1. According to Article 17(7) of the former Value-Added Tax Act (wholly amended by Act No. 11873, Jun. 7, 2013) and the main sentence of Article 61(1) of the Enforcement Decree thereof (wholly amended by Presidential Decree No. 24638, Jun. 28, 2013; hereinafter “Enforcement Decree”), where a business entity concurrently runs a taxable business and a tax-free business, the calculation of the input tax amount related to the tax-free business shall be based on the actual ownership, but the input tax amount that cannot be classified into actual ownership (hereinafter “common input tax amount”) shall be divided in proportion to the portion related to the taxable business and the tax-free business, and the proportional distribution shall be based on the ratio of the supply value of the tax-free business to the total supply value.

However, the method of allocating the common input tax according to the ratio of the value of supply is limited to cases where there is a relationship between the business where the common input tax has occurred and the business part where the value of supply has occurred, and if each business part is separated and independent, the common input tax amount shall not be divided based on the value

In such cases, whether each of the above business parts is related to each other shall be determined by comprehensively taking into account relevant circumstances, such as the details and purpose of being supplied with goods, etc. which are grounds for the occurrence of common input tax amount, type of business operation, common input tax amount and supply value, and characteristics of the business type.

On the other hand, if there is no supply value for taxable businesses and tax-free businesses during the pertinent taxable period or there is no supply value for either of them, due to the reasons such as that the business for which common input tax has occurred and the business for which the value of supply has occurred are separated.