contents
5. Tax Base and Assessment
a. Tax Base
	(1) Calculation of tax base
		(a) Principle for calculating the tax base
			The tax base of value-added tax for the supply of goods or services is an
			aggregate amount of the value as specified under the following. However,
			value-added tax is not to be included in the base.
			i)  If the supply is for a monetary consideration, its consideration
			ii)  If the supply is for a non-monetary consideration, its open market value
			iii) If the actual consideration is considered to be unduly less than that which
				might reasonably be expected or if there is no consideration, its open market
				value
			iv) In the case of the inventory goods at the time of the closing down of a
				business, the open market value of the inventory goods
		(b) Conversion of foreign currency
			Conversion methods for monetary consideration for foreign currency or other
			foreign exchange:
			i) In the case of conversion before the time of supply, the converted amount
			ii) In the case of conversion after the time of supply, an amount calculated based
				on the basic rate or cross rate of customers at the time of supply
	(2) Special cases
		(a) In the case of sales in installments or sales on deferred payment plans, the tax
			base is each part of the consideration receivable under the contract.
		(b) In the case of credit sales, the tax base is the total amount of supplied goods.
		(c) In the case of supply of goods or services on the condition of payment based on
			work completed, or interim payments, or in the case of continuous supply of goods
			or services, each part of the consideration receivable under the contract becomes
			the tax base.
	(3) Tax base for self-supply
		In the case of ordinary self-supply, the open market price of the goods is the tax
		base. However, in the case of self-supply of depreciable goods, the market price is
		one of the following.
		(a) Buildings or construction structures
				Tax Base = Acquisition Price *
						(1 -  5/100 * Number of Taxable Periods Elapsed Following Acquisition)
		(b) Other depreciable goods
				Tax Base = Acquisition Price *
						(1 - 25/100 * Number of Taxable Periods Elapsed Following Acquisition)
		(c) Calculation of the number of taxable periods elapsed following acquisition
			i)  If the goods are acquired (or if exempt from the value-added tax during a
				taxable period), the acquisition (or exemption) shall be deemed to have occurred
				on the commencement date of the taxable period.
			ii)  The number of taxable periods elapsed applicable to the tax base is limited to
				20 for buildings and construction structures, and four for other depreciable
				goods.
	(4) Amounts included and not included in the tax base
		(a) The following amounts are excluded from the tax base:
			i)   the amount of discount,
			ii)   the value of returned goods,
			iii)   the value of goods broken, lost or damaged before they are delivered, and
			iv)  national or public subsidies excluding subsidies directly linked to the price of supply.
		(b) The amounts of discount, bad debt, bounty or other similar amounts in relation to
			the value of supply after the supply of goods or services, is included in the tax base.
	(5) Tax base for the importation of goods
		The tax base for the importation of goods is an aggregate of the price on which
		customs duties are chargeable, the customs duties, the special excise tax, the
		liquor tax, the education tax, and the transportation tax thereon. The price on which
		the customs duties are chargeable is the normal arrival price (CIF price).
b. Tax Rate
	(1) The current rate
	The rate of value-added tax is 10%.
	(2) Application of the tax rate
		Where the tax rate is applicable on the VAT exclusive price, the 10% rate is applied.
		However, in the case of application on the VAT inclusive price of the retailers, the tax
		rate becomes 10/110. Where VAT is not separately collected at the time of the
		transaction, the tax rate of 10/110 is applicable on the VAT inclusive price.
c. Collection at Transaction
	The value-added tax will be collected where a trader supplies goods or services.  It is
	computed by multiplying the tax base to the tax rate.
d. Amount Payable
	(1) Computation of tax amount
		The amount of value-added tax is computed by deducting the input tax amount under
		the following items from the output tax amount chargeable on the goods or services
		supplied by the taxpayer. The input tax which exceeds the output tax is refundable.
		(a) The tax on the supply of goods or services that a trader has used or intends to
			use for his business
		(b) The tax on the importation of goods that a trader has used or intends to use for
			his business
	(2) Input taxes not deductible
		The input taxes are not deducted from the output tax where:
		(a) a trader has not received a tax invoice, has not submitted to the government an
			aggregate summary of the tax invoices of every individual supplier, has not recorded
			the whole or in part the necessary items to be recorded, or where the contents of the
			tax invoices are proved to be different from the facts (However, where a trader
			submits the tax invoice received with a revised return on the tax base under the
			Basic Law for National Taxes, or where a person whose tax base and tax amount
			payable or refundable are corrected by the head of a tax office submits to the
			government the tax invoice and sales slips of credit card and is certified by the head
			of the tax office, the input tax amount shall be deducted from the output tax amount.);
		(b) the input tax amount of expenses are not directly related to the business;
		(c) the input tax amount on the purchase and maintenance of small automobiles
			except for those used in transportation business;
		(d) the input tax amount on the supply of goods or services is exempted (including
			the input tax amount in relation to investment);
		(e) the amount of entertainment expenses or similar expenses are provided in the
			Presidential Decree; or
		(f) the input tax amount is levied at least 20 days before the registration.
