Are taxes applied to software delivered to the end-user over the Internet?
If so, on what value? As mentioned earlier, all computer software products enter Korean at a “zero” percent duty rate. Payments for software products imported over the internet, which constitute royalties, however, are subject to withholding taxes of 15%. Korea’s 10% VAT is applicable to all imports, including software, based on the CIF value. The imposition of VAT on software imported via the Internet will be determined by the location of the server from which customers can download the software. If the server from which the software is downloaded is located within Korea, the software importer must report sales to the National Tax Service and pay 10% VAT. The Korean Government currently does not charge corporate taxes on electronic transactions, regardless of the legal status of a U.S. firm’s Korean office. The imposition of corporate tax on tangible transactions is determined by the legal status of the Korean office of a U.S. company. If the Korean office has the authority to sign sa
