Is a hair salon VAT-exempt like an academy?
No. Unlike an academy's educational services, the beauty business is subject to VAT, so you must file and pay VAT on a regular basis. On the other hand, VAT paid on supplies used in services — like hair dye, perm solution, nail materials, and cosmetics — as well as on rent, interior, and beauty equipment purchases, can be refunded through the input tax credit. It's important to remember that even when materials are purchased with cash from a wholesaler, you must obtain a bill or card receipt to be eligible for both the input tax credit and the expense deduction.
The Most Important Issue — Is a Designer a Freelancer or an Employee?
Regardless of the specific field — hair, nail, or skincare — actual working conditions determine the answer, not the contract's name
"Fake 3.3% contracts" are a focus of Labor Ministry crackdowns
If a designer or technician shows up at a fixed clock-in time, takes instructions from the owner, and uses the salon's facilities and materials, the working relationship may be judged to be an employee in substance, even if the contract is labeled as a freelance (outsourcing) agreement. Courts have recognized hair designers as employees in some cases, and the Ministry of Employment and Labor has announced it will focus crackdowns on "fake 3.3% contracts" designed to avoid Labor Standards Act obligations.
Design your contract to match the actual working relationship
If a designer or technician recruits and manages their own clients and can set their own hours and methods, a business income (3.3%) freelance contract is appropriate. If clock-in times and hours are fixed, converting to an employment contract and enrolling them in the 4 major insurances reduces both tax audit and labor risk.
Income Structure of the Beauty Industry
Key Expense Items
Frequently Asked Questions
Tax Points Differ by Beauty Business Type
Select the type of business you run to see guidance tailored to your business
Hair Salons
Determining designer employee status, incentive withholding tax
Your hands create art, but your tax filing needs accuracy first
Nail Salons
Gel and parts materials cost ratio, no-show fee revenue recognition
Nail art can be as bold as you like — we'll keep your books plain and simple
Skincare Clinics & Estheticians
Revenue recognition for prepaid memberships, beauty equipment depreciation
Keep your clients' skin hydrated — your revenue reporting should stay bone-dry accurate
Lash Extension & Waxing Studios
High supplies cost ratio, simplified taxpayer determination for solo studios
Make every gaze sharp and defined — don't let your tax filing stay blurry
Tattoo Artists & Semi-Permanent Makeup
Business registration and industry code, deposit revenue recognition
Every stroke is placed with care — we'll etch your tax filing just as precisely