	(3) Deemed input tax deduction
		In the event where value-added tax is chargeable (e.g. where a trader who carries
		on all the taxable businesses supplies the goods produced or processed by using
		agricultural, livestock, marine, or forest products, the supply of which is exempted
		from value-added tax as raw materials), an amount that is computed by multiplying
		2/102, (3/103 in case of restaurant businesses) may be deducted from the output tax
		amount.
	(4) Bad debts tax deduction
		In the case where a taxable trader has supplied taxable goods or services on credit
		but could not collect the account receivables for the supply because the receiver of
		the supply has dishonored a bill, has become bankrupt, etc., and the trader has
		treated the account receivables as bad debts, the VAT on the goods or services
		should be arranged as follows.
		(a) The supplier may deduct the uncollected VAT from the output tax amount for the
			VAT period on which the day of the determination of bad debts falls:
				Deductible VAT = Bad Debts * 10/110
		(b) The government shall collect the VAT amount already deducted from the
			supplier's output VAT from the person who received the supply.
e. Tax Invoice and Bookkeeping
	(1) Tax Invoice
		(a) Contents of invoice
			When a registered trader supplies goods or services, he or she shall issue an
			invoice to the other party. The contents of the invoice shall contain:
			i) the registration number and the name of the individual or corporation trader;
			ii) the registration number of the other party to the supply;
			iii) the value of the supply and value-added tax thereon;
			iv) the date, month and year of issuance of the tax invoice; and
			v) other particulars as prescribed by the Presidential Decree.
		(b) Receipts
			A trader who carries on businesses such as retail outlets, ordinary restaurants,
			hotels, passenger transport, etc. may issue a tax invoice in which the name of
			the other party to the supply and the amount of value- added tax are not recorded
			separately ("receipts").
	(2) Bookkeeping
		(a) A trader is required to maintain accounting records of all transactions at each
			business place.
		(b) Mixed transactions
			Where a trader supplies exempt goods or services together with taxable goods
			or services, he or she should separately enter the transaction information into the
			books.
		(c) Keeping record
			A trader should keep the books in which the transactions are recorded and the
			tax invoices or receipts issued or received for a period of five years from the date
			of the final return for the taxable period in which the transactions are filed.
		(d) Tax invoices for transactions through a consignee or agent
			In the case of consignment sales or sales through an agent, the consignee or
			agent shall issue the tax invoice. Where the goods are delivered directly by the
			consignor or the principal the tax invoice shall be issued. In the case of
			consignment purchases or purchases through an agent, the supplier shall issue
			the tax invoice to the consignor or principal, In both cases, the registration
			number of the consignee or agent shall be recorded additionally in the invoices.
		(e) Monthly issue of tax invoice
			Where deemed necessary, the trader may prepare and issue a tax invoice by
			aggregating the total receivables of transactions of all parties to the end of the
			month.
		(f) Adjustment of tax invoice
			Where there is an error or needs to make corrections in the submitted tax invoice
			after the issuance of the tax invoice, the trader shall re-prepare and re-issue the
			tax invoice.
		(g) Exemption from obligations to issue tax invoice
			Persons carrying on one of the following businesses are exempt from the
			obligation to prepare and issue tax invoices:
			i)  self-supply of goods, personal use of goods, donation for a business
				purpose, supply at the time of closing down of a business, and self-supply of
				services; or
			ii)  exportation of goods, supply of services abroad, and other specific supplies
				of goods or services earning foreign currency that are subject to zero-rating.
		(h) Prevention of double issuance of tax invoice and credit card receipts
			When a retailer issued credit card receipts, additional issuance of a tax invoice
			is not allowed.
		(i) Tax invoice at the time of importation
			When importing goods, customs collectors are required to prepare and issue tax
			invoices in accordance with the provisions of the Customs Law.
	(3) Cash Register
		(a) Installation
			Traders who carry on retail businesses, ordinary restaurants, hotels, and other
			similar businesses shall install a cash register and issue tax invoices on which
			the consideration for the supply is recorded.
		(b) Deemed bookkeeping and taxation on the basis of cash receipts
			In the case where a trader issues tax invoices and keeps tapes of audit, he or
			she is deemed to have performed his obligation of bookkeeping and issuance of
			receipts. In relation to a taxpayer that has installed a cash register, value-added
			tax may be chargeable based on cash receipts.