OVERVIEW
Overview
Restaurants can claim the deemed input tax credit on tax-exempt agricultural, livestock and marine purchases, so simply collecting the right documentation can cut VAT significantly. Delivery-app revenue, on the other hand, is entangled with platform commissions and advertising fees, making it easy to overstate sales or miss deductible costs; once cash, card and delivery sales are combined, they often fail to match POS records. With purchase documentation and a sales reconciliation routine in place, operations become stable.
VALUE Tax & Accounting starts by fixing how purchase documentation is obtained, so that the deemed input tax credit can be used to the fullest. We reconcile card, cash and delivery sales against POS records to leave an evidentiary basis for reported revenue, and we recognise platform commissions and advertising fees as separate costs so revenue is never overstated. For interiors and kitchen equipment, we adjust the depreciation method to spread the tax burden of the opening period.
KEY ISSUES
Key tax issues in food service
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01
Deemed input tax credit
Simply collecting proper documentation for tax-exempt agricultural, livestock and marine purchases can reduce VAT considerably. Credit rates and ceilings differ between individuals and corporations and by taxation type, and invoices or equivalent evidence are mandatory, so confirm whether a supplier issues them before you commit to the relationship.
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02
Delivery-app revenue and commissions
Delivery revenue, platform commissions and advertising fees must each be recognised correctly as revenue or cost. The gross amount the customer paid is the revenue and the commission is a separate purchase, so booking only the settled deposit as revenue understates sales and loses the deduction at the same time.
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03
POS sales reconciliation
Substantiation is only possible when the total of card, cash and delivery sales agrees with both reported revenue and POS records. The more payment methods there are, the more gaps appear, so it is safer to reconcile the same way every month and record the reason for each difference.
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04
Payroll reporting
Day-laborer reporting, the four major social insurance programs and withholding for part-time and kitchen staff are easy to overlook. Unless income income payment statements are filed monthly and bank transfer records are kept alongside them, the payroll itself is disallowed as an expense and the tax burden actually rises.
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05
Treatment of start-up investment
Depreciating interiors and kitchen equipment and handling key money (business-premium payment) correctly can spread the tax burden of the opening period. As a rule, the interior of a leased store is capitalised as a fixture and then depreciated; where the lease term is fixed, depreciation may follow that term.
HOW WE HELP
How VALUE Tax & Accounting responds
Optimising the deemed input tax credit
We collect every piece of evidence for tax-exempt agricultural and marine purchases, cutting VAT to the limit of the credit.
Delivery and POS sales reconciliation
We match delivery-app settlement statements against POS and card sales so nothing goes unreported, and commissions are recorded correctly as costs.
Payroll and capital expenditure clean-up
We manage part-time payroll reporting and the depreciation of start-up investment to spread the tax burden of the opening period.
FAQ
Restaurant tax FAQ
Q Is a credit available on tax-exempt agricultural and marine purchases? expand_more
The deemed input tax credit lets you deduct a set proportion of purchases of tax-exempt agricultural, livestock and marine goods as input tax. Credit rates and ceilings differ between individuals and corporations and by taxation type, and invoices or equivalent evidence are mandatory, so this must be handled from the purchasing stage.
Q How should delivery-app revenue be reported? expand_more
Revenue is the gross amount the customer paid, not the amount the platform settles. Platform commissions and delivery fees are treated as separate purchases, so booking only the settled deposit as revenue understates sales.
Q Is the issuance of cash receipts mandatory? expand_more
Restaurants may fall within the industries required to issue cash receipts, in which case any cash transaction of KRW 100,000 or more must be receipted even if the customer does not ask. Failure to issue draws a penalty of 20% of the transaction amount, which is substantial.
Q How should part-time payroll be treated? expand_more
They must be reported as day laborers with income income payment statements filed monthly, and bank transfer records must be kept alongside. Paying in cash and omitting the filing means the payroll itself is disallowed as an expense, so the tax burden actually rises.
Q May interior fit-out costs be expensed in a single year? expand_more
As a rule, the interior of a leased store is capitalised as a fixture and depreciated over its useful life. Where the lease term is fixed, however, depreciation may follow that term, so the terms of the lease should be checked alongside.
OTHER INDUSTRIES