Business registration
Concept of business registration- “Business registration” refers to the reporting of a business operator who is subject to the payment of VAT and relevant business details to the competent tax office (『Legal Terminology Casebook』, Ministry of Government Legislation · Korea Legislation Research Institute, 2003).
Q. What happens if I run a skin care salon without registering it as a business?
A. The following disadvantages will occur if you run a skin care salon without registering it as a business.
· You will be unable to issue tax invoices to customers, and therefore you will not be able to benefit from the relevant tax deductions.
· Any transactions carried out in the absence of business registration will be deemed as unregistered transactions, and thus you will be liable to pay additional taxes for the non-registration.
· You will be liable to pay for additional taxes levied for dishonest reporting and payment regarding transactions of your business establishment that has failed to report VATs without registering its business.
< National Tax Service -National Tax Policies and Systems - Business Registration Information >
Application period and method of application- A skin care salon operator shall file an application for business registration for each place of business with the head of the tax office having jurisdiction over each place of business, with the requisite documents within 20 days from the commencement date of his/her business. However, a person who intends to newly start a business may file an application for business registration even before the commencement date of the business (Article 8(1) of the Value-Added Tax Act).
- A skin care salon operator may also file an application for business registration with the head of any tax office other than the head of the tax office having jurisdiction over his/her place of business. In such cases, he/she shall be deemed to file an application for business registration with the head of the tax office having jurisdiction over his/her place of business (Article 8(2) of the Value-Added Tax Act).
- A skin care salon operator who has two or more places of business (including those who currently operate one business establishment but wish to open an additional one) may file an application for registration by his/her business unit with the head of the tax office having jurisdiction over his/her main office or principal office. In such cases, an entrepreneur so registered shall be treated as a per-business unit taxable entrepreneur (Article 8(3) of the Value-Added Tax Act).
Documents to be submitted- A skin care salon operator who seeks to have his/her business registered shall submit the following x-documents to the competent tax office or other tax office selected for convenience (including submissions via Hometax of the National Tax Service (Article 11(1) and (3) of the Enforcement Decree of the Value-Added Tax Act and Attached Form 4 of the Enforcement Regulations of the Value-Added Tax Act).
· An application for business registration
·A copy of business registration certificate
·A copy of lease agreement (applicable only to those who have leased a property)
·If you have leased part of a commercial building, a floor plan of the relevant section (applicable only to the buildings that are subject to the Commercial Building Lease Protection Act)
·If a business operator that runs two or more places of business seeks to apply for registration by his/her business unit with the head of the tax office having jurisdiction over his/her main office or principal office, the above attached documents for the places of business other than the one that is subject to taxation by business unit, in addition to documents specifying the location, business type, business item, etc.
- A business operator that runs two or more places of business who seeks to apply for registration by his/her business unit with the head of the tax office having jurisdiction over his/her main office or principal office shall also submit the above attached documents for the places of business other than the one that is subject to taxation by business unit, in addition to documents specifying the location, business type, business item, etc. to the tax office that has jurisdiction over his/her business unit (Article 11(2) and (3) of the Enforcement Decree of the Value-Added Tax Act).
Issuance of business registration certificate- Upon receipt of an application, the head of a tax office having jurisdiction over the applicant’s place of business (headquarters or main office) shall issue to the applicant a business registration certificate stating the entrepreneur’s personal details and other necessary matters within 2 days (Saturdays, Sundays, holidays, substitute holidays, and Labor Day will be excluded from the calculation, and if the Commissioner of the National Tax Service deems it necessary to inspect the business operations, he/she may extend the deadline for issuance by up to 5 days) from the date of receipt of the application (Article 8(6) of the Value-Added Tax Act, Article 11(5) of the Enforcement Decree of the Value-Added Tax Act, and attached Form 7 of the Enforcement Regulations of the Value-Added Tax Act).
Sanctions for violations- If a skin care salon operator fails to file an application for registration within the time limit, 1 percent of the total value of supplies during the period from the commencement date of the business to the date immediately preceding the registration application filing date shall be added to the amount of tax payment or deducted from the refunded tax amount (Subparagraph 1 of Article 60(1) of the Value-Added Tax Act).