Tax reporting and value-added tax refund for B2C overseas online exporters

by 300cbt Team

Advantages of exporting overseas: VAT refund

Value-added tax is a tax borne by the final consumer, and all businesses must pay value-added tax in accordance with the reporting period. However, overseas sales are recognized as exports and are subject to a zero tax rate, so a VAT refund is possible. This is one of the big advantages of selling overseas. In order to be recognized as a zero tax rate, you must fill out and submit the zero tax rate attached documents announced by the National Tax Service in accordance with the reporting period.

​List of attached documents for zero tax rate (Source: National Tax Service)

VAT reporting period

  • Individual business: January, July (Value-added tax refund: Report by the 25th of the month and refund on the 10th of the following month)
  • Corporate business: January, April, July, October (Value tax refund: Report by the 25th of the month and refund on the 10th of the following month)

The VAT reporting period brings mixed joys and sorrows

When I worked as an employee at a company, payday felt so far away, but now that I am in a position to pay salaries, I can blink and it is payday for the employees, and when I turn around, it is VAT reporting day.

In the case of domestic sellers, many business owners sigh over the VAT they will have to pay as the VAT reporting period approaches. However, overseas sellers must consider how to reinvest the VAT refunded. It's a conflicting concern.

In order to be recognized as an export, export declaration is required.

In order to receive zero tax rate application (value-added tax refund), you must submit the zero tax rate documents mentioned above. The most common document attached to the zero tax rate is the export performance statement, which can only be prepared if an export declaration has been made. For export declaration, please refer to the post Enjoying the advantages and benefits of overseas sales (2) - Export declaration .

tax refund

▲ Export performance statement format

If you prepare an export performance statement based on the export declaration, you can not only easily fill out the zero-tax rate attachment documents but also apply for an early VAT refund. In general, for individual businesses, you can file a VAT return every 6 months and for a corporate business every 3 months to receive a refund the following month. However, for export declarations, you can apply for a VAT refund every month, and as a result, you can receive a VAT refund every month. . For businesses with large sales, this can be of great help in terms of fund management.

In principle, VAT refunds are subject to export declaration, but...

Is it possible to receive a VAT refund even if I do not file an export declaration? Yes, it is possible. For sellers who do not report exports, the export performance statement can be replaced with a parcel receipt and foreign currency deposit certificate (foreign currency deposit certificate) . The parcel receipt is issued by the post office, overseas transport company, etc. and must include the tracking number and country of shipment. For example, if you are a seller who ships a product in a small post office package, the receipt can be recognized as a receipt of the parcel because the tracking number and destination country are clearly stated. If you use the K-Packet service operated by the post office for online export sellers or an express delivery company such as Fedex, you can replace the parcel receipt with an overseas shipment list that can be downloaded from the web.

For foreign currency deposit receipts, please submit PayPal deposit details for eBay sales, and deposit details provided by virtual account service providers such as World First and Payoneer for Amazon sales.

For medicine, go to the pharmacist, and for taxes, go to the tax accountant.

Since there is no publicly announced format for filing the zero-tax rate attachment documents, coordination is required for each company's situation, so it is necessary to obtain confirmation and receipt from a tax accountant. Export reporting work is online and can be fully operated in-house, but tax processing requires the services of a professional tax accountant rather than internal staff as there are many tasks that need to be handled, such as income tax (corporation tax for corporations), four major insurances, and settlement of accounts, as well as VAT reporting processing. It is desirable to receive . Recently, the number of professional tax accountants who provide specialized services to online sellers has increased. To succeed in online sales, selection and focus are fundamental. Leave tax processing to a tax accountant and let sellers focus on marketing, CS, and business expansion.

Good news! Receive VAT refund

Once the value-added tax return is completed, the National Tax Service will send you refund-related documents by mail. The mail contains details of the refund and how to receive it. You can receive the refund in person at the post office, or you can register an account to receive the refund and receive it in your account. Once you register an account, your next payment will be automatically deposited, which is convenient.

Tax tips for overseas online businesses

  • Use only one business (corporate) card to process expenses
  • Most credit card companies do not accumulate points for transportation costs, but Hyundai (Red) Card allows points to be accumulated for transportation costs as well.
  • Organizing tax data should not be done during the VAT reporting period, but should be organized on a monthly date.

FAQs on VAT refund

Q: Is it possible to get a VAT refund even without a business?
A: No. VAT refund is a system implemented to promote exports of individual and corporate businesses registered in Korea and must be registered as a business.

Q: I am a simple business owner, is a refund possible?
A: It's impossible. Only individual businesses and corporate businesses can apply for a refund.

​Q: Currently, my sales overseas are small. Do I have to file a tax return?
A: Tax reporting is not an option but a business obligation. In the case of exports, there is a great benefit of VAT refund, and in order to be recognized as an export company, it is advisable to file an export report. If you are recognized as an export company, you can participate in various government-supported projects (enjoying the advantages and benefits of overseas sales (1) - VAT refund).

Q: Are there VAT refund systems in other countries?
A: In the United States, there is no refund system for overseas exports. Singapore and Hong Kong, representative trading countries, do not impose taxation on overseas income, so neither VAT nor income tax is charged for overseas sales.

Q: We sell domestically and internationally. How should I report this case?
A: You can organize and submit domestic sales as domestic sales data, and overseas sales as overseas sales data.
If there is no report, there is no benefit. We hope you enjoy the benefits of overseas sales through export declaration and VAT refund.

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