If we offer unlimited refills of side dishes, can the ingredient cost still be expensed?
Yes. Side dishes served as unlimited refills don't get separately recognized as revenue, but the ingredient cost is still normally deductible as an ingredient expense. Fresh, tax-exempt ingredients like rice, vegetables, livestock, and seafood qualify for the deemed input tax credit only if you obtain a bill, card receipt, or cash receipt, and individual restaurant operators get a preferential 9/109 credit rate for the portion of their taxable base up to 200 million KRW — so it's worth checking whether large refrigeration/freezer equipment should also be depreciated.
The Most Confusing Part — the Deemed Input Tax Credit and High-Turnover Sales
With such a high share of fresh ingredient purchases, documentation management translates directly into tax savings
Keep your documentation even for traditional-market cash purchases
Many owners buy tax-exempt fresh ingredients like vegetables, seafood, and livestock products with cash at traditional markets without keeping a receipt, but you must obtain a bill, card receipt, or cash receipt to qualify for the deemed input tax credit. Without documentation, the credit simply isn't available.
The bigger your purchase volume, the bigger the credit
Home-style restaurants run on a high-turnover, low-margin model, so fresh ingredient purchase volume is relatively large. Individual restaurant operators get a preferential 9/109 credit rate for the portion of their taxable base up to 200 million KRW, so it's important to track both your purchase volume and the credit cap together.
Income Structure of Korean Home-Style Restaurants
Key Expense Items
Must-Read for Korean Home-Style Restaurant Owners
Split Your Kitchen Equipment & Ingredients by Type to Save on Taxes
From refrigeration equipment to ingredient purchase documentation, categorizing each item correctly means you never miss the deemed input tax credit
Long-Term Fixed Assets — Depreciable Equipment
Kitchen equipment: large refrigerators/freezers, broth cooking equipment (cauldrons, soup pots)
Ventilation equipment: kitchen hoods, ventilation systems
Dining room equipment: tables, chairs, water purifiers
If a single transaction exceeds 1 million KRW, it's classified as a depreciable asset and must be expensed over its useful life.
Ingredients & Supplies — the Heart of the Deemed Input Tax Credit
Fresh ingredients like rice, vegetables, livestock, and seafood, along with seasonings and side-dish packaging containers, are fully expensed at the time of purchase, and tax-exempt agricultural/fishery products also qualify for the deemed input tax credit as long as you have documentation.
Personnel Service Costs — Kitchen & Dining Room Wages
Kitchen assistants and dine-in servers require withholding tax filing (by the 10th of the following month) and a payment statement submission regardless of hours worked, and weekly holiday pay should also be checked once weekly hours reach 15 or more.
Delivery & Takeout Platform Fees
Delivery app brokerage and payment processing fees, and takeout order platform fees, are recurring monthly expenses that are fully deductible at the time they're incurred.
| Category | Examples | Tax Treatment |
|---|---|---|
| Long-term fixed assets | Refrigerators/freezers, cooking equipment, hoods | Depreciate if over 1 million KRW |
| Ingredients & supplies | Rice, vegetables, livestock, seafood, packaging | Fully deductible at purchase, deemed input tax credit |
| Personnel services | Kitchen assistants, dine-in servers | Withholding tax filing, payment statement submission |
| Delivery & takeout platforms | Delivery app fees, takeout platform fees | Immediately deductible |