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South Korea CTC Requirements
Understand more about South Korea’s continuous transaction controls including when businesses need to comply and how Sovos can help.
South Korea's Long Standing e-Tax Invoice System
South Korea E-Invoices
South Korea introduced its Electronic Tax Invoice System i.e. e-Tax in 2010. Since 2011, this has become a mandatory e-invoicing requirement alongside the obligation to report e-tax invoices shortly after issuance. This requirement means South Korea has a continuous transaction controls (CTCs) reporting obligation. The scope of the mandate has been expanded to cover more taxpayers, however the initial workflows and requirements of the mandate have remained relatively stable.
E-invoicing in South Korea has been mandatory for all corporations since 2011 and for individual taxable persons when exceeding a certain turnover threshold.
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Mandate quick facts
- Mandatory e-invoicing with CTC reporting model: An issued e-tax invoice must be transmitted to the National Tax Service (NTS) within one day of the invoice being issued
- Invoice data is reported to the NTS in XML format
- Invoices and amended invoices (credit and debit notes) are in scope
E-invoicing in South Korea applies to domestic transactions only. Cross border transactions are out of scope
Mandate rollout dates
- January 2011: The electronic issuance of VAT invoices and next day reporting became mandatory for all Korean corporate taxpayers
- January 2012: : In addition to the first category, sole proprietors with a supply value of 1 billion KRW and above must issue e-tax invoices
- July 2014: The threshold changed from 1 billion KRW to 0.3 billion KRW and above
- July 2019: Introduction of the tax-free portion of the income to be included when calculating the threshold of 0.3 billion KRW
- July 2022: The threshold was updated from 0.3 billion KRW to 0.2 billon KRW and above
- July 2023: The threshold will be updated from 0.2 billion KRW to 0.1 billon KRW and above
Penalties
Penalties vary between 0.3-1% of the supply price based on the failure type e.g. non-issuance, issuance form, delayed issuance, non-transmission, late transmission.
Good to Know
Yes, VAT is South Korea’s consumption tax and is charged on virtually everything sold throughout the country.
Yes, e-invoicing in South Korea is mandatory for all corporations and for certain individuals with supplies over a certain amount.
VAT is charged on all supplies of goods and services. There are some exemptions and also zero-rated supplies of goods and services.
Here’s further information about some of the countries within Asia that require e-invoicing.
How can Sovos help?
As countries around the globe digitize their tax systems to close VAT gaps, our experts continually monitor, interpret and codify these changes into our software, reducing the compliance burden on your tax and IT teams.
Discover how the Sovos solution is tailored to manage all e-invoicing and related VAT obligations in South Korea.