Get tax breaks when you pay in cash Cash receipt system
[JoongAng Ilbo]
If you are an expat living in Korea, you may well have been confronted by a perplexing question when you pay in cash at stores or restaurants. “Do you want your cash receipt issued?” What is a “cash receipt”? In this week’s Living in Korea column, we will take a look at the cash receipt system operating in Korea and discuss how expats can take advantage of the program. Q.What is the cash receipt system for? A.The system is a program through which cash purchases are tracked by a customer presenting a membership card for the system or a cell phone number, as opposed to getting a regular receipt, which is a record of sale for use by the buyer and the seller. When this cash receipt information is entered after a cash purchase, the information is sent straight to the National Tax Service.
The system came into effect on January 1, 2005 in accordance with the government’s policy to develop a more accurate, more transparent system of taxation in Korea regarding cash transactions. Many cash transactions in Korea are still conducted in a rather gray area: legal transactions that should be reported to the government for reasons of taxation, but this is not always the case. Thus, the government began the cash receipt system, through which cash incentives are offered to consumers to help track taxable
transactions. The threshold for registering transactions stood at 5,000 won ($3.75) until June 2008, when it changed to 1 won beginning in July of that same year. So if I get a “cash receipt” issued, what is the benefit to me? If you are an individual taxpayer or a dependent of a taxpayer, the main taxpayer is able to receive a 20-percent deduction on his/her year-end tax settlement on the amount of total cash spending that exceeds 20 percent of one’s reported yearly income, up to a total of 5 million won. For businesses, a 1 percent rate of applicability is in place. Can foreigners take advantage of these savings as well? If so, how? On the Web site of the National Tax Service (www.taxsave.go.kr), foreigners can register by entering their alien registration number and performing a real-name check. If you are already registered as a tax payer then your name and alien registration number, as printed on your alien registration card, should already be accurately entered into the system. In the event that the online real-name check does not work, you will need to go to your local tax office to register as a foreigner tax payer. After four to five days, it should then be possible to perform the real-name check on the National Tax Service’s Web site. Registering for the cash receipt system is surprisingly easy, and the whole process can be done online in as little as 10 minutes. However, the hardest part of the process is that the Web site is only in Korean.
As soon as this page loads you will see a login prompt on the left-hand side with a picture of what looks like a credit card. Next to this credit card image are three links, the first of which is the registration (
회원가입) link. Click on it and you will be taken
to an explanation page that prompts you to select your form of registration.
소비자)", and on the right, 사업자)" (the former is for personal use, the latter for your business, if you own one). Next, click on "I agree (동의)" on the below, and you will be taken to The left button is the method for "individual consumers (
"business owners (
the page where you should input your personal information.
Although the information you need to put in is straight forward, the only challenge may be your "real name verification." Here, you will have to put in your name as written on your alien registration card, along with your alien registration number, and then click on "real name verification (
실명확인)." Fill in the rest of your personal information and personal preferences to receive 확인)," and you should be registered in the system. The final step is to simply to
notifications from the tax office. Click "ok (
confirm your method of entering each payment within the system. The first option is to have a membership card issued and sent to you. Perhaps the easiest way, however, is to simply use your cell phone number. Click on your desired option, and you are set to use the cash receipt system.
If you experience further difficulties trying to register for the system, you can also call the Global Center at 1688-0120 or the National Tax Service help line at 1544-2020 (press 2 for English). Where can I take advantage of the cash receipt system? How are these locations different from those that do not participate in the program? In theory, every registered business is legally obligated to provide a cash receipt on demand. As this is not always the case, you can know for sure that you can be provided with a cash receipt when you shop anywhere where there is an orange-colored cash receipt system sticker posted on the doorway. If you’d like to receive the benefits, present either your membership card for the cash receipt system or cell phone number, depending on the information you input at the time of registration.