Frequently asked questions about South Korea VAT
What is VAT?
VAT is the abbreviation of Value Added Tax. VAT is in general due when goods and/or services are sold. It applies to most goods and services that are bought and sold for use or consumption in Korea. It is a consumption tax because it is ultimately borne by the final consumer.
Who must pay VAT?
Generally, VAT is invoiced by the supplier that is selling goods or services and collected from the customer. Subsequently, the supplier reports and remits the collected VAT to the tax authorities.
If you are a business customer, you should provide your Business Registration Number to Zoom. If the Business Registration Number is valid then no VAT will be charged on the supplies made to you by Zoom. If you do not have a Business Registration Number or the Business Registration Number that you have provided is expired, cancelled or invalid then VAT will be charged on the supplies made to you by Zoom.
Why am I being charged VAT?
Under Korean tax law, an overseas service provider (such as Zoom) that provides Electronically Supplied Services (ESS) to customers in Korea is required to charge VAT on its supply to Korean customers who are not registered for VAT (this is referred to as a “B2C” supply).
VAT is generally not chargeable if ESS are provided to a customer that is registered for VAT in Korea (this is referred to as a “B2B” supply).
What is a Business Registration Number?
A Business Registration Number is a unique 10-digit number XXX-XX-XXXXX) that identifies a person/entity as being registered for VAT in Korea.
Zoom will verify the Business Registration Number provided via the Home Tax portal and will contact any customers where a Business Registration Number is provided and that number shows as expired, cancelled, or invalid in the Home Tax portal.
If a valid Business Registration Number cannot be provided, then VAT will be charged on supplies made by Zoom to you.
Does Zoom have a Business Registration Number?
Yes, Zoom has a Simplified Business Registration Number in Korea. The Simplified Business Registration Number reflects that Zoom is a foreign company without an establishment in Korea that is required to collect and remit VAT on its supplies of ESS to non-business customers (B2C) in Korea.
How do I enter my Business Registration Number ID?
To provide your Korean Business Registration Number, follow the steps below depending on where your billing portal is located in the left navigation menu of the Zoom web portal. Not sure how to identify where your billing portal is located? Learn how to locate your billing settings.
Zoom performs periodic validation checks of customer Business Registration Numbers to ensure that the Business Registration Numbers remain valid. If, during these periodic validations, it is identified that your Business Registration Number is expired, cancelled or invalid, Zoom may automatically update your account so that future invoices are subject to VAT. Where this happens, VAT will be charged on all future invoices until such time that a valid Business Registration Number is provided.
- Sign in to the Zoom web portal.
- In the navigation menu, click Plans and Billing then Billing Management.
- In the Contact Information section, click Edit.
- If selected, clear the Not VAT Registered check box.
- Enter your VAT.
- Click Save.
- Sign in to the Zoom web portal.
- In the navigation menu, click Account Management then Billing.
- Click the Billing Information tab.
- To the right of Sold To Contact, click Edit.
- If selected, clear the Not VAT Registered check box.
- Enter your VAT.
- Click Save Changes.
What happens if I do not have a Business Registration Number?
If a customer in Korea is unable to supply a valid Business Registration Number, Zoom will charge and collect Korean VAT on its supplies to you.
How is Zoom determining which customers Korean VAT applies to?
If you have not provided a Korean Business Registration Number and you are resident in Korea, Zoom will charge Korean VAT on it supplies to you.
Zoom will treat any customers with a ‘Sold To’ address in Korea as being resident in Korea. This information is subject to cross-referencing against other data to verify that the ‘Sold to’ country is accurate.
It is your responsibility as a customer to ensure that your sold to address is accurate.
Is there a minimum threshold purchase amount before VAT is applied?
No, VAT applies to all sales of Zoom’s services in Korea if the customer has not provided a valid Business Registration Number to Zoom.
What exemptions are available and how does a customer notify Zoom?
Customers who provide a valid Business Registration Number will not be charged VAT by Zoom.
Where a customer provides a valid Business Registration Number to Zoom the customer is responsible for its own VAT compliance and any remittances in accordance with Korean tax laws. This means that if the customer is required to self account for VAT through the reverse charge mechanism, the customer agrees that it will report VAT through the reverse charge mechanism and that Zoom will not be responsible for any Korean VAT.
There are currently no other exemptions available.
Are there any special exemptions applicable for government entities and charities under which VAT may not be charged?
No, government entities and charities are not eligible for special exemptions, unless they provide a valid Business Registration Number.
Are there any VAT obligations for me as a customer?
If you have provided a valid Business Registration Number, you are required to notify us if there is any change in your VAT registration status.
Where a customer provides a valid Business Registration Number to Zoom the customer is responsible for its own VAT compliance and any remittances in accordance with Korean tax laws. This means that if the customer is required to self account for VAT through the reverse charge mechanism, the customer agrees that it will report VAT through the reverse charge mechanism and that Zoom will not be responsible for any Korean VAT.
What if I have a Business Registration Number and forget to enter it?
Your Business Registration Number can be entered at any time. If entered before the next invoice is issued, Zoom will not charge VAT on the next invoice or future invoices issued to you. If no Business Registration Number is entered at the time the next invoice is issued, VAT will be charged until a valid Business Registration Number is entered.
If a valid Business Registration Number is entered and VAT has previously been charged on the invoices issued to you, then upon request by you, Zoom may refund any VAT included on invoices issued in the thirty days prior to a valid Business Registration Number being provided. However, VAT will not be refunded on any invoices issued outside of this thirty-day period.
Decision tree – will I be charged Korean VAT?
Disclaimer
Every customer is unique and so are their specific tax circumstances. The above stated information should not be considered as tax advice, but as a general overview of relevant tax rules. Zoom cannot provide you with tax advice for your individual situation, and therefore we strongly recommend speaking with a professional tax advisor for tailored advice.