Measure the cash tied up in import VAT until it comes back
This calculator is based on Korean rules for 2026: the VAT Act and its Enforcement Decree and Rule, the Customs Act and its Enforcement Decree, and the Korea Customs Service Notice on Collection Procedures, as checked on 2026-10-25.
It is a Korea-specific cash planning estimate, not an approval, a refund decision or financing advice.
A manufacturer importing raw materials pays import VAT at every clearance, at 10% of the customs value plus duty.
The tax is later credited as input tax or refunded on the VAT return, but working capital stays tied up for one or two months or more until then.
In months when imports cluster, the amount can reach hundreds of millions of won and is often covered by bank borrowing, and that interest is easy to miss in product costing.
Korea offers two schemes to ease the burden.
One is import VAT deferral (VAT Act Article 50-2), which lets export-oriented SME and mid-sized manufacturing corporations skip payment at clearance and settle it on the return; the other is monthly payment (Customs Act Article 9(3)), which bundles a month of taxes into one payment at month end.
Enter the release date and import VAT of each declaration, and the calculator places four cases on the same dated ledger, pay per declaration, monthly payment, deferral and both combined, to compare the peak cash need, borrowing interest and the net saving after guarantee costs.
Who this is for
- Owners and finance staff of exporting manufacturers who must size a bank line for import tax and the gap until refund
- SME and mid-sized corporations that want numbers on whether they meet the deferral test and how much interest it saves
- Import staff already on monthly payment who want to know how far the peak falls if deferral is added
- Practitioners who want the tax office request, Customs approval and renewal dates on one page
Per-declaration payment, monthly payment and deferral at a glance
The tax is the same in all three; only the date cash leaves changes.
The recovery date is set by the return period containing the release date whichever method you use, so a later payment date means a shorter period of tied-up cash.
Basis, payment timing, eligibility and guarantee for the three payment methods| Item | Per declaration | Monthly payment | Deferral |
|---|
| Basis | Customs Act Article 9(1) and (2) | Customs Act Article 9(3), Decree Article 1-5, Notice on Collection Procedures | VAT Act Article 50-2, Decree Article 91-2 |
| Cash payment | Before release or within 15 days of release | End of the month containing the due date | Nothing at clearance; settled against input tax on the return |
| Eligibility | Any importer | Compliant taxpayers without arrears or punishment | SME or mid-sized manufacturing corporations meeting the export test |
| Guarantee | Guarantee or exemption for post-release payment | Comprehensive guarantee by default; exempt taxpayers skip it within the limit | No separate guarantee rule |
| Period | Not applicable | To the last day of the month containing the second anniversary of approval | One year from approval |
Monthly payment under Customs Act Article 9(3) covers the import VAT that Customs collects as well as duty, and this calculator models the import VAT part only.
When both schemes are approved, qualifying goods pay nothing at clearance and other rows, or rows outside the deferral period, can use monthly payment, which is why the combined scenario is shown separately.
Deferral requirements and application timeline
VAT Enforcement Decree Article 91-2(1) requires both company tests based on the prior business year and history tests as of the request date.
The calculator takes each item as met, not met or unverified: any item not met fails the test, and unverified items without a failure mean the result needs confirmation.
Company tests (prior business year)
- A corporation that is an SME under Restriction of Special Taxation Decree Article 2 or a mid-sized enterprise under Article 6-4(1)
- Manufacturing as the main business
- Exports (zero-rated supplies of goods) of at least 30% of total supplies; SMEs also qualify with KRW 5 billion or more
History tests (as of the request date)
- Continuous business for the last three years
- No national tax arrears, including customs duty, in the last two years, except amounts settled within 15 days after the due date
- No punishment under the Tax Crimes Punishment Act or the Customs Act in the last two years
- No deferral cancellation in the last two years
From request to deferral period
- Within three months of the later of the prior-year corporate tax deadline and the VAT final return deadline, ask the district tax office to confirm the requirements (Decree Article 91-2(3), Rule Form 33-2).
- The tax office issues the confirmation within one month of the request (paragraph 4).
- Apply to the competent customs office with the confirmation attached (Form 33-3), and Customs notifies its decision within one month (paragraphs 5 and 7).
- The deferral lasts one year (paragraph 8) and covers only VAT payable on a tax declaration under Customs Act Article 38 (paragraph 6).
If the deferral is still planned, the calculator applies it only to releases after the longest processing time, one month for confirmation plus one month for approval from the request date.
If any requirement is not met, no deferral is applied, and every result that assumes approval carries a pre-approval warning.
Qualifying goods are those used in your own taxable business; goods whose input tax is not creditable, such as passenger cars, are excluded (paragraph 2).
