Sales Tax State Activity Update -October 2008

South Korea Proposes Changes to VAT Exemptions

As an FYI, South Korea is expected to announce plans to reduce the number of VAT-exempt supplies effective July 1, 2009. It would be part of a bill to amend the Enforcement Decree of the VAT Law.

In addition, a consolidated tax return system would be introduced from 2010. Taxpayers could opt for the current single return system or for the new system which would be based on the VAT registration of a taxpayer rather than the registration of individual business establishments. The new system would only be permitted for a taxpayer with an enterprise resource planning system and prior approval from the tax office in the applicable jurisdiction.

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