 1.1 = KRW 100,000 (supply value), with KRW 10,000 as VAT.
Q. When can I get a VAT refund?
If input VAT (purchases) exceeds output VAT (sales) — common during initial capital investment or for export-oriented businesses — the difference is refundable. General refunds are paid within 30 days of the final return; early refunds for exports and facility investments are processed within 15 days.
Q. What are the penalties for not issuing electronic tax invoices?
Businesses required to issue electronic tax invoices face a surcharge of 2% of the supply value for non-issuance. Buyers also lose the ability to claim input VAT credits without a proper tax invoice.
Q. What is the difference between VAT-exempt and zero-rated?
VAT-exempt goods/services (medical care, education, basic necessities) are free from VAT but input VAT credits cannot be claimed. Zero-rated transactions (exports, foreign currency-earning services) apply a 0% rate but allow full input VAT credit, enabling refunds.
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