Tax audit deferral extended for small businesses with sales under 1 billion won

The National Tax Service has extended the regular tax audit deferral period for small businesses with annual sales under 1 billion won until the end of December 2026. This expansion aims to ease management burdens for small businesses and SMEs amid high inflation.

A tax audit does not necessarily imply suspicions of tax evasion. According to information from the National Tax Service, audits are conducted regularly not only to investigate suspected evasion but also to verify the accuracy of reports submitted by taxpayers. Targets are selected through a comprehensive analysis of reported data and various taxation materials, primarily to check for omitted sales through personal accounts or whether labor costs for family members or employees who did not actually work were processed as expenses. Therefore, being selected for a regular tax audit does not inherently mean there are suspicions of tax evasion.

Expanding support to ease tax audit burdens for small businesses and SMEs

The National Tax Service has expanded tax audit support measures to relieve the management burden on small businesses and small and medium-sized enterprises (SMEs) amid difficult economic conditions such as high inflation. First, the deferral period for regular tax audits targeting small businesses with annual sales of less than 1 billion won has been extended from the end of June to the end of December 2026. The eligibility for deferral has also been broadened, with SMEs that receive a commendation from the Ministry of SMEs and Startups at the level of Prime Minister or higher after 2026 newly included in the deferral group. For companies located in provinces, the deferral period can be extended for up to three years.

A system to prevent management disruptions caused by overlaps between a company's major business schedules and tax audit timing has also been fully implemented. The "Tax Audit Timing Choice System," which has been in full effect since April this year, allows targets of regular tax audits to directly select their audit timing within a three-month range. Through this, companies can maintain a stable management environment while preparing for the audit. The National Tax Service is also implementing measures to reduce the burden on companies, such as minimizing the stay of investigators on-site and disclosing major verification items in advance. The National Tax Service plans to continue conducting necessary tax verifications while alleviating the burden on sincere taxpayers.

November interim payment of comprehensive income tax to be deducted as 'previously paid tax'

Individual business owners must also manage the interim payment schedule for comprehensive income tax in November, in addition to the final return in May. Interim payment is a system where a portion of the tax is paid in advance before the final return scheduled for the following May. From the taxpayer's perspective, it allows for the distribution of the burden of paying taxes all at once, while for the National Tax Service, it provides the advantage of securing tax revenue evenly throughout the year.

However, the interim payment amount is not calculated based on the actual income from the first half of this year. Unlike office workers, small business owners and other individual entrepreneurs find it difficult to calculate their income for the first half of the year accurately every time because their monthly income is not constant. Considering that it would impose an excessive administrative burden if all business owners recalculated and reported their income for the first half of the year, the National Tax Service calculates and notifies the interim payment amount based on the tax amount finalized in the previous taxation period. The 2026 interim payment amount will be notified based on one-half (1/2) of the comprehensive income tax amount finalized in 2025.

Eligibility for interim payment and how to check

Making an interim payment does not mean paying taxes twice. The amount paid in advance in November is treated as "previously paid tax" during the comprehensive income tax final return in May of the following year and is deducted from the final tax amount to be paid. For example, even if an interim payment was made in November, there may be no additional amount to pay during the May final return if the tax amount to be paid at that time is less than the interim payment.

If an individual is subject to interim payment but has not received a notice, they can directly check whether the National Tax Service sent a notification through HomeTax or SonTax. Since there are cases where individuals are excluded from the interim payment target or have no tax amount to pay, individual business owners are encouraged to check in advance whether they fall under the interim payment target.

Source: original video (YouTube)