Buyers Can Directly Issue Tax Invoices When Sellers Go Bankrupt or Close Business

National Tax Service Implements 'Maeip Jabalhaeng Gyesanseo' System for the First Time

Starting next month, if a buyer fails to receive an invoice due to the seller's bankruptcy, closure, or loss of contact, the buyer will be able to issue the invoice themselves to have the purchase cost recognized.

On the 28th, the National Tax Service (NTS) announced that it will implement the "Buyer-Issued Invoice" system for the first time in July, allowing taxpayers who purchase tax-exempt goods and services to issue invoices directly.

An invoice is a document that certifies a value-added tax (VAT) exempt transaction, similar to a tax invoice for taxable goods and services. Buyers must pay an additional tax of 2% of the purchase amount as a penalty if they do not have invoices or other supporting documents when filing comprehensive income tax returns.

When issuing a Buyer-Issued Invoice, if a business engaged in manufacturing or restaurant operations using tax-exempt agricultural products as materials submits a Buyer-Issued Invoice Summary Table during VAT reporting, the supply value of the corresponding Buyer-Issued Invoice can receive a deemed input tax credit. The deemed input tax credit is a system that allows a certain amount to be deducted as input tax when purchasing VAT-exempt agricultural, livestock, fishery, and forest products and supplying VAT-taxable goods or services.

Additionally, if a Buyer-Issued Invoice is issued and kept, it is considered that the obligation to receive and keep supporting documents has been fulfilled, so the buyer can include the cost as necessary expenses for business income without bearing the penalty for failure to receive supporting documents.

Buyer-Issued Invoices are issued after confirmation by the competent tax office when the supplier provides tax-exempt goods or services but does not issue an invoice. The application target is transactions with a supply value of 50,000 KRW or more per transaction, and the application for transaction confirmation must be made within six months from the end of the taxable period that includes the supply date. The NTS will verify the transaction by the end of the month following the application and notify both the buyer and supplier of the transaction confirmation result if the transaction is confirmed to be genuine.

An NTS official stated, "The Buyer-Issued Invoice system is intended to facilitate taxpayers' cost verification when the supplier does not issue an invoice due to their circumstances, improving taxpayer convenience and enhancing the transparency of invoice transactions." He added, "The NTS will continue to actively promote administrative measures to increase taxpayer convenience and improve market transaction transparency."

This content was produced with the assistance of AI translation services.