If Value-Added Tax Payment is Difficult, Apply for 'Extension of Deadline'... Even Zero-Revenue Filings are Mandatory

As the Value-Added Tax (VAT) payment period approaches, business owners who find it difficult to pay taxes due to temporary liquidity shortages can utilize the payment deadline extension system. In principle, VAT must be paid in full within the designated deadline, and there is no separate installment payment system, but an extension of the deadline is possible if specific reasons are recognized.

If there are reasons such as financial difficulties or disasters, 'Extension of Payment Deadline' can be applied for

According to a National Tax Service video, reasons for applying for a payment deadline extension include cases where one has suffered from natural disasters, fire, or theft; cases where payment is difficult due to the illness of the taxpayer or their family; serious business liquidity shortages; or bankruptcy or business closure. However, having these reasons does not mean the deadline is automatically extended.

The taxpayer must directly apply through Hometax or similar services by stating the reason and the required period for the extension, and the extension is finalized only after receiving final approval. The video emphasized that not all applications are approved, so if it is determined that payment will be difficult, it is important to apply in advance before the payment deadline passes.

If immediate cash expenditure is burdensome, there are ways to utilize credit card payments and installment services. However, when paying taxes with a credit card, a payment agency fee is incurred, and since whether installment interest or interest-free options apply varies by card company, conditions must be checked before use. If a decrease in sales or business slump is serious, it may be advantageous to check whether actual business performance can be reflected through preliminary filing.

Even without sales, 'Zero-Revenue Filing' must be done... Caution regarding input tax credit for passenger vehicles

The guide also covered reporting obligations that business owners facing preliminary VAT filing often confuse. If one is subject to preliminary filing, the report must be proceeded with even if there are no sales at all. In cases where there are no sales and no purchase records, a 'zero-revenue filing' can be performed. Furthermore, even if the final tax amount to be paid is 0 won based on the calculation results, if one is a subject for filing, a tax return must be submitted through Hometax.

Caution is also required regarding the scope of input tax credit application. Just because expenses were paid with a credit card does not mean all expenditures are eligible for deduction. Expenditures unrelated to the business or entertainment-related expenses cannot receive input tax credit regardless of whether they were paid by credit card. In particular, for business passenger vehicles, light cars, vans with 9 or more seats, and trucks are eligible for deduction, but general passenger vehicles with fewer than 9 seats cannot, in principle, receive input tax credit even if used for business.

In the case of freelancers, whether they are taxable or tax-exempt varies depending on the form of business. One-person media creators, such as YouTubers, are categorized based on whether they employ workers or possess separate business facilities. Even for general freelancers, if they provide human services in an independent capacity without physical facilities and without employing workers, VAT may be exempt. If an error is discovered after filing, it can be corrected through a 'revised return' when taxes were under-reported, or a 'request for rectification' when more taxes were paid.