VAT Early Returns

 Date: Sept 11, 2020

I. Refund of VAT

Where purchase tax amount (10% of purchasevalue and other deducted taxes) is greater than sales tax amount *10% of suppliedvalue) the gap between them refers to VAT refund amount.

If an entrepreneur makes a final return of theamount of tax refundable for each taxable period, the head of the tax officehaving jurisdiction over the place of tax payment shall refund such amount tothe entrepreneur within 30 days of the end of the final return period.

 

 

★ Four times of filing a year(general tax payer)

① Jan ~ Mar: April 25 (preliminary report)

② April ~ June: July 25 (final report)

③ July ~ Sept: Oct 25 (preliminary report)

④ Oct ~ Dec: Jan 25 next year (final report)

 

☞ Shortcomings of general VAT refund system

→ Greater financial burden onbusiness operators who always have tax refund

→ long processing time (30 days toget refund)

→ the refund for the first andfourth quarter is not granted right after tax filing

 

II. Early VAT Refund System

This system is designed to make up forshortcomings of general refund. When a business owner has zero tax rate,establishes, acquire, or expand business establishment he or she is able tohave early VAT refund. This is to relive financial burden and encourageinvestment by granting early refund when the amount of refund is huge.

 

★The head of the competent taxoffice shall refund the amount of tax refundable for each preliminary returnperiod to the entrepreneur who has filed the preliminary return, within 15 daysafter the expiration of the deadline for filing such preliminary return.

 

★ A return by anentrepreneur who seeks to obtain an early refund shall be deemed a return ofearly refund filed Provided, That the return shall be accompanied by astatement of acquisition of buildings or other depreciable assets, specifyingmatters provided for in the followingor by a financial restructuring.

 

★ The type and use ofbusiness facilities, the scheduled date of installation and the date ofcompletion thereof

★ Goods or services supplied,and the input tax amount;

★ Other referenceinformation.

★ Where an entrepreneur files,within 25 days after the expiration of an early refund period fixed on amonthly or bimonthly basis in the preliminary return period or in the lastthree months of the taxable period, a return on the tax base and the amount oftax refundable for the early refund period with the head of the competent taxoffice, the head of the competent tax office shall refund the amount of taxrefundable for each early refund period to the entrepreneur, within 15 daysafter the expiration of the deadline for filing early refund return

☞Early VAT refund period

→ Every month

→ Every two months

→ Every quarter

☞ Due date for early refund report – 25^th date in the nextmonth of early VAT tax filing period

 

II. Laws and Regulations

 

Article 107 (Early Refunds)

(1)  The head of the competent tax office shallrefund the amount of tax refundable under Article 59 (2) of the Act for eachpreliminary return period to the entrepreneur who has filed the preliminaryreturn, within 15 days after the expiration of the deadline for filing suchpreliminary return.

 

(2) “Businessfacilities prescribed by Presidential Decree” in Article 59 (2) 2 of the Act,means the depreciable assets referred to in Article 62 of the EnforcementDecree of the Income Tax Act or Article 24 of the Enforcement Decree of theCorporate Tax Act.

 

(3)  A return filed under Article 90 (2) or 91 (1)by an entrepreneur who seeks to obtain an early refund pursuant to paragraph(1) shall be deemed a return of early refund filed under Article 59 (2) of theAct: Provided, That the return shall be accompanied by a statement ofacquisition of buildings or other depreciable assets, specifying mattersprovided for in the following, in cases falling under Article 59 (2) 2 of theAct, or by a financial restructuring plan prescribed by Ordinance of theMinistry of Strategy and Finance in cases falling under subparagraph 3 of thesame paragraph: <Amended by Presidential Decree No. 27838, Feb. 7, 2017>

 

1.  The type and use of business facilities, thescheduled date of installation and the date of completion thereof;

 

2.  Goods or services supplied, and the input taxamount;

 

3.  Other reference information.

 

(4)  Where an entrepreneur qualifying for Article59 (2) of the Act files, within 25 days after the expiration of an early refundperiod fixed on a monthly or bimonthly basis (hereinafter referred to as “earlyrefund period”) in the preliminary return period or in the last three months ofthe taxable period (hereafter referred to as “deadline for filing an earlyrefund return” in this paragraph), a return on the tax base and the amount oftax refundable for the early refund period with the head of the competent taxoffice, the head of the competent tax office shall refund the amount of taxrefundable for each early refund period to the entrepreneur, within 15 daysafter the expiration of the deadline for filing early refund return,notwithstanding paragraph (1).

 

(5)  In filing a return of early refund underparagraph (4), a return of early refund on zero tax rate, etc., specifying thefollowing particulars, shall be filed, along with the documents classified inthe table in Article 101 (1) and the lists of total tax invoices by customerand by seller regarding the tax base: Provided, That in case falling underArticle 59 (2) 2 or 3 of the Act, the return shall be accompanied by astatement of acquisition of buildings or other depreciable assets or afinancial restructuring plan referred to in the proviso to paragraph (3):<Amended by Presidential Decree No. 27838, Feb. 7, 2017>

 

1.  The entrepreneur's personal details;

 

2.  The tax base and the amount of tax refundableand the basis for calculation thereof;

 

3.  The details of the lists of total taxinvoices by customer and by seller submitted;

 

4.  Other reference information.

 

(6)  Where the lists of total tax invoices bycustomer and by seller are submitted under paragraph (5), they shall be deemedsubmitted under Article 54 (1) of the Act.

 

(7) “Where theentrepreneur is in the implementation process of a financial restructuring planprescribed by Presidential Decree” in Article 59 (2) 3 of the Act means wherethe entrepreneur is in the implementation process of a plan referred to inArticle 34 (6) 1, 2 or 4 of the Enforcement Decree of the Restriction ofSpecial Taxation Act that is approved by the approval authority of a financialrestructuring plan provided for in paragraph (7) of the same Article as at theend of the early refund period, preliminary return period, or taxable period. <NewlyInserted by Presidential Decree No. 27838, Feb. 7, 2017>

 

Article 59(Refunds)

(1)	If an entrepreneur makes a final return of the amount of tax refundable for each taxable period, the head of the tax office having jurisdiction over the place of tax payment shall refund such amount to the entrepreneur within 30 days (in cases falling under any subparagraph of paragraph (2), within 15 days) of the end of the final return period, as prescribed by Presidential Decree.
(2)	Notwithstanding paragraph (1), if an entrepreneur makes a return of tax refund on any of the following grounds, the head of the tax office having jurisdiction over the place of tax payment may early refund the amount of tax refundable to the entrepreneur, as prescribed by Presidential Decree: <Amended by Act No. 14387, Dec. 20, 2016>

 

1.	Where the entrepreneur qualifies for the zero tax rate prescribed in Articles 21 through 24;
2.	Where the entrepreneur newly constructs, acquires, expands, or extends any of the business facilities prescribed by Presidential Decree;

 

3.	Where the entrepreneur is in the implementation process of a financial restructuring plan prescribed by Presidential Decree.

 

 

 

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