[VAT] Tax Rate for Exports in Korea (How to Qualify for the 0% VAT Tax Rate -1 )

The standard VAT (Value Added Tax) rate in Korea is 10%, and it applies to almost all goods and services provided by your company to clients within the country, except for certain non-VAT items. Consequently, when sending invoices to clients, your company adds a 10% VAT to the price of its goods and services.

 

However, what about exports to foreign countries? Are they also subject to the same 10% tax rate? or not?

Here's what I'm going to tell you.

 

 

 

1.Any goods exported to outside of Korea are subject to a 0% VAT tax rate

When it comes to exports, any goods sent outside of Korea are subject to a 0% VAT tax rate. This applies to various export methods, including direct exportation, exportation through agencies, intermediary trade transactions, and more. Importantly, it doesn't matter whether the goods are exported through customs or sent via courier services like DHL – the 0% VAT rate remains applicable.

 

This is because Korea applies the consumer country taxation principle to avoid double taxation and also to promote exports.

 

 

 

2.When goods are supplied to an export company, and that company subsequently exports them outside of Korea, the supply of goods can be eligible for a 0% VAT tax rate.

 

Even if you're not exporting directly to a foreign country, when you sell goods to a Korean company that intends to export those goods, or make export goods using the goods your company provided you can still benefit from the 0% VAT rate. This measure aims to enhance the price competitiveness of exported goods.

The key condition to be aware of is the requirement for obtaining a document called a [local letter of credit] or a [written confirmation of purchase determined].

 

 

*You should check that this only applied to exporting goods. not service. For the way to get applied 0% VAT, Please follow us check our next posting.

 

 

 

 

Thank you for read my article! I hope it helps.

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