This guide is intended for businesses who sell tax-free products and services as stipulated in Article 26 of the VAT Act (Supply of Tax-Free Goods or Services).

If you are a general business that does not sell the goods or services specified in this article, you may skip this guide. A 10% VAT is automatically applied through the PG or credit card company for such businesses.

Getting Tax-free Merchant ID through PG Contract

If you are a tax-free business, you can submit a business registration card to prove your tax-exempt status when signing a PG contract. You will receive a merchant ID that allows you to set the following tax-free related properties when requesting a payment using IMP.request_pay.

• amount: total payment amount
• tax_free: tax free amount

Some PGs use a single merchant ID, without getting a separate tax-free merchant ID, for both taxable and tax-free amounts. They set the tax_free property to indicate the tax-free portion of the order.

Three types of merchant IDs can be issued according to your business's tax-exempt status.

Tax-free merchant ID

A tax-free merchant ID is issued to businesses that only sell tax-free products and services. If you make a transaction with a tax-free merchant ID, all payments are tax exempted regardless of the tax-free setting.

Taxable merchant ID

A taxable merchant ID is issued to businesses that only sell taxable products and services. If you make a transaction with a taxable merchant ID, all payments are taxed regardless of the tax-free setting.

Combination merchant ID

A combination merchant ID is issued to businesses that sell both taxable and tax-free products and services. You must use a combination merchant ID to set the tax-free amount for only the tax-free items.

To pay for both taxable and tax-free items, specify the total payment amount for all items in the amount property, and the total tax-free amount for only tax-free items in the tax_free property.

Applying tax_free setting

The scenarios in this section show how to set the amount and tax_free properties when purchasing tax-free and/or taxable items.

Assume that a flower business (tax-free business) sells tax-free plant seedlings and taxable vases as follows:

• Plant seedlings: tax-free, 11,000 won each
• Vase: subject to VAT, 22,000 won each

CASE 01. Purchasing only tax-free items

For a purchase of one seedling, set the total payment amount to 11,000 won, and the total tax-free amount to 11,000 won as follows:

JavaScript
IMP.request_pay(
  {
    amount: 11000, // total payment amount
    tax_free: 11000, // total tax-free amount
    // ...
  },
  function (rsp) {
    // ...
  },
);

In this case, the total amount of 11,000 won is tax-free, and the final payment is calculated as follows (terminology may vary by PG):

• Total tax-free amount: 11,000 won
• VAT: 0 won

CASE 02. Purchasing only taxable items

For a purchase of one vase, set the total payment amount to 22,000 won, and the total tax-free amount to 0 won as follows:

JavaScript
IMP.request_pay(
  {
    amount: 22000, // total payment amount
    tax_free: 0, // total tax-free amount
    // ...
  },
  function (rsp) {
    // ...
  },
);

In this case, a 10% VAT is applied to the total amount of 22,000 won, and the final payment is calculated as follows:

• Total item price: 20,000 won
• VAT: 2,000 won

CASE 03. Purchasing both tax-free and taxable items

For a purchase of 3 seedlings and 1 vase, set the total payment amount to 55,000 (33,000 + 22,000) won, and the total tax-free amount to 33,000 won (for seedlings) as follows:

JavaScript
IMP.request_pay(
  {
    amount: 55000, // total payment amount
    tax_free: 33000, // total tax-free amount
    // ...
  },
  function (rsp) {
    // ...
  },
);

In this case, a 10% VAT is applied to the total taxable amount of 22,000 won, and the final payment is calculated as follows:

• Total item price: 20,000 won
• Total tax-free amount: 33,000 won
• VAT: 2,000 won