The deferral can be cancelled if national tax falls into arrears or a complaint is filed under the Tax Crimes Punishment Act or the Customs Act after approval (paragraph 10).
Cancellation does not affect goods already imported under deferral (paragraph 12).
Monthly payment: requirements, validity, guarantee and limit
Customs Act Enforcement Decree Article 1-5 and Articles 20 to 33 of the Korea Customs Service Notice on Collection Procedures set the requirements and procedure.
Unlike the deferral there is no size or export test; the compliance record is what matters.
Approval requirements (Notice Article 21)
- No punishment under the Customs Act or the Tax Crimes Punishment Act in the last two years
- No customs arrears in the last two years, except amounts settled within 15 days or settled amounts under KRW 3 million
- Import and tax payment history for the last three years (two for SMEs), or guarantee-exempt status
- Not flagged for failing to submit tax data in the last two years
Validity and renewal
- Approval is valid to the last day of the month containing the date two years after approval (Decree Article 1-5(2)).
- Renewal is requested at least one month before expiry, and automatic renewal can be chosen in the first application (Notice Article 25).
- If approval is cancelled for loss of eligibility, the tax is demanded with a deadline within 15 days (Decree Article 1-5(4)).
Guarantee cost comes off the net saving
Notice Article 27 requires a comprehensive guarantee for goods under monthly payment by default, and only guarantee-exempt taxpayers may skip it within the monthly limit.
A surety insurance bond costs a premium, so the calculator subtracts the guarantee cost you confirmed for the analysis period from the interest saving of the monthly and combined scenarios.
The limit revolves (Article 29): when monthly taxes not yet paid plus the current row exceed it, that row is paid per declaration.
Under the drafting rule for monthly payment slips (Notice Article 33), payment falls at the end of the month containing release date plus 15 days.
For example, a January 16 release has a January 31 due date and joins the January bundle, while a January 17 release has a February 1 due date and joins February.
Recovery timing: input tax credit and refund deadlines
VAT Act Article 18 sets the time of import at the release date, and Article 38(3) credits import input tax against output tax for the period containing that date.
The date import VAT comes back therefore depends on how you file and claim refunds, and the calculator uses the statutory latest date for each of four methods.
Recovery date rule and legal basis for each VAT recovery method| Recovery method | Recovery date | Days after filing | Basis |
|---|
| Offset against VAT payable | Quarterly preliminary or final deadline (Apr 25, Jul 25, Oct 25, Jan 25) | 0 days | Act Articles 48 and 49 |
| Zero-rated refund at quarterly filing | Quarterly deadline + 15 days | 15 days | Act Article 59(2), Decree Article 107(1) |
| Monthly early refund | Filed by the 25th of the month after release + 15 days | 15 days | Decree Article 107(4) |
| General refund | Half-year final deadline (Jul 25, Jan 25) + 30 days | 30 days | Act Article 59(1) |
- A filing deadline on a Saturday, public holiday or Labor Day moves to the next day under Framework Act on National Taxes Article 5.
Refund deadlines are “within” limits, so they are not holiday-adjusted, and the actual deposit can arrive earlier.
- The offset method assumes the VAT payable for that return exceeds the import VAT.
If low domestic sales turn the return into a refund, recalculate with a refund method.
- Deferred rows are set off against the deferred tax on input line (11), “deferral on imports by exporters”, so there is no cash to recover either.
Peak cash need and borrowing interest formulas
End-of-day balance = previous balance + payments that day − recoveries that day
Borrowing interest = Σ (positive end-of-day balance × days to the next event) × annual rate ÷ 365 (rounded down to the won)
The peak is the largest amount after counting same-day payments before same-day recoveries, and the peak date is the first day it is reached.
The interest saving is per-declaration interest minus scenario interest, and the net saving deducts the monthly-payment guarantee cost from that.
- The ledger uses only payment and recovery dates as events, treats the balance as unchanged between them, and accumulates won-days (balance × days).
- If recovery comes before the monthly payment, the balance can turn negative; no borrowing exists then, so interest is zero for those days.
- To avoid rounding drift on large amounts, won-days are summed as integers and the rate is applied once at the end.
- The best case is the applicable alternative with the largest net saving; ties go to monthly payment, then deferral, then combined.
How to use the calculator
- Enter the company type, whether manufacturing is the main business, and prior-year total supplies and exports to see the export share.
- Mark three years of continuous business, two-year arrears, punishment and cancellation history, import and tax history, and tax data cooperation as met, not met or unverified.
- Enter the deferral status (approved, planned or not used) with the period start or planned request date, and the request window base date.
