Is cigarette revenue also subject to VAT filing like ordinary merchandise?
Yes, cigarettes carry separate taxes such as individual consumption tax, but the sales revenue itself is still subject to VAT filing, so you need to accurately reflect the cigarette-revenue line from your headquarters' settlement statement. Store fixtures such as refrigeration/freezer display cases and the POS system are classified as a depreciable asset once they exceed KRW 1 million and must be expensed over their useful life, and we recommend also checking overnight-shift premium pay for part-timers who work 10 p.m. to 6 a.m.
The Trickiest Part — Headquarters' Settlement Statement and Disposal-Support Subsidies
Understanding the headquarters settlement structure correctly is essential to avoid revenue and expense filing errors
Break Out Each Line Item on the Headquarters Settlement Statement
A headquarters settlement statement bundles POS sales, royalties, logistics fees, disposal-support subsidies, and more together. Don't just record the settlement total as revenue — break out actual sales revenue separately from the amounts you pay to or receive from headquarters.
Keep Supporting Documentation for Disposal-Support Subsidies
Disposal-support subsidies your headquarters provides for expired products are treated either as a revenue deduction or a separate income item. Keep headquarters' disposal records as supporting documentation to avoid confusion at filing time.
Income Structure Features of Convenience Stores (Franchise)
Key Expense Items
Must-Know for Convenience Stores (Franchise)
Split Store Fixtures & Headquarters Settlement by Category to Save on Taxes
From refrigerated display cases to overnight labor costs, categorizing each item correctly is what cuts unnecessary tax
Long-Term Fixed Assets — Equipment Subject to Depreciation
Store fixtures: refrigeration/freezer display cases, POS system
Security fixtures: CCTV, automated entry system
Once a per-unit purchase exceeds KRW 1 million, it's classified as a depreciable asset and must be expensed over its useful life.
Cost of Goods Purchased — Immediate Expense
The cost of cigarettes, alcohol, lunchboxes, and similar merchandise is tracked as inventory at purchase and recorded as cost of goods sold when sold. Check the tax invoice from your headquarters-designated supplier every month.
Personal-Service Costs — Day/Night Labor Costs
Both day-shift and overnight part-timers require withholding-tax filing and submission of payment statements, and overnight shifts (10 p.m.–6 a.m.) also require an overnight-shift premium.
Royalty, Logistics & Disposal-Support Subsidy Settlement
Royalties and logistics fees you pay to headquarters are deductible expenses, and disposal-support subsidies you receive from headquarters are treated as a revenue deduction or separate income — keep the headquarters settlement statement as supporting documentation.
| Category | Typical Examples | Tax Treatment |
|---|---|---|
| Long-term fixed assets | Refrigeration/freezer cases, POS, CCTV | Depreciated once over KRW 1M |
| Cost of goods purchased | Cigarettes, alcohol, lunchboxes, etc. | Tracked as inventory, recorded as COGS on sale |
| Personal service | Day/night part-timers | Withholding filed, overnight premium checked |
| Headquarters settlement | Royalties, logistics fees, disposal-support subsidies | Reflected by category based on settlement statement |