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 nail salon without registering it as a business?
A. The following disadvantages will be incurred if you run a nail salon without registering it as a business.
· You will be unable to issue tax invoices to customers, and thus you will not be able to benefit from relevant tax deductions.
· Any transactions carried out in the absence of business registration will be deemed as unregistered transactions, and thus you will be responsible for paying additional taxes for the non-registration.
· You will be responsible for paying additional taxes levied for dishonest reporting and payment regarding transactions of your business establishment that has failed to report VATs without registering its business.
Application period and method of application- A nail 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, within 20 days from the commencement date of his/her business operations. 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 operations (Article 8(1) of the Value-Added Tax Act).
- A nail salon operator may 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 operations. In such cases, he/she shall be deemed to have filed an application for business registration with the head of the tax office that has jurisdiction over his/her place of business (Article 8(2) of the Value-Added Tax Act).
- A nail salon operator who has two or more places of business (including those who currently operate one place of 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 nailbeautician who seeks to have his/her business registered shall submit thefollowing x-documents to the competent tax office heador the tax office head considered favorable by the applicant (includingsubmissions via information networks of theNational Tax Service (Article 11(1) and (3) of the Enforcement Decree of theValue-Added Tax Act and annexed Form 4 of the Enforcement Regulations of theValue-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 plan of the relevant portion (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, and 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, and documents specifying the location, business type, business item, etc. to the tax office having 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 shall issue the applicant a business registration certificate stating the entrepreneur’s personal details and other necessary matters within 2 days from the date of application, excluding any day falling under Article 5(1) of the Framework Act on National Taxes. However, if the Commissioner of the National Tax Service deems it necessary to inspect the business facilities or business operations, he/she may extend the deadline for issuance within 5 days and issue a business registration certificate based on the findings of the inspection (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 in case of violations- If a nail beautician fails to file an application for registration within the time limit, one percent of the total value of supply during the period from the commencement date of business operations 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).
※ Further details on business registration is available at on the website of National Tax service