What is value-added tax and who is the taxpayer?

Value-added tax is a tax imposed on value added, that is, profits, that arise in the process of trading goods (goods) or providing services (services).

The value-added tax paid by businesses is calculated by subtracting purchase tax from sales tax, with the calculation formula as follows.

Value-added tax = Sales tax - Purchase tax

Value-added tax is generally included in the price of goods, so the actual burden falls on the final consumer, and businesses report and pay the tax that the consumer bore to the tax office.

Therefore, all businesses that sell products or provide services must include value-added tax in the transaction amount when collecting and pay it to the tax office.

Value-added tax taxpayers include all businesses that sell products or provide services in business, regardless of profit purpose.

However, if the business engages only in value-added tax exempt businesses such as the sale of unprocessed food and the provision of medical/educational services as stipulated by law, the reporting and payment obligations do not apply.

Ultimately, value-added tax is not a tax that the business directly bears, but a structure where the business collects and pays on behalf of the final consumer, and businesses must check whether they have value-added tax reporting and payment obligations according to their business type.