5.92 Million VAT Payers in July... COVID-19 Impacted Sole Proprietors Extended Until September

[Sejong=Asia Economy Reporter Kim Hyunjung] A total of 5.92 million individual and corporate business operators must file and pay value-added tax (VAT) for their business performance from January to June of this year by the 26th of this month. Approximately 440,000 individual business operators who faced operational difficulties due to strengthened COVID-19 quarantine measures, such as business suspension and restrictions, have their payment deadline extended until the end of September.

On the 8th, the National Tax Service (NTS) announced that the first-term VAT filing targets this year include 4.84 million individual general taxpayers and 1.08 million corporate business operators. This is an increase of 330,000 compared to the 5.59 million who filed the first-term final return last year. Simplified taxpayers numbering 29,000 must pay the preliminary VAT amount (50% of last year's paid tax, excluding amounts under 300,000 KRW) by the 26th.

Additionally, following the tax law revision that raised the exemption threshold for VAT payment obligations from an annual sales of less than 30 million KRW to less than 48 million KRW, 19,000 simplified taxpayers who met the conditions during the January 2022 final return will be excluded from the preliminary assessment this month. No tax bill will be issued to these excluded taxpayers, and a separate notice will be sent. They must file their final return for the 2021 annual performance by January 25 of next year.

Furthermore, COVID-19 affected businesses that cannot pay the assessed national tax by the deadline may apply for deferred collection. In such cases, the NTS plans to provide tax administration support, including payment deferrals for up to three months.

Along with this, the NTS is also making early payments of tax refunds to support exports, investments, and improve liquidity for small and medium-sized enterprises (SMEs). If eligible businesses apply for early refunds, the NTS will promptly review and pay by the 30th of this month unless there is a need to verify facts such as suspected improper refunds. This is 11 days earlier than the statutory deadline of August 10. Notably, starting this year, the requirement for business operation period has been relaxed from five years to three years to expand support for SMEs facing financial difficulties.

Moreover, small businesses with sales under 1 billion KRW in the previous year or those whose sales have dropped by 30% or more will receive general refunds by August 16, which is 10 days earlier than the statutory payment deadline, upon filing. In addition, businesses facing operational difficulties due to restructuring, disasters, or accidents will receive active support upon applying for deadline extensions.

The NTS will not operate in-person filing counters to prevent COVID-19 infection and plans to strengthen non-face-to-face filing services. Tax returns must be prepared by the taxpayer or their tax agent, and they can refer to major industry-specific filing method videos posted on the NTS website, YouTube, or Hometax, as well as manuals in the website’s reference section. However, filing assistance will be provided only to vulnerable groups such as seniors over 65, persons with disabilities, and newly established small businesses who find self-preparation difficult. For other inquiries, taxpayers can use the automated real-time chatbot consultation service (Hometax), which started on the 1st of this month. To enhance taxpayer understanding following the 2021 simplified taxpayer tax law revision, a tax amount comparison simulation program has also been developed and is available through Hometax (Tax Simulation Calculation).

Meanwhile, the NTS plans to provide maximum convenience for sincere filers while conducting verification of filing contents for those who file insincerely. In particular, the NTS will strengthen the linkage between verification and investigation, selecting businesses with high suspicion of tax evasion as investigation targets for thorough examination.

This content was produced with the assistance of AI translation services.