# VAT Calculator

> Calculate VAT (Value Added Tax) from total price or supply price.

## What is a VAT Calculator?

The VAT (Value Added Tax) Calculator is an essential business tool for anyone operating in or transacting with businesses in South Korea. Korea's VAT system, established under the Value Added Tax Act, applies a flat 10% tax rate on the supply of most goods and services. Unlike many countries with multiple VAT tiers, Korea's single-rate system simplifies calculations but still requires careful handling when issuing tax invoices, filing quarterly VAT returns, and managing input/output tax credits. This calculator performs two critical functions: extracting the supply price and VAT from a VAT-inclusive total price, and computing the VAT and total from a supply price. These calculations are performed thousands of times daily by business owners, accountants, freelancers, and procurement professionals across Korea. Getting them right is not just a matter of convenience — incorrect VAT separation on tax invoices can lead to rejected input tax credits, penalties from the National Tax Service, and even criminal liability in cases of intentional misreporting. The calculator handles the rounding issues that frequently cause confusion when splitting VAT-inclusive amounts and provides instant, accurate results that you can use directly on your tax invoices, purchase orders, and financial records.

## How to Use

Step 1: Select the calculation mode based on what information you have available.

Mode 1 — Total to Supply Price: Choose this mode when you know the VAT-inclusive total price and need to separate it into supply price and VAT components. This is the most common scenario when you receive a receipt or quotation showing the final amount and need to determine the VAT portion for your records or tax invoice.

Mode 2 — Supply Price to Total: Choose this mode when you know the pre-tax supply price and need to calculate the VAT and total amount. This is common when setting prices, preparing quotations, or creating invoices where you start with your base cost and need to add VAT.

Step 2: Enter the amount in Korean Won. The calculator accepts any positive number and handles both small amounts (individual purchases) and large amounts (business contracts worth millions of KRW).

Step 3: The result is calculated automatically and displayed instantly, showing all three components: supply price, VAT amount, and total price. The values are rounded to the nearest Won, following the standard rounding convention used in Korean tax accounting.

Note: When extracting VAT from a total price, the calculator divides by 1.1 and rounds to the nearest Won. Due to rounding, recalculating the total from the extracted supply price may differ by 1 Won from the original total. This is normal and accepted in Korean tax practice.

## Formula

Korea applies a flat 10% VAT rate on taxable goods and services. The formulas are:

From Total Price (VAT-inclusive) to Supply Price:
Supply Price = Total Price / 1.1 (rounded to the nearest Won)
VAT Amount = Total Price - Supply Price

From Supply Price to Total Price:
VAT Amount = Supply Price x 0.1 (rounded to the nearest Won)
Total Price = Supply Price + VAT Amount

Examples:
1. Total Price = 110,000 KRW
   Supply Price = 110,000 / 1.1 = 100,000 KRW
   VAT = 110,000 - 100,000 = 10,000 KRW

2. Supply Price = 250,000 KRW
   VAT = 250,000 x 0.1 = 25,000 KRW
   Total = 250,000 + 25,000 = 275,000 KRW

3. Total Price = 33,000 KRW
   Supply Price = 33,000 / 1.1 = 30,000 KRW
   VAT = 33,000 - 30,000 = 3,000 KRW

Rounding Edge Case:
   Total Price = 10,001 KRW
   Supply Price = 10,001 / 1.1 = 9,092 KRW (rounded)
   VAT = 10,001 - 9,092 = 909 KRW
   Verification: 9,092 x 1.1 = 10,001.2 (1 Won rounding difference is acceptable)

VAT-Exempt Items (0% effective rate):
Certain categories are exempt from VAT under Korean law: unprocessed agricultural/fishery/livestock products, medical and healthcare services, educational services, financial and insurance services, postal services, public transportation, newspapers and books, and residential rentals. For these items, Supply Price = Total Price and VAT = 0.

Zero-Rated Items:
Exports, international transportation services, and certain other items are subject to a 0% rate. Businesses can still claim input VAT credits on these transactions.

## Tips

Tax Invoice Accuracy: When issuing electronic tax invoices, the supply price and VAT must be separately stated. Any discrepancy between the invoice amount and the actual transaction amount can result in the buyer's input tax credit being denied. Use this calculator to verify amounts before issuing or accepting tax invoices, especially for odd amounts where rounding may cause confusion.

Input-Output Tax Credit System: Korean VAT operates on an invoice-based credit system. Businesses collect output VAT on their sales and pay input VAT on their purchases. The difference (output minus input) is what they remit to the National Tax Service. If input VAT exceeds output VAT (common for new businesses making large capital investments), the business receives a refund. Accurate VAT calculation and documentation is critical for claiming these credits.

