South Korea Proposes Amendments to VAT Act for 2025 Budget
The South Korean National Assembly accepted Bill No. 2204961, a proposal to amend the Value-Added Tax (VAT) Act as part of the 2025 budget package. The bill includes measures to encourage digital compliance, prevent tax evasion, and extend support for small businesses.
Extending VAT deduction for e-invoices
One of the key changes in the bill is the extension of the VAT deduction period for electronic invoices. The current deadline of December 31, 2024, would be pushed to December 31, 2027. This extension applies to individual business owners whose total annual supply of goods and services was below 300 million KRW (about USD 217,463) in the previous year. The change aims to support small businesses by incentivizing digital invoicing and easing compliance burdens.
Higher surcharge for false business representation
To curb fraudulent practices, the bill proposes to increase the surcharge rate for businesses operating under false pretenses. For general taxpayers, the rate would increase from 1% to 2% of the total supply price, while for individual taxpayers, it would rise from 0.5% to 1%. This adjustment reflects a stronger stance on tax evasion, encouraging businesses to operate transparently.
Imposing VAT on non-supplied invoiced items
Another important measure would impose VAT on businesses that issue tax invoices without supplying goods or services in the taxable period. This addition addresses cases where invoices are issued without actual transactions, a tactic used to evade taxes. By enforcing VAT in these situations, the bill seeks to close existing loopholes.
Implementation date
If passed, the amended VAT Act would take effect on January 1, 2025, aligning with the new fiscal year and allowing businesses and tax authorities to prepare for the changes.
Source: South Korean VAT Bill No. 2204961.
VAT/GST rates 2024 in Asia
| Country | Standard VAT/GST Rate | Reduced Rates |
| Armenia | The standard VAT rate is 20%. | |
| Azerbaijan | The standard VAT rate is 18%. | |
| Bahrain | From January 1, 2022, the standard VAT rate is 10%. | |
| Bangladesh | The standard VAT rate is 15%. | 10%, 7.5%, 5%, 2,4%, 2% |
| Brunei | There is no VAT in Brunei. | |
| China | The standard VAT rate is 13%, 9%, 6% | Reduced rates of 5%, 2%, 3%, 1.5% and 0.5%. |
| UAE | VAT is charged at 5% in the United Arab Emirates (UAE) | |
| Georgia | The standard VAT rate is 18% | |
| Hong Kong | There is no VAT or sales tax in Hong Kong. | |
| India | The primary rates of Indian GST are 0.25%, 1.5%, 3%, 5%, 12%, 18% and 28% | |
| Indonesia | The standard VAT rate is 11% | |
| Iraq | There is no VAT in Iraq. (The standard sales tax ranges from 10% to 300% on alcohol & tobacco) | |
| Israel | The standard VAT rate is 17% | |
| Japan | The standard (Consumption Tax) rate is 10% | 8% |
| Kazakhstan | The standard rate of VAT is 12% | |
| South Korea | The standard VAT rate is 10% | |
| Kuwait | There is no VAT in Kuwait | |
| Laos | The standard VAT rate is 10% | |
| Lebanon | The standard VAT rate is 11% | |
| Malaysia | On September 1, 2018, the Government of Malaysia replaced the Goods and Services Tax (GST) with a 10% Sales Tax (The standard rate of service tax is 8%) | 5% (Sales Tax), 6% |
| Oman | the standard VAT rate in Oman is 5% | |
| Pakistan | Pakistan does not have VAT. The standard sales tax rate is 18% | Pakistan has a large number of reduced sales tax rates, including 1%, 2%, 5%, 10% and 12% (among others). |
| Philippines | The standard VAT rate is 12% | |
| Qatar | There is no VAT in Qatar | |
| Russia | The standard VAT rate is 20% | 10% |
| Saudi Arabia | VAT is charged at 15% | |
| Singapore | The standard Goods and Services Tax (GST) rate is 9% | |
| Sri Lanka | The standard VAT rate is 18% | |
| Taiwan | The standard VAT rate is 5% | |
| Tajikistan | The standard VAT rate is 14% | 10%, 7%, 5% |
| Thailand | The standard VAT rate is 7% (Reduced from the standard 10% until 30 September 2024) | |
| Turkey | The standard VAT rate is 20% | 10%, 1% |
| Uzbekistan | The standard VAT rate is 12% | |
| Vietnam | The standard VAT rate is 8% | Reduced VAT rate is 5% |