Question 1

How is Korean VAT calculated?

Accepted Answer

VAT is 10% of the supply price, and the total is supply price times 1.1. To work back from a total, VAT is total divided by 11 rounded down, and the supply price is the total minus VAT.

Question 2

What is the difference between general and simplified taxpayers?

Accepted Answer

General taxpayers pay output VAT minus input VAT and get a refund if purchases are larger. Simplified taxpayers pay sales x value-added rate x 10% minus 0.5% of purchases, get no refund, and owe nothing if sales for the period are under 48 million won. Simplified status is for businesses with prior-year sales under 104 million won.

Question 3

Why is the reverse calculation sometimes off by 1 won?

Accepted Answer

Because of rounding down, about one in eleven totals cannot be reproduced exactly: 10% of the derived supply price differs from the VAT by 1 won. The calculator always keeps supply price plus VAT equal to the total and shows a note in those cases.

Korean VAT Calculator

Value-added tax calculation