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| VAT Exemption for Postpartum Care Voucher Users

Welcoming a newborn is a joyful moment, yet financial pressure often weighs heavily on new parents. One of the biggest costs is hiring a postpartum caregiver, and even with government vouchers, the remaining out-of-pocket expenses have not been small.

Recently, the National Tax Service announced a major policy shift: a full VAT exemption on both the government-supported voucher amount and the user’s co-payment. Until now, co-payments were considered taxable, increasing the actual cost for families.

This new interpretation eliminates that tax burden entirely. The change comes after ongoing confusion and requests from the care-service industry to revise the previous view that only the government-funded portion was exempt.

In this article, we’ll break down what the NTS announcement means, why the interpretation changed, and how this benefits families and service providers.

| Full VAT Exemption on Postpartum Care Voucher Services

On December 5, 2025, the National Tax Service announced that both the government-funded portion and the user’s co-payment for postpartum care voucher services are now VAT-exempt.

Previously, only the government-supported amount was exempt, while the co-payment was treated as taxable, causing financial and administrative difficulties for families and service providers.

The NTS clarified that a voucher is legally defined as a “certificate allowing access to a specific social service,” and therefore the service as a whole should be exempt from VAT.

As a result, families will no longer pay VAT for any part of the postpartum care service.

| Why Did the NTS Change Its VAT Interpretation?

The interpretation change reflects how Korea’s voucher system and social-service environment have evolved. A voucher is no longer seen as a partial subsidy but as a legal certificate granting access to specific services.

As users’ co-payment amounts increased with expanded welfare services, taxing only the co-payment portion became inconsistent with policy objectives.

After internal review by the NTS Interpretation Committee, the previous stance— VAT exemption only for the government-funded portion—was officially overturned.

| What Changes for Families & Providers?

Families immediately benefit from a lower financial burden, as the 10% VAT previously applied to co-payments is now eliminated.

Service providers no longer face uncertainty over mixed taxable and non-taxable portions, significantly reducing administrative and tax risks.

The change also aligns the voucher system with its intended purpose—ensuring accessible welfare services for various groups, including postpartum mothers, seniors, and individuals with disabilities.

| Key Laws Supporting the VAT Exemption

The exemption is grounded in:

 • Article 26 of the VAT Act (exempt medical/welfare services)

 • Article 35 of the VAT Enforcement Decree (services provided via social-service vouchers)

 • Article 5-2 of the Social Welfare Services Act (legal definition of vouchers)

These statutes collectively confirm that any service provided through an authorized voucher is VAT-exempt in full.

| Frequently Asked Questions

Q1. Is VAT fully exempt now?
Yes. Both the voucher-funded portion and the user’s co-payment are VAT-exempt in full.

Q2. Does this apply only to postpartum care?
No. The exemption applies to all welfare services provided via government-approved vouchers.

Q3. What changes for service providers?
The risk of incorrect VAT treatment is removed, allowing for more stable operations.

| Final Thoughts

This VAT exemption marks a meaningful step toward reducing financial burdens for families during childbirth and postpartum recovery.

By recognizing voucher-based welfare services as fully exempt, the NTS aligns the system with its original intent—supporting families when they need it most.

Below is a quick summary of what has changed:

• Full VAT exemption: voucher + co-payment
• Immediate cost reduction for families
• Tax and compliance risks eliminated for providers
• Voucher legally defined as a welfare service certificate
• Applies to various social-service programs
• Effective immediately as of Dec 5, 2025