South Korea

Implementation of mandatory e-invoicing in South Korea

• January 1, 2011: South Korea introduced mandatory electronic tax invoices for corporations with annual sales exceeding KRW 3 billion. These invoices must be issued through a government-certified system and reported to the National Tax Service (NTS) in real time.
• July 1, 2014: The obligation was expanded to include small and medium-sized enterprises (SMEs). Now, all registered businesses are required to issue e-tax invoices for B2B transactions, regardless of size, ensuring wide adoption across the economy.
• Current system: E-invoices must be submitted to the NTS platform within one day of issuance. This applies to both issuance and receipt of invoices, and late or non-reporting may result in penalties. The system ensures near real-time visibility for tax authorities, enabling accurate VAT tracking and minimizing fraud.

Who needs e-invoices in South Korea?

• Large Enterprises: Businesses with significant turnover, mandatory since 2011.
• SMEs: Required based on turnover thresholds, phased in by 2014.
• Exporters: Required for cross-border transactions to ensure accurate VAT reporting.
• Non-Resident Businesses: Must issue e-invoices for transactions with South Korean entities if VAT-registered in South Korea.

E-Invoicing vs. E-Billing

Key features of South Korea's e-invoicing system

• Submission Platforms: Invoices must be submitted via FACe for public sector transactions or SII for VAT reporting.
• Validation: The platform ensures compliance with mandatory fields, digital signatures, and VAT rules.
• Archiving: E-invoices must be stored electronically for 6 years in compliance with Spanish tax laws.

E-Invoicing dataset

• Buyer/Seller IDs: NIF (Tax Identification Numbers).
• Invoice Details: Invoice number, issue date, and payment terms.
• Goods and Services: Line-item descriptions, quantities, unit prices, and subtotals.
• Taxes: Applicable VAT rates and amounts.
• Transaction Info: Total payable amount, currency, and payment method.
• Delivery Details: Ensures authenticity and integrity of the invoice.

E-invoicing across transaction types

• Mandatory for all VAT-registered businesses.
• Real-time e-invoicing ensures compliance, reduces errors, and facilitates VAT refunds for cross-border transactions.

• Not mandatory but encouraged for improved transparency and internal records.

• Required for suppliers to public entities via the NTS platform.

Penalties for non-compliance

• Fines: Up to €10,000 per violation for failing to meet public sector requirements.
• Operational Delays: Rejected invoices may lead to payment delays and strained client relationships.
• Legal Risks: Audits and reputational damage for repeated noncompliance.