The South Korean government introduced an electronic tax invoice called e-Tax around 2010. The government has always set a threshold to identify private entities covered, and the e-invoice scope is being gradually expanded by reducing that threshold. Obligated VAT payers transmit their invoices to the tax authority via the National Tax Service (NTS). All responsible companies must have a digital certificate before generating an e-Invoice. Here are the five key questions about South Korean e-Invoicing.
1. Will e-Invoicing come into effect for all taxpayers at the same time or will there be a gradual implementation?
In 2010 VAT registered businesses whose turnover exceeded 300 million KRW ($264,500) were obliged to upload their e-Invoices to the tax authority through the NTS. Over time the turnover values decreased and the number of responsible businesses is increasing proportionally. Currently, the obligation covers both legal businesses and individuals whose turnover is at least KRW 300 million (about $250,000). However, the new threshold limit will come into force in July 2022 which will reduce turnover to KRW 200 million (about $163,000).
2. What are the submission methods?
There are four different ways to submit an e-Invoice:
- Via the Hometax portal: submit e-Invoices through the official National Tax Service (NTS) portal. Authentication is required and automatically uploads a limited number of documents.
- Via Direct integration, using ERP, internal accounting software, or an Application Service Provider (ASP). Authentication is again required via electronic certificate and is suitable for transmitting large amounts of documents.
- Via the AVRS telephone system. This is used when there is limited access to the internet and security card authentication.
- In-person. This method will not be available after the advent of the e-Invoice regulation.
3. What is the e-Invoice format in South Korea?
The electronic invoice data must be sent in XML format to the NTS. Like real-time invoices, generated e-Invoices should be submitted to NTS immediately, but they can be changed due to VAT regulations. Generally, electronic invoices should be reported within one day of issue.
4. Is an electronic signature requested before the transmission of the invoices?
The reporting of e-Invoices requires the use of digital signatures, which must be used to sign the e-Invoices.
5. Will there be an archiving period for the invoices?
Yes, in South Korea issued e-Invoices must be stored in the required electronic format (XML) and digitally signed for 5 years.
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