High-income Entrepreneurs Must Issue Receipts

Plastic surgery clinics, law firms, golf shops and imported furniture stores must issue cash receipts to customers.

The reward for reporting businesses that fail to do so will rise to one million won from 50,000 won.

A high-ranking official of the National Tax Service said yesterday, “The new measure will make up for systematic loopholes through which the self-employed earning a high income intentionally avoids giving cash receipts.”

“Under the new measure, such businesses must provide receipts and rewards will be raised to better track earnings of the self-employed and impose due taxes on them.”

The agency will negotiate with the Finance and Economy Ministry on the measure and apply it to tax revisions as early as possible.

The ministry will also audit up to 80 percent of the income of independent business owners by 2015, up from 50 to 60 percent. It will also introduce a measure to encourage provision of cash receipts.

High-income business owners now must join a national chain store association, but are not obliged to issue receipts. Because of this, many only issue receipts when costumers ask them.

In addition, critics said the reward system introduced in July last year is inefficient since the cash amounts are too small. Proving that no receipts were issued is also difficult to prove.

The tax authority will make issuing receipts mandatory for high income earners like doctors and lawyers, and will gradually extend the scope to minimize public confusion.

The national association for providing cash receipts had 1,710,000 members as of December 2007, a level similar to that of companies accepting credit cards. The value of the cash receipts last year reached 50 trillion won, the highest since the launch of the system in 2004.

parky@donga.com