South Korea - VAT on Cloud Computing Services
In its 2019 tax amendment proposals the South Korean government has announced an expansion of the scope of electronic services provided by a foreign entrepreneur that are subject to VAT.
Under the current VAT Act, where a foreign entrepreneur supplies any game, audio or video file, software, or other services prescribed by the Presidential Decree on the VAT Act (electronic services), VAT will be imposed.
The 2019 tax amendments will newly include "cloud computing services" in the scope of electronic services. Accordingly, a foreign entrepreneur supplying cloud computing services will bear the obligation to report and pay VAT.
The new rule will be applicable to services provided on or after 1 July 2019.