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Acknowledged Only When Specifying Corporate Guests’ Names

Acknowledged Only When Specifying Corporate Guests’ Names

Posted January. 05, 2004 22:38,   


Starting from this year, corporations are required to register names and other details on the receipts of occasions when they treat guests and spend more than 500,000 won per occasion.

The National Tax Service announced on January 5 that they have arranged an expense handling regulation regarding high expenses (of amount which includes taxes such as value added tax) spent in treating corporate guests of more than 500,000 won and that they would apply the regulation starting at this year’s corporate term from January 1.

Accordingly, if the fee of receiving guests exceeds 500,000 won per case, corporations have to specify the names of the guests, the receivers, the purpose of the reception, and other details which proves its correlation to business on the backside of the paper that the receipt is attached upon the request by taxation authorities for tax investigation and for documentation purposes.

The receipt includes credit card slips, tax bills, and regular bills, which can be valid for five years. Corporations that electronically transfer the related records to an electronic tape or in a diskette are required to document it separately under a “Detail List of Corporate Reception” aside from the electronic records.

The National Tax Authority plans to apply the same regulation to cases in which two separate payments of less than 500,000 won were made in the same location and on the same date and if the total sum amounts up to more than 500,000 won.

Also, the same rule will apply to cases in which a corporation makes two separate payments of less than 500,000 won with different dates but with the same guests and if the total sum amounts to more than 500,000 won.

Corporate Tax Manager Cho Hong-hee at the National Tax Service said, “If we judge the reception expenses are not related to their business, they are not acceptable as the tax deductible items, which increases their corporate tax burden as well as the receivers’ income tax since he or she is considered to have utilized corporate funds.”

Ji-Wan Cha cha@donga.com