What is the difference between a general and simplified VAT taxpayer in Korea?

General taxpayers (general taxpayer) have annual revenue of KRW 80M or more. They pay 10% on sales minus input tax credits from business purchases. Simplified taxpayers (simplified taxpayer) have revenues below KRW 80M and apply a lower effective rate using an industry-specific value-added ratio.

When do freelancers file VAT in Korea?

General taxpayers file twice a year: the first period (January–June) is due by July 25, and the second period (July–December) is due by January 25 of the following year. Simplified taxpayers file once a year by January 25.

Does the 3.3% withholding tax for freelancers apply instead of VAT?

No, they are separate. The 3.3% withholding (3% income tax + 0.3% local) is deducted by the payer and applies to unregistered freelancers. Once you register as a business, VAT reporting obligations begin separately. VAT and income tax are different taxes.

🧾Freelancer VAT & Tax Liability Calculator (Korea)

Enter your taxable sales and input purchases to estimate your Korean VAT payable

Taxpayer Type

Industry Value-Added Ratio

Taxable Sales (KRW, VAT-exclusive)

Input Purchases Eligible for Credit (KRW, tax invoice received)

Korean VAT for Freelancers and Sole Proprietors

Once registered as a business in Korea, you are subject to Value Added Tax (VAT). The VAT system works differently for general taxpayers versus simplified taxpayers, and this calculator handles both scenarios.

General Taxpayer VAT Formula

VAT payable = Output tax (sales × 10%) − Input tax credit (purchases × 10%). If your business purchases exceed your taxable sales for a period, you may receive a refund. Keep all tax invoices (tax invoice) to support your input credits.

Simplified Taxpayer VAT Formula

For simplified taxpayers: VAT payable = Sales × Industry value-added ratio × 10%. The effective rate is lower, but you cannot fully deduct input tax and cannot issue full tax invoices, which may limit B2B work opportunities.

Filing Deadlines

General taxpayers: First period (Jan–Jun) → file by July 25; Second period (Jul–Dec) → file by January 25. Simplified taxpayers: Annual filing by January 25. Quarterly preliminary payments reduce the final balance due at annual filing.

Frequently Asked Questions

Do I need to register as a business to report VAT?

Yes. VAT reporting is required only after registering a business with the NTS (National Tax Service). Unregistered freelancers who receive 3.3% withholding are not separately subject to VAT reporting.

What purchases qualify for input tax credits?

Any business-related purchase for which you have received a proper tax invoice (tax invoice) qualifies: equipment, software, office supplies, business travel, etc. Personal expenses and entertainment with restrictions do not qualify.

Korean VAT for Freelancers and Sole Proprietors

General Taxpayer VAT Formula

Simplified Taxpayer VAT Formula

Filing Deadlines

Frequently Asked Questions

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