[VAT] Are you familiar with the concept of a 'Corrected Tax Invoice'?

Have you come across the concept of a 'Corrected Tax Invoice'? A Corrected Tax Invoice is a type of invoice used to rectify errors or amend details on a previously issued tax invoice, primarily due to inaccuracies in the initial tax invoice or changes in the terms of a transaction with your clients.

For instance, if you have issued a tax invoice to a client for a sale, but circumstances arise that necessitate the cancellation of the entire transaction, you would need to provide your client with a Corrected Tax Invoice to accurately reflect the revised details.

In these situations, the issuance of a Corrected Tax Invoice is a vital administrative step to ensure compliance with tax regulations and maintain transparent and accurate financial records.

 

Article 32 (Tax Invoices)

(7)

Where an error in the entries in a tax invoice or electronic tax invoice is found or a ground prescribed by Presidential Decree arises in connection with the entries in a tax invoice or electronic tax invoice issued, a new tax invoice (hereinafter referred to as “corrected tax invoice”) or a new electronic tax invoice (hereinafter referred to as “corrected electronic tax invoice”) in which such error, etc. is corrected may be issued, as prescribed by Presidential Decree.

(8)	Matters necessary for preparing and issuing tax invoices, electronic tax invoices, corrected tax invoices, and corrected electronic tax invoices shall be prescribed by Presidential Decree.

 

1.Grounds for issuance of corrected tax invoice 

There are situations where it becomes necessary to amend the details on a previously issued tax invoice. This can occur due to inadvertent errors in the initial issuance or as a result of contractual changes agreed upon between you and your clients.

Please check below Enforcement Decree Of The Value-added Tax Act article 70

 

Article 70 (Grounds and Procedures for Issuance of Corrected Tax Invoices and Corrected Electronic Tax Invoices)

1.	Where the original goods supplied are returned: It shall be prepared by writing the amount in red or adding a negative thereto after entering the return date of goods as the date the tax invoice is prepared and affixing the date the original tax invoice was prepared in its reference column;

2.

Where no goods or services are supplied, due to cancellation of a contract: It shall be prepared by writing the amount in red or adding a negative thereto after entering the date of contract cancellation as the date tax invoice is prepared and affixing the date the original tax invoice was prepared in its reference column;

3.

Where a certain amount is added to, or subtracted from, the value of supply, due to the termination, etc. of a contract: It shall be prepared by writing the added amount in black and writing the subtracted amount in red or adding a negative thereto after entering the date of occurrence of the grounds for addition or subtraction as the date tax invoice is prepared;

4.

Where a local letter of credit is opened or a written verification of purchase is issued within 25 days after the end of the taxable period (if the 25th day after the end of the taxable period falls on a holiday or Saturday, referring to the business day immediately following such day) in which the time of supply of goods or services falls: It shall be prepared by writing the zero-tax rated portion in black and writing the amount described in the original tax invoice in red or adding a negative thereto, after entering the date the original tax invoice was prepared as the date tax invoice is prepared and affixing the opening date, etc. of the local letter of credit in its reference column;

5.

Where any requisite entry item, etc. is wrongly stated in error (excluding where it is known in advance that the tax base or the amount of tax will be rectified, as specified in any of the following items): It shall be prepared by writing the amount described in the original tax invoice in red or adding a negative thereto and other portions in black:

6.

Where any requisite entry item, etc. is wrongly stated except in error (excluding where it is known in advance that the tax base or the amount of tax will be rectified, as specified in any of the items of subparagraph 5): It shall be prepared within one year from the day following the final return deadline for the taxable period in which the date of supply of goods or services falls, by writing the amount described in the original tax invoice in red or adding a negative thereto and other portions in black;

7.	Where a duplicate electronic tax invoice is issued in error: It shall be prepared by adding a negative to the amount described in the original tax invoice;

8.	Where a tax invoice is issued for tax-free or other transactions exempt from issuance thereof: It shall be prepared by writing the amount described in the original tax invoice in red or adding a negative thereto;

9.

Where a tax invoice is issued with the wrongly applied tax rate (excluding where it is known in advance that the tax base or the amount of tax will be rectified, as specified in any of the items of subparagraph 5): It shall be prepared by writing the amount described in the original tax invoice in red or adding a negative thereto and writing other portions in black.

 

2.No penalty for the correction

 

As previously mentioned, there are penalties associated with incorrect tax invoices.

Penalty you should pay when you fail to issue Tax invoice In Korea

Nevertheless, it's important to note that when you issue a corrected tax invoice, you are not subject to any penalty taxes."

 

 

 

 

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