VAT & Withholding Tax Calculator

Value Added Tax is an indirect tax levied on the value added in transactions of goods and services. Korea has applied a single rate of 10% since 1977, calculated by multiplying the supply price by 10%. For example, a product worth 1 million KRW is sold for 1.1 million KRW including 100,000 KRW VAT.

VAT-inclusive calculation is obtained by supply price × 1.1, and VAT-exclusive calculation is calculated by total consideration ÷ 1.1. Excluding VAT from 1.1 million KRW yields a supply price of 1 million KRW and VAT of 100,000 KRW. Such calculations are essential when preparing quotations, issuing tax invoices, and drafting contracts.

Withholding tax is a system where tax is deducted in advance when paying income. Business income is 3.3% (income tax 3% + resident tax 0.3%), other income is 8.8% (income tax 8% + resident tax 0.8%). For a freelance service fee of 2 million KRW, the actual payment is 1,934,000 KRW after deducting 66,000 KRW in withholding tax.

General taxpayers are businesses with annual sales of 80 million KRW or more, subject to a 10% tax rate with full input tax deduction. Simplified taxpayers have annual sales below 80 million KRW, subject to lower rates of 0.5-3% by industry but with limited input tax deduction. General taxpayer status may be advantageous if the purchase ratio is high.

General taxpayers must issue electronic tax invoices by the 10th of the month following the supply date. Tax invoices must include supplier and recipient information, supply price, VAT amount, and issue date. Failure to issue results in an additional tax of 1-2% of the supply price. Issuance is possible through Hometax or ASP.

VAT is filed twice a year. First period final return (January-June) is due by July 25, and second period final return (July-December) is due by January 25 of the following year. The amount obtained by subtracting input tax from output tax is paid, and simplified taxpayers file once a year (in January). Electronic filing is available through Hometax.