Korean VAT Calculator

Value-added tax is a 10% charge collected from the customer on every sale of goods or services and passed on to the state. It is not a tax the business bears; the business collects it on the customer's behalf and hands it over. But the business also paid 10% on everything it bought in, so it only remits the difference between the tax it collected and the tax it paid. Enter your sales and purchases for one tax period and this calculator shows that difference, which is the VAT you actually owe.

You can switch between ordinary and simplified taxation. They compute the same tax in different ways. Ordinary taxation subtracts input tax from output tax; simplified taxation ignores purchases and instead applies a value-added rate fixed for your trade. Below the result the page also shows what the other type would have cost, so you can see straight away which one is better for you.

Business owners who want a rough figure before the filing deadline. VAT is money collected from customers, and once it sits in the business account it looks like your own. A large payment at filing time then comes as a shock. Running this once a quarter tells you roughly what to set aside.

It is also for anyone starting a business and choosing between ordinary and simplified taxation. Simplified taxation has a reputation for being cheaper, but that is not always true. Because it does not deduct input tax, a trade that buys a lot of equipment or stock early on is often better off under ordinary taxation, where it can receive a refund. Enter your expected sales and purchases and compare the two results.

부가가치세법 제30조 sets the rate at 10%. For an ordinary taxpayer, 제37조 of the same Act defines the amount payable as output tax minus input tax. Output tax is the net sales amount multiplied by 10%; input tax is 10% of the net value of purchases backed by a tax invoice or other qualifying evidence. If the difference is positive you pay it; if negative, that amount is refunded. Net sales means the price without VAT, so enter the amount excluding tax, not the gross figure the customer paid.

A simplified taxpayer, under 부가가치세법 제63조제2항, multiplies the gross receipt by the value-added rate for their trade and then by 10%. The gross receipt includes VAT, so the base differs from the net figure used in ordinary taxation. The value-added rates are set by 시행령 제111조제2항 of the same Act: 15% for retail and food service, 20% for manufacturing, 25% for lodging, and 40% for professional services and property leasing. Each rate is the state's estimate of how much of a trade's sales is value the business itself adds, so the tax is the same whether your actual purchases are large or small. The effective burden on sales is the value-added rate times 10%: 1.5% for retail, 4% for professional services.

Suppose an ordinary-taxed retailer sells ₩50 million and buys ₩30 million of stock in one tax period. Output tax is 10% of ₩50 million, or ₩5 million; input tax is 10% of ₩30 million, or ₩3 million. The ₩2 million difference is the VAT payable, which works out to 4% of sales. If the same retailer had bought ₩60 million instead, input tax of ₩6 million would exceed output tax and ₩1 million would come back as a refund.

Run the same ₩50 million of retail sales through simplified taxation and the result is ₩50 million times the 15% value-added rate times 10%, or ₩750,000. That is only 1.5% of sales, far less than the ordinary figure above. But if the trade is professional services, the value-added rate rises to 40%, the tax becomes ₩2 million, and it matches the ordinary result exactly. Add heavy purchases on top and ordinary taxation pulls ahead. The outcome swings widely with type and trade, so always run your own numbers.

The most common error is entering the VAT-inclusive total in the sales field. Ordinary taxation works from the net amount, so entering the gross figure inflates the tax. Simplified taxation, on the other hand, works from the gross receipt including VAT, which is why the field label changes when you switch type. The second is deducting every purchase. Only purchases with qualifying evidence such as a tax invoice or a card sales slip count; simple receipts and cash deals do not. Some items, such as entertainment expenses and non-business passenger cars, are excluded by statute regardless of evidence.

The third is assuming a simplified taxpayer can get a refund. The structure never produces a negative amount, so no matter how much equipment you buy, nothing comes back. If a large investment is planned in the first year, this alone can decide the question. Finally, this calculator covers only the core of the computation. The sales threshold for simplified taxation, the exemption from payment, the credit for issuing card sales slips, and preliminary returns and assessments are not included, so check those separately when you file.