Making VAT a Bonus, Not a Tax

VAT was paid for the first time. After finding out what VAT is, I tried to organize it on my own.





Is VAT a tax?


Paying VAT feels like a tax

If the amount to be paid for VAT is not subtracted from the sales, it feels like a tax that has to be paid out of my account just like any other tax.

In particular, if you do not have enough working capital, you may have to pay debt to pay taxes.



(photo source)


VAT is not my tax, it is paid on behalf of the final consumer

Actually, VAT is not my tax.

VAT is included in the price of goods, so it is actually a burden on the final consumer. However, since it is included in the product price, the tax is paid by the business operator to the tax office. If there is a purchase by a business operator, there is a deduction.


next VAT overview on the IRS website이다.


Value-added tax is a tax levied on the value-added (profit) obtained in the process of transaction of goods (goods) or provision of services (services).

VAT = output tax - input tax

  • Since VAT is included in the price of goods, it is actually borne by the final consumer. In this way, the VAT paid by the final consumer is paid by the business operator to the tax office.
  • Therefore, businesses subject to VAT must collect and pay a certain amount of VAT on the transaction amount when selling products or providing services.



Since it is impossible to collect value-added tax from end users individually, it seems to be a structure in which it is left to the business operator, and then reduced a little in consideration of the purchase or tax rate and paid instead.




VAT payment


Simplified taxpayers pay once a year, individual entrepreneurs pay twice a year, and corporate business owners pay four times a year.


It is all work, but it is not done in real time, but for convenience, the payment is made in the following period.   VAT overview on the IRS websitebrought from


Taxation period and report payment

Value-added tax is reported and paid with six months as the taxable period.

VAT taxable period and report payment – ​​including taxable period, taxable period, report and payment period, and reportable persons
tax period taxable period Report payment period Subject to report
1st period 1.1~6.30 Scheduled report 1.1 ~ 3.31 4.1 ~ 4.25 corporation business
final report 1.1 ~ 6.30 7.1 ~ 7.25 Corporation/Individual General Business
2st period 7.1~12.31 Scheduled report 7.1 ~ 9.30 10.1 ~ 10.25 corporation business
final report 7.1 ~ 12.31 1.1~1.25 of the following year Corporation/Individual General Business

※ In general, corporate business owners report 1 times a year and individual business owners report twice a year

Individual business owners (general taxpayers) who are in poor business condition or who receive early refunds can choose to report or pay the expected tax amount or the scheduled tax payment.

Individual simplified taxpayers report and pay one year as the taxable period.

VAT taxable period and report payment – ​​including taxable period, report and payment period, and those subject to report
tax period Report payment period Subject to report
1.1 ~ 12.31 1.1~1.25 of the following year private business operator



Entrepreneurs collect and pay VAT

The fact that there is such a period for reporting and payment means that business operators have to collect and pay VAT after all.

If you forget all this and operate your business thinking of VAT as income, it feels like a tax when you have to pay VAT.

But I think the human mind is all like this. Even if you do not even mention cognitive science or psychology, logically the above is correct, but psychologically you will think of sales as income.




Making VAT a Bonus


Putting it into the VAT payment account while making the monthly sales settlement

Humans are never logical. It is better to split the canister as it will be used if it is in one container.

I created a separate account for VAT payment. So, at the end of each month, the sales tax is added to the account. As I mentioned above, VAT is not my money, but the money I receive on my behalf. I'm nailing it as money I shouldn't spend.



Bonus after VAT return

The VAT rate is 10%, but the purchase portion is deducted when VAT is filed. However, for now, I'm just putting 10% of my Korean sales in my bank account. It would be good to calculate it considering the purchase, but I can't get there yet.

The amount of tax payable is determined when VAT is filed. Since I put 10% in, the tax I have to pay is unconditionally small, and the difference is felt as a bonus. When VAT is considered as income, it is the opposite of being considered as a tax.

Of course, if the cost is high or the operating capital is low, this will not be possible. Moreover, it seems even more difficult to do this if sales are declining and the business is even closed due to COVID-19.

This is an idea I thought of in order not to feel like a tax to pay VAT and not to actually have to raise the money. To avoid having to pay debt to pay taxes. It seems to be a big difference psychologically and in terms of actual money.


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