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Value-added tax

lastmod 2025-08-19created 2025-07-025 edits

Value-added tax is a tax levied on the value added (profit) obtained in the course of trading goods or providing services, and the value-added tax a business pays is calculated by subtracting the input tax from the output tax. 

부가가치세 = 매출세액 − 매입세액
  • Since value-added tax is included in the price of goods, it is actually borne by the final consumer. The business pays the value-added tax borne by the final consumer to the tax office.
    • A tax like this, where the "person who bears it (consumer)" and the "person who pays it (business)" differ, is called an "indirect tax".1
      • That's because it's impossible for consumers to pay the tax one by one every time they buy something.
      • So the business holds the tax and pays it all at once when filing the value-added tax return.
  • Therefore, a business subject to value-added tax must collect a certain amount of value-added tax on the transaction amount when selling goods or providing services, and pay it.

Filing value-added tax on Hometax

See also

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References

  1. For reference, a tax where the person who bears it and the person who pays it are the same is called a "direct tax." Representative examples include inheritance tax and gift tax. ↩

author Zer0 sitemap