Reducing Tax Burden for Small Business Owners... Simplified Taxation Threshold Raised from 80 Million to 104 Million Won

Individual Businesses with Previous Year Supply Value Over 80 Million KRW Must Issue Electronic Tax Invoice

Starting next month, the threshold for simplified taxation will be raised from the previous KRW 80 million to less than KRW 104 million.

The National Tax Service announced that from July this year, the scope of simplified taxation will be expanded to reduce the tax burden on small business owners and enhance transaction transparency. Additionally, various systems related to value-added tax will be improved and implemented, including the expansion of electronic tax invoice issuance obligations and the scope of items subject to the purchaser payment special case.

First, from July 1, the threshold for simplified taxation will be raised from less than KRW 80 million to less than KRW 104 million. However, for real estate rental businesses and taxable entertainment venues, simplified taxation will continue to apply only if the amount is less than KRW 48 million, as before.

Also, according to the revision of the exclusion criteria for simplified taxation industries, from next month, skin care services (pibugiyong-eop) and other beauty services (nail art) will be eligible for simplified taxation regardless of area. Until now, businesses with a location in special or metropolitan cities and an area of 40㎡ or more in skin or other beauty services were not eligible for simplified taxation even if their sales were low. However, going forward, businesses with a supply value of less than KRW 104 million in the previous year will be eligible for simplified taxation.

Along with this, from July 1, the obligation to issue electronic tax invoices will be expanded to individual business owners with sales of KRW 80 million or more. Approximately 590,000 individual business owners will be newly subject to the electronic tax invoice issuance obligation regardless of tax type (general or simplified). Businesses that receive the mandatory issuance notification must continue to issue electronic tax invoices even if their supply value by business location in the previous year falls below the threshold.

Additionally, 'non-ferrous metal scrap' will be added to the list of items subject to the purchaser payment special case under the value-added tax system. The National Tax Service has sent individual notices (via mobile or mail) to approximately 180,000 business operators in the non-ferrous metal handling industry who are newly subject to this special case due to the expansion of applicable items.