In any of the following events, a business entity may not deduct the input tax from the output tax:
1. Where the supporting documents, as set out in Article 33 herein, for purchased goods or services are not obtained or kept in the manner required.
2. The goods or services purchased are not for the use of principal and ancillary business operation. However, this requirement does not apply to purchases made for the support of national defense, provision of morale services to the troops, or contribution to the government.
3. Goods or services for social relations purposes.
4. Goods or services rewarded to individual employees.
5. Passenger cars for personal use.
Business entities engaging solely in the business of tax-exempt goods or services as provided in Article 8, paragraph 1 herein may not apply for refund of the input tax.
When a business entity is prohibited from deducting a certain part of the input tax from the output tax because it engages on a concurrent basis in the business of tax-exempt goods or services provided in Article 8, paragraph 1 herein, or due to other provisions of this Act, the ratio and calculation method related to the non-deductible amount shall be prescribed by the Ministry of Finance.