OVERVIEW
Overview
Exporters apply the zero VAT rate to sales, but input VAT accumulates, so a refund arises at every filing. Refunds are delayed or denied if the documentary requirements fall even slightly short, and reporting duties under the Foreign Exchange Transactions Act apply on top. In addition, transactions where goods never enter Korea — such as intermediary trade or consignment processing — follow entirely different rules for revenue recognition and taxation, so review is needed from the moment the deal is structured.
VALUE Tax & Accounting first confirms how each transaction is structured, then designs the zero-rating requirements and the supporting documentation around it. We make early refunds routine to ease cash-flow pressure, and we standardise shipping documents and payment flows in anticipation of repeated requests for substantiation. Transactions whose tax treatment differs — intermediary trade or consignment processing, for example — are reviewed at the contract stage, so no filing ever has to be unwound after the fact.
KEY ISSUES
Key tax issues in import & export
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01
Zero-rating requirements
Zero rating is granted only if you can evidence the export, hold the shipping documents, and issue tax invoices in the manner appropriate to the transaction type. Zero rating means the tax amount is nil, not that the filing obligation disappears; if supporting documents are missing, a separate penalty applies for improper reporting of the zero-rated tax base.
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02
Early VAT refund
Exporters with large input VAT face refunds at every turn, so the supporting documents should be standardised to keep them from being delayed. Early refunds can be claimed monthly, letting you recover cash during heavy raw-material purchasing without waiting for the final return.
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03
Foreign Exchange Transactions Act filing
Missing an exception filing — payment and receipt reports, set-offs, third-party payments — exposes you to administrative fines. This sits under a different statute from tax filing but arises out of the same transaction, so the reporting duty should be confirmed when the settlement method is chosen.
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04
Taxation by trade structure
In intermediary trade and consignment processing the goods never enter Korea, so revenue recognition and the taxable/zero-rated distinction work entirely differently. Treating them like an ordinary export throws off the tax base itself, so review is needed from the moment the structure is designed.
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05
Linking customs duty drawback
Customs duty drawback on raw materials for export must be managed together with VAT and corporate tax treatment if you are not to lose twice. Unless the timing of including the refunded duty in taxable income and the corresponding cost-of-sales adjustment are reflected together, the tax burden can pile into a single fiscal year.
HOW WE HELP
How VALUE Tax & Accounting responds
Standardised zero-rating and refund records
We organise invoices, bills of lading and export declaration certificates by filing period, reducing refund delays and the burden of substantiation.
Early refund scheduling
We judge whether to claim monthly or early refunds against your input VAT and cash flow, improving liquidity.
Review by foreign exchange and trade structure
For intermediary trade, consignment processing, third-party payments and other structures, we settle taxability and reporting duties in advance.
FAQ
Import & export tax FAQ
Q Are exports entirely relieved of VAT? expand_more
Exports are zero rated, so output VAT is nil, but the filing obligation does not disappear with it. The return must be filed properly with the zero-rating attachments; if documents are missing, a penalty applies for improper reporting of the zero-rated tax base.
Q May input tax be recovered before the export proceeds are received? expand_more
A business subject to zero rating may apply for an early refund. Applications can be made monthly, which greatly eases cash pressure when raw-material purchases are concentrated, so it is better to use it than to wait for the final return.
Q At what point should export revenue be recognised? expand_more
For an export that takes domestic goods out of the country, the time of supply is the shipping date. Using the contract date or the date of payment throws off the tax period, so the sales ledger should follow the shipping date on the export declaration certificate.
Q At what exchange rate is revenue denominated in foreign currency translated? expand_more
If the amount was converted into won before the time of supply, use the converted amount; otherwise translate at the base rate or arbitrated rate on the date of supply. Applying the rate on the date of deposit changes the tax base, so take care.
Q May the VAT payable to customs on importation also be relieved? expand_more
Export-oriented SMEs that meet the requirements can defer payment of import VAT, settling it at the time of filing instead of paying at import and reclaiming later. The eligibility requirements must be confirmed and approval applied for in advance.
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