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

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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.

Extra hours, extra rewards

INFOGRAPHIC

South Korea CTC Requirements

Understand more about South Korea’s continuous transaction controls including when businesses need to comply and how Sovos can help.

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Good to Know

Does South Korea charge VAT?

Yes, VAT is South Korea’s consumption tax and is charged on virtually everything sold throughout the country.

Is e-invoicing mandatory in South Korea?

Yes, e-invoicing in South Korea is mandatory for all corporations and for certain individuals with supplies over a certain amount.

How does VAT work in South Korea?

VAT is charged on all supplies of goods and services. There are some exemptions and also zero-rated supplies of goods and services.

Which countries in Asia require e-invoicing?

Here’s further information about some of the countries within Asia that require e-invoicing.

How Sovos can 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.