Do I really have to issue a cash receipt even to customers who pay in cash?
Yes, the pub business is also designated as an industry subject to mandatory cash receipt issuance, so for any cash transaction of 100,000 KRW or more, you must issue a receipt even without a customer request, or face a penalty of 20% of the unissued amount. Alcohol equipment like draft beer machines and refrigeration equipment is classified as a depreciable asset once it exceeds 1 million KRW and must be expensed over its useful life, and night/late-night serving staff require withholding tax filing and payment statement submission regardless of hours worked.
The Most Confusing Part — Alcohol Input Tax Credit and Entertainment-Tavern Classification
Unlike fresh ingredients, alcohol is subject to a different tax treatment standard
Alcohol does not qualify for the deemed input tax credit
Unlike fresh ingredients such as vegetables and seafood, alcohol is not eligible for the deemed input tax credit. Instead, obtaining a tax invoice from an alcohol wholesaler qualifies you for the general input tax credit, so it's advantageous to use suppliers that issue tax invoices.
Regular pubs and entertainment taverns are taxed at entirely different rates
Entertainment taverns with a dance floor or hostesses are subject to the special consumption tax, which significantly changes the tax burden. If you operate as a regular pub, avoiding related facilities and staff keeps you from being classified as an entertainment tavern.
Income Structure of Bars & Pubs
Key Expense Items
Must-Read for Bar & Pub Owners
Split Your Alcohol & Equipment Costs by Type to Save on Taxes
From draft beer machines to night-shift labor costs, categorizing each item correctly cuts unnecessary tax
Long-Term Fixed Assets — Depreciable Equipment
Alcohol equipment: draft beer machines, refrigeration/ice-making equipment
Store equipment: interior, sound/lighting equipment
If a single transaction exceeds 1 million KRW, it's classified as a depreciable asset and must be expensed over its useful life.
Alcohol & Appetizer Ingredients — General Input Tax Credit
Alcohol and appetizer ingredients are fully expensed at the time of purchase. Since alcohol doesn't qualify for the deemed input tax credit, it's advantageous to purchase from suppliers that issue tax invoices and claim the general input tax credit.
Personnel Service Costs — Night-Shift Wages
Night/late-night serving staff require withholding tax filing and payment statement submission regardless of hours worked, and night-shift allowances and weekly holiday pay should also be checked.
Interior & Promotional Costs
Store interior and social media/delivery app promotion costs are recurring monthly expenses that are fully deducted at the time they're incurred.
| Category | Examples | Tax Treatment |
|---|---|---|
| Long-term fixed assets | Draft beer machines, refrigeration/ice equipment, interior | Depreciate if over 1 million KRW |
| Alcohol & appetizer ingredients | Alcohol, appetizer ingredients | Fully deductible at purchase, general input tax credit |
| Personnel services | Night-shift serving staff | Withholding tax filing, check night-shift allowances |
| Interior & promotion | Store interior, social media/delivery app promotion | Immediately deductible or depreciated |
Frequently Asked Questions
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