E-Invoice in South Korea
South Korea’s developed market economy offers a lower-risk business environment for businesses wishing to enter the Asian market. South Korea introduced the electronic tax invoice (‘e-Tax’) as its invoicing method in 2011. The electronic tax invoice system started in 2011 for every Korean corporation and in 2012 for sole proprietors whose previous year’s sales totaled more than 1 billion KRW (881.7 KUS Dollars). In this regard, since July of 2014, all sole proprietors whose sales exceed 300 million KRW (264.5 K US Dollars) per year must issue their VAT invoices electronically. By the way, implementation of e-invoice in South Korea saves money and time.
However, there are various types of bills used in South Korea under different circumstances.
Some of the invoices that used are:
- VAT invoice
- Sales invoice
- Purchase invoice
- Commercial invoice
- Credit invoice
On the other hand, businesses registered for VAT must submit their invoices through the National Tax Service (NTS) to tax authorities in one of the following ways:
- Invoice uploading via the free portal provided by the tax office
- Using an outsourced, licensed e-invoice service provider
- Creating your e-invoice through accounting systems with a digital certificate
- Using the AVRS phone system
- Submit personally to a local tax office
Businesses that want to issue a tax invoice must first obtain a digital certificate. When issuing e-tax invoice, a tax registration document is required to match invoice with customer. The invoice is sent to the customer by e-mail. At the same time, the e-Tax invoice sends to NTS. However, monthly bulk invoice notification is allowed until the 10th of the following month.
Ultimately, failure to deliver the e-Tax invoice to NTS could result in a fine of 1% of the taxable amount.