Simplified vs general taxpayer
| Type | Simplified taxpayer | General taxpayer |
|---|---|---|
| Who | Prior-year sales under 104,000,000 KRW | Everyone else |
| Tax payable | Sales × industry ratio × 10% | Output tax − input tax |
| Purchase credit | Purchases × 0.5% | Full input tax |
| Refunds | None | Yes |
| Payment exemption | Sales under 48,000,000 KRW | None |
| Filing | Once a year (by 25 January) | Twice a year (by 25 July and 25 January) |
Value-added ratios by industry (simplified taxpayers)
| Industry | Value-added ratio | Effective rate |
|---|---|---|
| Retail, recyclables collection and sale, restaurants | 15% | 1.5% |
| Manufacturing; farming, forestry, fishing; parcel delivery | 20% | 2.0% |
| Accommodation | 25% | 2.5% |
| Construction; transport and warehousing; ICT; other services | 30% | 3.0% |
| Finance and insurance services; professional, scientific, technical; facilities and business support, rental; real estate services and rental | 40% | 4.0% |
Worked example (simplified, retail)
With annual sales of 50 million KRW and creditable purchases of 10 million KRW: 50M × 15% × 10% = 750,000 KRW, minus the purchase credit 10M × 0.5% = 50,000 KRW, gives about 700,000 KRW payable. A general taxpayer in the same situation pays (50M − 10M) ÷ 11 ≈ 3.64 million KRW.
FAQ
Are sales the payout or the customer payment?
VAT sales are what customers paid, before marketplace fees. Fees are recorded separately as creditable purchases. Smart Store and Coupang seller centers provide downloadable VAT reports.
What if a simplified taxpayer exceeds 104 million KRW?
If prior-year sales exceed the threshold, you become a general taxpayer from 1 July of the following year.
Do simplified taxpayers pay nothing in July?
They file annually, but may receive a July interim bill for half of the previous tax paid, settled at the January final return.
Is the card-sales credit guaranteed?
It applies to consumer-facing sole proprietors with prior-year supply value of 1 billion KRW or less: 1.3% capped at 10 million KRW a year through 2026. The 2026 tax reform proposal would cut it to 1.2% with a lower cap; it is not final, so check the rules when you file.
Related: VAT guide for simplified-taxpayer sellers