South Korea exempts animal blood for treatment, prevention or diagnosis from VAT from 1 January 2025

What changed in detail

Law No. 20614, promulgated on 31 December 2024 and in force from 1 January 2025, amended Article 26(1) item 5 of the Value Added Tax Act. The item exempts medical and health services and “혈액” (blood). The amendment reads blood as including animal blood prepared for treatment, prevention or diagnosis. Under Article 2 of the addendum, the exemption applies to supplies made on or after 1 January 2025.

The same Act made three other changes:

• It extended the tax credit for issuing electronic tax invoices, available to individual businesses whose prior-year supply value per place of business is below KRW 300 million (Articles 47(1) and 63(4)), from 31 December 2024 to 31 December 2027.
• It created ad-hoc assessment (수시부과) during a tax period (new Article 57-2 and Article 68(2)), for example where tax invoices are issued without an actual supply. It applies where the trigger arises on or after 1 January 2025 (addendum Article 3).
• It doubled the additional tax on nominee businesses (명의위장) from 1% to 2% of supply value for general taxpayers (Article 60(1)2) and from 0.5% to 1% for simplified taxpayers (Article 68-2(1)). Supplies made before 1 January 2025 stay under the old rates (addendum Article 4).

What it means

All four provisions are still in force: the consolidated VAT Act in force from 2 January 2026 reads Article 26(1)5 with the animal-blood wording and Article 60(1)2 at 2%. The grounds for ad-hoc assessment were filled in by Presidential Decree No. 35353 (kr-app-market-reporting-2025), and Law No. 21218 later raised the fake-invoice additional tax that also triggers it to 4% (kr-false-invoice-surcharge-4pct-2025).

The exemption itself matters to veterinary blood banks and their customers: those supplies stopped carrying 10% VAT, and the supplier lost input-VAT recovery on them. The more widely felt change in this Act is the e-tax-invoice credit for small sole proprietors, now available until the end of 2027.