Article 106-11 (Special Rule on Payment of Value-Added Tax by Purchaser for Dispatch Service to Duty-Free Shops)

Where a tourism business operator (hereinafter referred to as “tourism business operator”) as defined in Article 2 (2) of the 「Tourism Promotion Act」 intends to supply dispatch services (hereinafter referred to as “dispatch services to duty-free shops”) as prescribed by Presidential Decree, which solicit tourists to duty-free shops, to another tourism business operator or a person licensed to operate a bonded sales outlet under Article 196 of the 「Customs Act」 (hereinafter referred to as “duty-free shop operator”), the tourism business operator supplying the dispatch service to duty-free shops, and the tourism business operator and duty-free shop operator receiving such service shall open a special account for transactions of dispatch services to duty-free shops (hereinafter referred to as “dispatch service transaction account”) as prescribed by Presidential Decree.

A tourism business operator or a duty-free shop operator who has received dispatch services to duty-free shops from a tourism business operator shall deposit, using the dispatch service transaction account, the amount under subparagraph 1 to the tourism business operator who supplied the dispatch service to duty-free shops, and the amount under subparagraph 2 to the person designated by Presidential Decree, by the deadline for deposit of value-added tax (hereinafter referred to as “value-added tax deposit deadline” in this Article) from the date of receipt of the dispatch service to duty-free shops (if the date of receipt of the dispatch service to duty-free shops is earlier than the date of receipt of the tax invoice, the date of receipt of the tax invoice). Provided, That in cases where the price of dispatch services to duty-free shops is settled through methods prescribed by Presidential Decree, such as corporate purchase fund loans, only the amount under subparagraph 2 may be deposited. 1. Price of dispatch services to duty-free shops 2. Amount calculated by applying the tax rate under Article 30 of the 「Value-Added Tax Act」 to the taxable base under Article 29 of the same Act (hereinafter referred to as “value-added tax amount” in this Article).

If a tourism business operator who supplied dispatch services to duty-free shops has received payment for the price of dispatch services to duty-free shops without using the dispatch service transaction account under paragraph ③, the head of the tax office having jurisdiction over the place of tax payment shall collect a penalty tax of 10 percent of the price of the dispatch services to duty-free shops from the tourism business operator who supplied the service and the tourism business operator or duty-free shop operator who received the service, respectively.

The value-added tax amount deposited according to paragraph ③ by a tourism business operator or a duty-free shop operator who has received dispatch services to duty-free shops shall be added to the tax amount payable or the tax amount to be refunded for the tourism business operator who supplied the dispatch service to duty-free shops.

A person who has received the deposit of the value-added tax amount according to paragraph ③ shall pay the value-added tax amount, after adding the refundable tax amount according to paragraph ⑦, to the national treasury by the 25th day of the month following the end of each quarter.

The Commissioner of the National Tax Service may issue orders concerning the preparation and submission of tax invoices and summaries of tax invoices to tourism business operators and duty-free shop operators who supply or receive dispatch services to duty-free shops, if necessary to preserve value-added tax.