- Enter the monthly payment status, approval date, monthly limit and the guarantee cost for the period.
- Enter up to 12 release dates and import VAT amounts from the import declarations, and untick the deferral box for non-creditable goods.
- Choose the recovery method, per-declaration timing (before release or 15 days after) and working-capital rate, then review the scenario table, cash calendar and schedule cards and save the review.
Notes such as a material name or B/L number are carried into the saved review.
Inputs are calculated in your browser only and are never sent to or stored on a server.
Four scenarios in an illustrative example
Assume an SME manufacturing corporation with prior-year supplies of KRW 12,000,000,000, of which exports are KRW 4,800,000,000 (40.0%), meeting every requirement.
The deferral was approved from 2026-12-01 to 2027-11-30, and monthly payment was approved on 2025-11-14 and is valid to 2027-11-30, with a KRW 200,000,000 limit and a KRW 400,000 guarantee cost.
The company uses monthly early refunds, pays per declaration before release and borrows at 5.5% a year.
Payment and recovery dates by declaration in the example| Declaration | Import VAT | Per declaration | Monthly | Recovery (early refund) |
|---|
| #1 · released 2026-11-03 | KRW 38,000,000 | 2026-11-03 | 2026-11-30 | 2027-01-12 |
| #2 · released 2026-11-13 | KRW 42,000,000 | 2026-11-13 | 2026-11-30 | 2027-01-12 |
| #3 · released 2026-12-17 | KRW 35,000,000 | 2026-12-17 | 2027-02-01 | 2027-02-09 |
| #4 · released 2027-01-08 | KRW 40,000,000 | 2027-01-08 | 2027-02-01 | 2027-03-12 |
| #5 · released 2027-01-20 | KRW 45,000,000 | 2027-01-20 | 2027-03-02 | 2027-03-12 |
| #6 · released 2027-02-10 | KRW 37,000,000 | 2027-02-10 | 2027-03-02 | 2027-04-09 |
The November early refund deadline of 2026-12-25 is Christmas, so it moves to 12-28 (Monday), and the recovery date is 15 days later on 2027-01-12.
The January bundle end 2027-01-31 is a Sunday, so it is paid on 02-01; the February bundle end 02-28 is a Sunday followed by Independence Movement Day, so it is paid on 03-02.
Peak, interest and net saving by scenario in the example| Scenario | Peak | Peak date | Borrowing interest | Net saving |
|---|
| Pay per declaration | KRW 155,000,000 | 2027-01-08 | KRW 2,114,260 | — |
| Monthly payment | KRW 122,000,000 | 2027-03-02 | KRW 1,075,287 | KRW 638,973 |
| VAT deferral ★ | KRW 80,000,000 | 2026-11-13 | KRW 780,547 | KRW 1,333,713 |
| Deferral + monthly | KRW 80,000,000 | 2026-11-30 | KRW 518,356 | KRW 1,195,904 |
Paying per declaration ties up the tax on the first four of six rows, KRW 155,000,000, on 2027-01-08, and 14,031,000,000 won-days at 5.5% give interest of KRW 2,114,260.
The deferral leaves only the two November releases before its start date to be paid in cash, so the peak drops to KRW 80,000,000 and the interest saving is KRW 1,333,713.
The combined case saves the most interest at KRW 1,595,904, but after the KRW 400,000 guarantee cost its net saving is KRW 1,195,904, so deferral is the best case in this example.
The next confirmation window runs from 2027-03-31 to 2027-06-30; a first-day request is approved by 2027-05-31 at the latest and a last-day request by 2027-08-31, both before the current period ends on 2027-11-30.
The monthly-payment renewal deadline of 2027-10-30 is a Saturday, so it moves to 2027-11-01.
Reading the result and what to do next
The peak sizes your bank line
Use the peak and peak date of the chosen method in working-capital line discussions.
The peak reduction shows how far the line can shrink, or how much more material the same line can carry.
If the net saving is small or negative
When the monthly-payment guarantee cost exceeds the interest saving, the net saving turns negative.
Recheck guarantee-exempt status and the surety premium rate, and recalculate for the months when imports cluster.
If requirements remain unverified
Confirm arrears and punishment history with the tax office and Customs, and the export share with the prior-year zero-rated sales schedule.
Until the approval notice arrives the result is an estimate, so also keep funds ready for per-declaration payment.
If a schedule warning appears
Releases outside the deferral period, requests outside the window and renewal gaps can be resolved by moving shipments or applications earlier.
Prepare the forms and documents on the checklist and fix the timeline with your tax accountant and customs broker.
Frequently asked questions
Does import VAT deferral mean I never pay the VAT?
