National Tax Service mandates business registration for continuous revenue earners

The National Tax Service has warned that individuals generating continuous and repetitive revenue must complete business registration within 20 days of commencement to avoid missing out on tax benefits, including up to 100% income tax reductions for entrepreneurs aged 34 or younger.

With the advancement of online platforms and the spread of generative AI technology, "zero-capital, one-person startups" are surging, allowing individuals to start businesses without the massive capital required in the past. A key characteristic of this trend is the lowered barrier to entry, such as sharing expertise in specific fields or producing content using AI.

According to recent startup trends reported by the National Tax Service, while securing capital through large-scale loans was once essential to start a business, "slim startups" or "micro-startups" are increasing due to the revitalization of online communication and transactions. Representative examples include online shopping mall operators and platform-based one-person creators. Because these businesses are based online, they are characterized by not requiring significant capital or additional personnel.

From knowledge sharing to AI utilization: Diversifying revenue models

Startup forms are becoming more sophisticated. There is an increasing number of cases where individuals use generative AI to produce content without appearing in front of a camera, generating platform revenue through services such as Google AdSense. Methods have also emerged to automate promotion and content uploading using AI.

Subscription economy models utilizing professional knowledge are also gaining attention. A recent consultation case involved an individual providing analysis of the United States stock market via the social media platform X (formerly Twitter) and receiving subscription fees from users. Such models, which generate income by sharing areas of study or expertise, possess high growth potential, sometimes reaching high tax brackets as the scale of revenue grows.

"Business registration mandatory for repetitive revenue... must report within 20 days"

One-person entrepreneurs with small business scales or those who do not hire employees often face confusion regarding business registration obligations. According to the National Tax Service, regardless of whether employees are hired, business registration is mandatory if revenue is generated in a continuous and repetitive manner through business activities.

The timing of business registration is also critical. Under tax law principles, business registration must be completed within 20 days from the date the business commences. Caution is advised, as failing to register while generating revenue may result in missing out on tax benefits.

Youth aged 34 or younger can receive up to 100% income tax reduction for 5 years

Strong tax support measures are in place for young entrepreneurs. If a person aged 34 or younger meets startup requirements, they can receive a reduction of 50% to a maximum of 100% on income tax (or corporate tax) for five years, depending on the business type. A 100% reduction effectively means taxes are exempted during that period.

Representative eligible industries include most online-based startups, such as media content creation (creators) and online shopping mall operations. Even if an entrepreneur fails to apply for these tax benefits during the initial startup phase due to a lack of awareness, they can retroactively claim benefits for the past five years through the rectification request (tax refund request) system. The National Tax Service urged eligible individuals to check their status and actively utilize these well-established systems for youth.

Source: original video (YouTube)