Value Added Tax (VAT) is a tax that is reported and paid for added value acquired in the process of providing goods and services* and importing goods.
*The term “goods” means any things or rights that have property value and “services” means all labor and activities, other than goods, that have property values. Article 2, <Value-added tax act>
Who is the Taxpayer? and What is Taxable Income?
Taxpayers are all businesses and importers** of goods, and VAT is calculated by subtracting input tax (total sales x tax rate) from output tax (total amount of purchase x tax rate). If you have more output tax than input tax, and the final VAT shows negative for the accounting period, you can claim for VAT return.
**Any individual, corporation (including the State, a local government, or a local government association), unincorporated association or foundation, or other organization that falls under any of the following subparagraphs shall be liable to pay the value-added tax as prescribed by this Act: 1. An entrepreneur; 2. Person who imports goods. Article 3, <Value-added tax act>
Filing and Payment Schedule
VAT shall be filed and paid for four times;
First Half Preliminary for the period of January 1st – March 31st, must be filed and paid on April 25th
First Half Final for the period of January 1st – June 30th, must be filed and paid on July 25th
Second Half Preliminary for the period of July 1st to September 30th, must be filed and paid on October 25th
Second Half Final for the period of October 1st to December 31st, must be filed and paid on January 25th
Tax Rate
10% of VAT is charged to most goods or services sold domestically, while 0% of VAT is charged to the exported goods or overseas provision of service.
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