No.
VAT Act Article 50-2(2) requires the deferred tax to be settled or paid when you file the preliminary or final return.
Under Enforcement Decree Article 91-2(9) the return settles the input tax on those goods against the deferred tax, so the tax does not disappear; you simply do not pay it in cash at clearance.
The calculator therefore treats deferred rows as zero payment and zero recovery.
Can sole proprietors or large companies use the deferral?
No.
Decree Article 91-2(1)(1) limits it to corporations that were small or medium-sized enterprises under Restriction of Special Taxation Decree Article 2, or mid-sized enterprises under Article 6-4(1), in the prior business year and whose main business is manufacturing.
The calculator marks sole proprietors and large companies as not meeting the deferral test; monthly payment under Customs Act Article 9(3) can still be checked separately.
How is the 30% export share calculated?
It is the prior-year value of zero-rated supplies of goods (exports) divided by total supplies for the same year.
Mid-sized companies need at least 30%; SMEs qualify with at least 30% or exports of KRW 5 billion or more.
Zero-rated services are not included in supplies of goods, so check the zero-rated sales schedule before requesting confirmation.
When should I apply for the deferral?
Request confirmation from the district tax office within three months of the later of the prior-year corporate tax deadline and the VAT final return deadline.
For a December year-end company this is usually March 31 to June 30.
The tax office issues its confirmation within one month, and Customs decides within one month of the application that attaches it, so plan for up to two months.
When is tax paid under monthly payment?
Customs Act Article 9(1) sets the due date at 15 days from acceptance of the tax declaration, and Article 9(3) lets an approved compliant taxpayer pay all taxes whose due dates fall in the same month by the end of that month.
Payment therefore falls at the end of the month containing release date plus 15 days, moving to the next day when that is a Saturday or public holiday.
In the example, the January 31 (Sunday) bundle is paid on February 1 and the February 28 (Sunday) bundle on March 2, the day after Independence Movement Day.
Does monthly payment need a guarantee?
In principle, yes.
Article 27 of the Notice on Collection Procedures requires a comprehensive guarantee for goods under monthly payment, and only guarantee-exempt taxpayers may skip it within the monthly limit.
Under Article 29 releases are accepted within the remaining limit and the limit is restored on payment, so the calculator moves a row to per-declaration payment when the monthly taxes not yet paid plus that row exceed the limit.
When does an early refund actually arrive?
Under Decree Article 107(4), a monthly early refund is filed within 25 days after the early refund period ends and paid within 15 days after that deadline.
For goods released in November, you file by December 25 (the next business day when that is Christmas) and receive the refund within 15 days.
A zero-rated refund at the preliminary or final return arrives within 15 days of that deadline, and a general refund within 30 days of the final deadline.
What should I prepare before the deferral period ends?
The deferral lasts one year from approval, so the next year’s confirmation must be requested in time to avoid a gap.
The calculator shows the latest approval date if you request on the first or last day of the next window and warns if a last-day request could push approval past the current period.
Monthly payment must also be renewed at least one month before it expires, and you can choose automatic renewal in the first application.
Scope and cautions
- The deferral neither exempts nor reduces import VAT.
The tax office and Customs decide approval and refunds, and the calculator guarantees neither.
- It does not model monthly payment of duty, individual consumption tax or other taxes, duty drawback on export materials, bonded-warehouse storage versus release timing, two-month early refund periods, or companies under preliminary tax notices.
- A mixed return, where VAT payable is smaller than import VAT and part becomes a refund, is approximated with a single recovery method.
- Extra closure days designated by the Commissioner of Korea Customs Service under Customs Act Decree Article 1-4 are not applied, and dates after 2027-12-31 skip weekends only because holiday data is unavailable and are flagged.
- No loan product is recommended; enter the rate of your actual working-capital facility.
Check the official sources and plan your cash
Official sources were checked on 2026-10-25.
The VAT Act MST276117 (effective 2026-01-02), its Enforcement Decree MST283641 (effective 2026-04-01) and Rule MST284995, the Customs Act MST290673 (effective 2026-10-02), its Enforcement Decree MST283621, the Notice on Collection Procedures (effective 2026-10-02), Framework Act on National Taxes Article 5 and the Regulation on Public Holidays were confirmed through the Korea Ministry of Government Legislation OPEN API.
Requirements, processing times and filing deadlines must be rechecked whenever the law or notice changes.
Start with the calculator above to see the peak and net saving of the four scenarios.
Then prepare the forms on the checklist and request confirmation early in the window so the deferral continues without a gap into next year’s cash plan.
Build your import VAT cash calendar