[Untangling Business Issues]⑦ Closing a Business but Asked to Reissue the Business Registration Certificate?

The number of self-employed individuals closing their businesses is increasing due to the impact of COVID-19.
[Photo by Asia Economy DB]

The series [Untangling Business Knots], which introduced the process through which entrepreneurs overcame regulatory barriers threatening their survival via the government agency 'Small and Medium Business Ombudsman,' concludes with this final installment. [Editor’s Note]

[Asia Economy Reporter Kim Jong-hwa] # Mr. A, who operated a mail-order business, decided to close his store as it became difficult to operate due to the COVID-19 pandemic. He visited the local district office to file a closure report. However, the district office refused to accept the closure report because he did not attach the original business registration certificate (registration card). Having lost his business registration certificate, Mr. A had to visit the local tax office to apply for a reissuance of the certificate. On the day the certificate was reissued, he returned to the district office, attached the reissued business registration certificate, and was finally able to complete the closure report.

Starting a business is difficult, but closing one is also not easy in reality. The fact that a business owner must reissue a business registration certificate just to close the business... Even if it does not cost a lot, it is frustrating for Mr. A who is closing his business.

This is not the fault of the district office officials. It is because domestic law is structured that way. For certain industries such as mail-order businesses or animal hospitals, when filing a closure report, the original permit or registration certificate must be submitted to the local government. The law does not provide exceptions for cases of loss or damage, so the original registration certificate must be reissued and attached.

When the Small and Medium Business Ombudsman conducted a comprehensive review of laws that need to be amended to simplify closure reporting, it was found that as many as 14 laws must be revised. To do so, consultations with six ministries?including the Ministry of Agriculture, Food and Rural Affairs; Ministry of Culture, Sports and Tourism; Ministry of Health and Welfare; Ministry of Gender Equality and Family; Ministry of Food and Drug Safety; and the Fair Trade Commission?are required.

Accordingly, the Small and Medium Business Ombudsman examined the progress of the 'Integrated Closure Reporting' system, which is being promoted jointly with the Ministry of the Interior and Safety and the National Tax Service, believing that if this system is properly established, closure reporting simplification would naturally follow. However, progress was slow.

The Integrated Closure Reporting system was promoted to eliminate the inconvenience for small business owners who had to visit both the tax office, which handles business registration, and the city/county/district office, which handles permits, separately when filing closure reports. However, due to insufficient legal grounds for integrated closure reporting in individual laws, lack of related forms in some agencies, and inadequate system guidance, related complaints have been steadily received by the Small and Medium Business Ombudsman.

By next year, it is expected that the unreasonable practice of having to alternate visits between the tax office and district office for closure reporting, and having to reissue damaged business registration certificates to attach to closure reports, will all be resolved.

The Ombudsman, together with related ministries, has decided to ▲ amend relevant laws, ▲ strengthen system operation inspections and publicity, and ▲ promote sharing of closure information to establish the Integrated Closure Reporting system.

Park Ju-bong, Small and Medium Business Ombudsman, said, "We are discussing amendments to 33 laws across 13 ministries. Among them, 7 laws have been amended, and the remaining 26 laws are scheduled to be amended in the second half of the year." He added, "By next year, small business owners and self-employed individuals in 142 industries will no longer have to endure the inconveniences they previously experienced when filing closure reports."