Samil PwC Publishes K-Beauty Accounting and Taxation Guidebook

Samil PwC announced on the 25th that it has published the "K-Beauty Industry Status and Accounting & Tax Guide Book," which contains essential information for the sustainable growth of K-Beauty companies.

Provided by Samil PwC

According to the guidebook, the cumulative export value of domestic cosmetics in the third quarter of this year reached $7.4 billion, a 19.3% increase compared to the same period last year ($6.8 billion). The total cosmetics export value for this year is expected to surpass the record high of $9.18 billion set in 2021. Although exports to China, which accounts for the largest share, declined due to a preference for domestic brands and strengthened regulations, other consumer countries such as the United States, Japan, and the European Union (EU) recorded double-digit growth rates. Indie brand products also rapidly grew in the global market through innovative planning and localized marketing.

The guidebook also covers factors that K-Beauty startups should consider at each stage, from funding to mergers and acquisitions (M&A) and initial public offerings (IPO). Growth strategies for K-Beauty startups include ▲developing specialized products and establishing brand identity ▲expansion strategies considering the global market ▲sustainability and eco-friendly product development ▲digital and D2C (direct-to-consumer) strategies.

Key accounting issues that K-Beauty companies need to consider include revenue recognition, inventory valuation, customer loyalty programs, business combinations, and impairment reviews. It also explains major tax issues such as corporate tax and value-added tax considerations related to promotional events, returns, test products, and mileage. Internal control-related issues are also addressed, including strategies to strengthen internal controls to prevent fraud such as embezzlement and procedures to manage the risk of uncollected sales proceeds.

Kim Young-soon, K-Beauty Industry Leader (Partner) at Samil PwC, said, "After the first revival centered on China in the mid-2010s, K-Beauty is now entering the second revival phase through a complete ecosystem." He added, "With active activities expected in startups, investments, M&A, and IPOs, Samil PwC will become a trusted advisor supporting K-Beauty companies based on quality and industry expertise." Detailed information about the report can be found on the Samil PwC website.