When you open an online shop or a small business in Korea, the first deadline is not a tax return but business registration. Article 8 of the Value-Added Tax Act requires an application within 20 days of the business start date, and a late registration adds 1% of what you sold in the meantime as a penalty (art. 60). Recovering the VAT on things bought before registering also depends on a deadline (art. 39). This follows the VAT Act and its Enforcement Decree as written.
1. Within 20 days of the start date. One application per place of business, to the head of the competent tax office. You may also apply before starting (Act art. 8(1)).
2. Late: 1% of the supply value. It applies to sales from the start date to the day before you apply; for a simplified taxpayer it is 0.5% of the supply price (art. 60(1) item 1, art. 68-2(1)).
3. Input VAT before registration is not deductible as a rule. But if you apply within 20 days after the end of the taxable period in which the purchase fell, purchases back to the first day of that period stay deductible (art. 39(1) item 8).
When and where — Act art. 8
Art. 8(1) A business operator shall apply to the head of the tax office with jurisdiction over the place of business for business registration for each place of business within 20 days from the business start date, as prescribed by Presidential Decree. A person intending to start a new business may apply even before the start date.
- Any tax office — applying to a tax office other than the competent one counts as applying to the competent one (para. 2). Filing through the national tax information network (Hometax) counts as filing (Decree art. 11(1)).
- Two or more places of business — registration may be made as a single business unit at the head office or main office (para. 3).
- Later changes — suspension, closure or a change in registered particulars must be reported without delay, as must not starting a business you registered in advance (para. 8).
What counts as the business start date — Decree art. 6
| Business | Start date | Basis |
|---|---|---|
| Manufacturing | The day manufacture begins at each plant | Decree art. 6 item 1 |
| Mining | The day extraction begins at each site | Item 2 |
| Any other business | The day you begin supplying goods or services | Item 3 |
Online selling and services fall in the third row, which reads as “the day you first sell” (our reading), not the day the fit-out started. That is why there is a separate route to register in advance while preparing to open (proviso to art. 8(1)).
How long it takes — Decree art. 11
- The application states your personal details, the reason for applying, the business start date or the date work began on setting up the premises, and other relevant matters (para. 1).
- The tax office issues the registration certificate within 2 days of the application, not counting the days listed in article 5(1) of the Framework Act on National Taxes; where premises or business conditions need checking it may extend this by up to 5 days (para. 5).
- An advance application may be refused where it is recognised that the business will not in fact start (para. 7).
- If you do not register, the tax office may investigate and register you ex officio (para. 6).
The documents to attach are set by business type in a table in Decree art. 11(3), which we did not reproduce. A minor also attaches a legal representative’s consent (same paragraph).
Late registration — the penalty (art. 60)
Art. 60(1) item 1 Where registration is not applied for by the deadline in the main text of article 8(1): 1 percent of the total supply value from the business start date to the day before the date of application for registration.
| Who | Penalty | Basis |
|---|---|---|
| General taxpayer | 1% of total supply value | Art. 60(1) item 1 |
| Simplified taxpayer | 0.5% of total supply price | Art. 68-2(1) (“supply value” read as “supply price”, 1% as 0.5%) |
| Registering in another person’s name, or trading under it | 2% of total supply value (1% if simplified) | Art. 60(1) item 2 |
| Example (ours) | Sales before registering | Penalty |
|---|---|---|
| General taxpayer | Supply value 10 million won | 100,000 won |
| Simplified taxpayer | Supply price 10 million won | 50,000 won |
| General taxpayer | Supply value 50 million won | 500,000 won |
The penalty runs on sales up to the day before you apply, so applying even a day sooner stops the base growing (our reading). And as the text says, it is counted from the start date, not from the day the 20 days ran out. The penalty is added to tax payable or deducted from a refund.
What you bought before registering — input VAT (art. 39)
Art. 39(1) item 8 Input tax before applying for business registration under article 8; except that, where registration is applied for within 20 days after the end of the taxable period that includes the time of supply, input tax within the period counted back from the date of application to the first day of that taxable period is excluded.
If there are large purchases before opening, such as a fit-out or equipment, this proviso matters. Input VAT before registration is not deductible as a rule, but if you apply before 20 days have passed since the end of the taxable period in which the purchase fell, the input VAT back to the first day of that period is not cut out.
Miss that deadline and the pre-registration input VAT is lost (our reading). This provision concerns general taxpayers who deduct input VAT; the credit for simplified taxpayers is set by a different article (art. 63), which we did not read.
Checklist
- ☐ When was your first sale (the start date)? 20 days run from then
- ☐ With large purchases before opening, register in advance?
- ☐ General or simplified taxpayer? (penalty rate 1% or 0.5%)
- ☐ Late already? Apply today — the base runs only to the day before you apply
- ☐ The certificate comes within 2 days (extendable by 5 for checks)
- ☐ Report suspension, closure, a move or other changes without delay
Questions that remain
Do small side sales need registering?
Article 8 places the duty on a “business operator”. Who counts as one depends on the definitions in article 2 of the same Act, which we did not read this time. Tax on side income is in side-job income tax.
What about VAT-exempt businesses?
Registration for someone carrying on only VAT-exempt business falls under the Income Tax Act, which we did not read this time.
Can I be a simplified taxpayer?
The threshold and the tax calculation are in the VAT guide and the VAT calculator.
After registering — VAT and income tax filing dates are in the tax calendar, and if 3.3% is being withheld from freelance pay, see the freelancer 3.3%.
Sources
- Value-Added Tax Act [in force 2 January 2026] — original text (checked 12 October 2026). Article 5(2) (first taxable period), article 8 (20 days; each place of business; other tax offices; business-unit registration; reporting changes), article 39(1) item 8 (input VAT before registration; 20 days), article 60(1) (1%; 2%) and article 68-2(1) (simplified taxpayers 0.5%; 1%).
- Enforcement Decree of the VAT Act [in force 1 April 2026] — original text. Article 6 (business start date) and article 11 (application; 2 days; 5 days; ex officio registration; refusal).
- Not read. The table of documents by business type in Decree art. 11(3), the definition of a business operator in Act art. 2, the detail of art. 5(1) item 2 on general taxpayers’ taxable periods (given as a table), the simplified taxpayers’ credit (art. 63), and registration of VAT-exempt businesses under the Income Tax Act.
- Our arithmetic and reading. The 100,000, 50,000 and 500,000 won examples, the “a day sooner” point, and the reading of the start date for online selling.
Where to check further
- Hometax or a nearby tax office — applying for registration and the documents required.
Written on 12 October 2026. The provisions follow the original text at the Korea Law Information Center; the tables and arithmetic are ours.
