Overview
For forwarders and carriers, money passes through a long chain, so the first question is where your own revenue ends. Whether you treat the entire freight received from the shipper as revenue, or only the margin after paying the carrier, changes reported revenue several times over. On top of that, international legs are zero-rated while domestic legs are taxable, and whose name goes on the tax invoices for advanced warehouse and customs charges comes up every time.
VALUE Tax & Accounting starts from the substance of the contract. Whether you undertook carriage on your own account and responsibility, or merely arranged it, decides gross versus net — and we then apply that basis consistently. We separate international multimodal carriage from domestic legs to assemble the zero-rating evidence, and sort out the tax invoice flow for disbursements and handling fees. Logistics is an industry eligible for SME tax reduction, so we check those requirements as well.
Key tax issues for transport and logistics
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01
Gross or net comes first
The income tax enforcement standard treats only the arrangement fee as total revenue, but where you have undertaken to carry another's goods on your own responsibility and are in substance running a carriage business, the entire amount received from the shipper is total revenue. Contracts, bills of lading and how risk is allocated are what that judgment rests on, so the paperwork has to line up first.
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02
International legs are zero-rated, domestic legs are not
Taking a shipper's cargo under an international multimodal contract and carrying it on your own account falls within foreign navigation services and is zero-rated. A leg that runs only from one domestic point to another is not. Packing and similar services supplied together as a necessary incident of the carriage are zero-rated with it, but a separate service is taxed on its own.
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03
Disbursements and fees are different things
Money paid out in advance — ocean freight and surcharges, bonded transport, warehouse storage, inland carriage — is different in nature from a handling fee. Tax invoices are not required for freight supplied by a foreign carrier, but taxable domestic services must be invoiced to whoever actually receives them. The same test decides who the customs broker's clearance fee is invoiced to.
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04
Pure arrangement changes the invoicing
If you only arrange carriage, you invoice only your arrangement fee; the carriage itself is invoiced to the shipper in the carrier's name, with the forwarder's registration number noted in the remarks field. Issuing everything under your own name without knowing this structure can escalate into a false tax invoice problem.
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05
Logistics is an eligible industry for reductions
Logistics, including international freight forwarding, is an eligible industry both for the SME special tax reduction and for the startup SME tax reduction under the Restriction of Special Taxation Act. These cut tax directly where the requirements are met, so it is worth confirming your industry code and SME status up front.
How VALUE Tax & Accounting responds
Fixing the revenue recognition basis
We read the substance of the contract to settle gross versus net, then apply the same basis to every transaction.
Zero-rating by leg
We separate international from domestic carriage and align zero-rated invoices and evidence leg by leg.
Disbursement and reduction review
We sort out the invoice flow for disbursements and fees and confirm eligibility for logistics tax reductions.
Transport and logistics tax FAQ
Q Should all forwarding receipts be booked as revenue? expand_more
It depends on the substance of the contract. If you undertook door-to-door carriage on your own account and responsibility, the entire amount received from the shipper is total revenue and what you paid the carrier is cost of sales. If you merely arranged it, only the fee is revenue. Contracts and bills of lading are the basis for that call, so start by putting the documents in order.
Q Is the domestic leg zero-rated too? expand_more
No. Carrying goods from one domestic point to another for a fee is not zero-rated. There are exceptions where the requirements are met — for instance a domestic forwarder carrying imported cargo from the port of arrival to the shipper's warehouse and receiving payment from a foreign forwarder through a foreign exchange bank. Who pays you, and how, is the dividing line.
Q Is overseas purchase-delivery forwarding zero-rated? expand_more
It can be, where a business registered for international freight forwarding under the Framework Act on Logistics Policies takes a domestic consumer's order, receives the goods at an overseas warehouse and carries them into Korea on its own account and responsibility. Registration and the allocation of responsibility are the requirements, so review the business structure first.
Q Do we need tax invoices for foreign carriers' freight? expand_more
Freight supplied by a foreign carrier is exempt from the tax invoice requirement. But taxable services arising domestically and separate from the international carriage — bonded warehouse charges or inland carriage, for example — must be invoiced to whoever actually receives them, so the transaction has to be broken down.
Q Can transport and logistics businesses claim tax reductions? expand_more
Logistics, including international freight forwarding, is an eligible industry for both the SME special tax reduction and the startup SME tax reduction. Whether it applies and at what rate depends on your industry code, SME status, and where and when the business was founded, so it is safer to check before closing the books.