Electric Tax Invoice System under Value Added Tax Act in Korea

a.     Background

To develop and modernize the company's IT environment in Korea, National Tax Service (“NTS”) is introduced the Electric Tax Invoice(‘ETI”) Syetem effective from Jan 1^st 2011. Now all of the corporate entites and most of individual business are used this system in common. Before the introduction of system, Korean tax payers are used the unique paper Tax invoice and had to keep it certain periods(Min. five years) however at present, no need to print out and keep it by physical type any more.

b.     Who have to issue and transmit it both customers and NTS

-       All of corporate entities

-       Individual Business : revenue of previous tax filing period each business entity is more than KRW 300 Million ( USD 300,000 )

-       Although the person or business entities are not met above two criteria, it's possible to use and issue the Electric Tax Invoice Syetem.

c.     Transmission of the detailed Issuance List to NTS

When company is issued the Electric Tax Invoice to their customers, company have to sent the same Electric Tax Invoice to NTS by the end of next day.

Ex) In case of the the timing of supply is Nov. 3^rd 2014,

n  If ETI is issued on Nov. 3^rd 2014, company mest be transmitted by Nov. 4^th 2014.

n  If ETI is issued on Dec. 10^th 2014, company mest be transmitted by Dec. 11^th 2014.

d.     Benefits from the ETI's transmission

-       Exemption from the obligation of the Tax Invoice keeping(5 years)

-       Exemption from the obligation of the submission of summary for Tax Invoice by customers both input and output

-       Tax Credit benefits