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Electronic Invoicing in South Korea

South Korea has implemented one of the most advanced electronic invoicing systems in the world. Through the National Tax Service (NTX) and its “e-Tax Invoice” platform, the taxpayers must issue, report, and archive electronic invoices following the requirements imposed by the new VAT law. 

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Characteristics of Electronic Invoicing in South Korea

Since its introduction in 2011, the electronic invoicing system in South korea known as the e-Tax Invoice, has been progressively designed to cover not only large enterprises, but also small and medium businesses as well as individual companies which surpass a determined turnover. 

The authority responsible is the NTS or National Tax Service from South Korea. The electronic invoicing mandate applies to both B2B as well as B2G transactions. The international transactions or exports lie outside of the main mandate for electronic invoicing in Korea. 

The system requires the invoice be sent in a ‘pre-clearance’ model, in other words, it is reported to the NTS upon issuance (or very shortly after), and after sent to the client. 

Mandatory Use

The most relevant chronology is the following: 

  • January 2011: electronic invoicing mandate for corporate taxpayers. 
  • 2014: From 2014, all taxpayers whose sales surpass 300 million KRW or 264,500 USD a year must issue their electronic invoices in real-time. The invoices must be sent to the NTS. 
  • July 1st,  2022: a new cut off at KRW 200 million or roughly 160.000 USD for individual businesses and taxpayers.
  • July 1st,  2023: reduced cut off of 100 million KRW or 83.000 USD to include any other new subjects under the mandate. 

Invoice format

Electronic invoices must be generated in an XML format, according to the standard defined by the Korean tax authority. The invoice must contain the minimum mandatory data fields such as; vendor registration number, client registration number (or equivalent number if not registered as a company), total amount, VAT, date of preparation, among others. 

Electronic Signature

To guarantee the authenticity, integrity and no repudiation of the invoice, a digital signature is required in accordance with the PKI, public key infrastructure. The issuing company must obtain a valid digital certificate created by a certifiable authority or by the NTS itself. 

Electronic Archiving

Issued electronic invoices must be archived for a period of at least 5 years, according to the South Korean fiscal regulation.

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