Why registration exists
When Korea introduced VAT in 1977, invoices had to flow between identifiable businesses, so registration became the backbone of the system. The registration number works as a business ID for tax invoices, business accounts, contracts, loans and grants. Research shows heavy entry procedures deter start-ups (Djankov et al., 2002; Klapper et al., 2006).
When and how to apply
- Deadline: within 20 days of starting, per location; you may apply before opening.
- Where: online via Hometax or at a tax office; numbers are usually issued within two days.
- Documents: ID, lease for the premises, and permits for licensed trades; companies register after incorporation.
- Online sellers also file a mail-order business report with the local government.
Simplified vs general taxpayer
Simplified status applies when prior-year sales are under KRW 104 million (since July 2024); VAT is computed at low sector rates and waived under KRW 48 million. General taxpayers pay output minus input VAT and can claim refunds, which helps when start-up purchases are large. Income tax follows as comprehensive income tax for individuals or corporate tax for companies.
After registering
Expect VAT filings, social insurance once you hire, and closure reports if you stop. Easier registration alone has modest effects on start-ups (Bruhn, 2011; Kaplan et al., 2011); survival depends on your break-even point and real customers.
FAQ
- Can I register before opening?
- Yes, and it helps you claim pre-opening input VAT.
- Can simplified taxpayers issue tax invoices?
- Yes—they must if prior-year sales were KRW 48 million or more; smaller ones issue receipts.
Sources reviewed: 2026-11-09
References
- 부가가치세법 제8조 (사업자등록)·제60조 (가산세)·제61조 (간이과세의 적용 범위). VAT Act rules on 20-day registration, penalty and simplified taxpayers.
- 국세청. (n.d.). 사업자등록 안내. National Tax Service guide to documents, business types and processing.
- 국세청 홈택스. (n.d.). 사업자등록 신청·정정·휴폐업. Online portal for registering, amending or closing a business.
- Djankov, S., La Porta, R., Lopez-de-Silanes, F., & Shleifer, A. (2002). The regulation of entry. The Quarterly Journal of Economics, 117(1), 1–37. Compares start-up procedures, time and cost across 85 countries.
- Klapper, L., Laeven, L., & Rajan, R. (2006). Entry regulation as a barrier to entrepreneurship. Journal of Financial Economics, 82(3), 591–629. European evidence that heavy entry rules deter new firms.
- Bruhn, M. (2011). License to sell: The effect of business registration reform on entrepreneurial activity in Mexico. The Review of Economics and Statistics, 93(1), 382–386. Mexico's registration reform raised the number of registered businesses.
- Kaplan, D. S., Piedra, E., & Seira, E. (2011). Entry regulation and business start-ups: Evidence from Mexico. Journal of Public Economics, 95(11–12), 1501–1515. Finds the same reform's effect was modest and temporary.