Change of Business Year

Date: April 16, 2021

I. Introduction

Due to tax law revisions, not only soleproprietors but also small-scale corporations can pay the tax of preliminarynotice from the National Tax Service before filing VAT returns.

II. Small-scale Corporation

Corporations with less than 105 million won ofsupply value in the immediately preceding taxable period

* Immediately preceding taxable period: 2020 June ~December as of 2021 April.

* Supply value: the amount without VAT

III. Tax Amount Notified

The taxamount is imposed within 25 days after preliminary notice period, deciding thetax amount by 50% of the paid tax amount in the immediately preceding year.

However,if the tax amount does not exceed KRW 300,000 or if an individual changes fromsimplified taxpayer into general taxpayer taxes are not imposed.

* Thehead of a tax office having jurisdiction over a place of tax payment shall,with respect to any sole proprietor and corporate entrepreneur prescribed byPresidential Decree, determine an amount (where there is a fractional amountbelow 1,000 won, it shall be rounded down) equivalent to 50 percent of theamount of tax payable for the immediately preceding taxable period in eachpreliminary return period and collect it by not later than 25 days after theend of the relevant preliminary return period,: Provided, That when thecollectable amount is less than 300,000 won or a simplified taxable person isconverted to a general taxable person as of the commencement date of therelevant taxable period, the amount shall not be collected.

IV. Corporations that are eligible for preliminarynotice

 “If the deterioration of business performanceis caused by the suspension of, or a slump in business operations or if anycause prescribed by Presidential Decree exists, the relevant entrepreneur” ofthe Act means any of the following:

① If thevalue of supply or the amount of tax payable for the portion of eachpreliminary return period is less than 1/3 of either the value of supply in theimmediately preceding taxable period or the amount of tax payable under Article48 (3) of the Act due to the suspension of or a slump in business operations,the relevant entrepreneur;

② If an earlyrefund is sought under Article 107 for the portion of each preliminary returnperiod, the relevant entrepreneur.

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