Quarterly Filing: VAT returns in Korea are filed quarterly (January 25, April 25, July 25, October 25), with preliminary returns in April and October. Businesses must reconcile all their VAT-inclusive transactions and ensure the sum of supply prices and VAT on their issued and received tax invoices match their reported figures.

Simplified Taxpayers: Small businesses with annual revenue under 80 million KRW qualify as simplified taxpayers and pay a reduced effective VAT rate ranging from 1.5% to 4% depending on their industry. The standard 10% rate in this calculator applies to general taxpayers.

Consumer Prices: In Korea, most consumer-facing prices displayed in stores and restaurants are VAT-inclusive (total prices). Unlike some countries where VAT is added at the register, Korean retail prices already include the 10% VAT. Business-to-business (B2B) transactions, however, frequently quote supply prices excluding VAT, and the VAT is added on the invoice.

Common Mistake — Calculating 10% of the Total: A frequent error is computing VAT as 10% of the total price. This is incorrect. If the total is 110,000 KRW, the VAT is NOT 11,000 KRW (10% of 110,000). The correct VAT is 10,000 KRW (the total divided by 1.1 gives the supply price of 100,000, and VAT is the difference of 10,000). Always divide by 1.1, not multiply by 0.1, when working backward from a total price.

## FAQ

### Q. What are the supply price and VAT for a total of 11,000 KRW?

For a VAT-inclusive total of 11,000 KRW, the supply price is calculated by dividing by 1.1: 11,000 / 1.1 = 10,000 KRW. The VAT is the remainder: 11,000 - 10,000 = 1,000 KRW. This is a clean example with no rounding issues. For amounts that do not divide evenly by 1.1 (such as 10,001 KRW), the supply price is rounded to the nearest Won and there may be a 1 Won discrepancy when verifying the multiplication, which is normal and accepted in Korean tax practice. Always use the formula Total / 1.1 rather than Total x 10/110 to ensure consistency.

### Q. Can the VAT rate be different from 10%?

In Korea, the standard VAT rate for taxable businesses is fixed at 10% and has remained unchanged since the VAT system was introduced in 1977. Unlike the EU or UK which have reduced rates for certain goods, Korea maintains a single standard rate. However, there are important exceptions: VAT-exempt items include unprocessed food, medical services, education, financial services, and public transportation — these carry an effective 0% rate but businesses cannot claim input credits. Zero-rated items include exports and international transportation — these also have 0% VAT but businesses CAN claim input credits. Simplified taxpayers with under 80 million KRW annual revenue pay reduced effective rates of 1.5-4% depending on their industry classification.

### Q. Why must supply price and VAT be separated on tax invoices?

Korean tax law requires the separate listing of supply price and VAT on all tax invoices for several critical reasons. First, the VAT credit system depends on accurate documentation: the buyer claims the VAT shown on received invoices as input tax credit against their output VAT liability. If the separation is incorrect or missing, the National Tax Service may deny the input tax credit, resulting in a direct financial loss to the buyer. Second, accurate separation enables proper revenue recognition — the supply price represents actual revenue while VAT is a pass-through tax liability. Third, during tax audits, the NTS cross-references seller-issued and buyer-received invoices, and discrepancies trigger automatic flags. Penalties for incorrect tax invoices can range from 1-2% of the supply price for the issuer.

### Q. How do I handle VAT for international transactions?

For exports from Korea, the zero-rate (0%) applies, meaning no VAT is charged to the foreign buyer. However, the Korean exporter can still claim input VAT credits on domestic purchases related to the export. For imports into Korea, VAT is charged at the standard 10% rate on the customs value (CIF value plus customs duties), and this is collected by customs at the point of entry. For digital services purchased from foreign companies (e.g., SaaS subscriptions, cloud services), Korea requires foreign providers to register and charge 10% VAT to Korean consumers since 2015. Korean businesses purchasing these services can claim input VAT credits through the simplified foreign supplier reverse-charge mechanism.

### Q. When do I file VAT returns and how are they calculated?

VAT returns in Korea are filed quarterly, with due dates on January 25 (for October-December), April 25 (for January-March), July 25 (for April-June), and October 25 (for July-September). Additionally, preliminary returns are due in April and October for the first month of each quarter. The VAT payable is calculated as: Output VAT (VAT collected on your sales) minus Input VAT (VAT paid on your business purchases) = Net VAT due. If your input VAT exceeds output VAT (common for businesses making large investments or exporters), you receive a refund from the NTS within 30 days of filing. Late filing incurs a penalty of 20% of the unpaid tax plus daily interest. Electronic filing through HomeTax (hometax.go.kr) is mandatory for most businesses.