Article 5(Designation of Duty-Free Shops and Revocation of Such Designation) #
(1) A business entity which intends to obtain designation as a duty-free shop shall submit to the head of the competent tax office a written application for designation in the form prescribed by Ordinance of the Ministry of Economy and Finance. In such cases, if the relevant business is required to obtain permission, designation, or registration pursuant to other statute or regulation, the business entity shall attach a copy of the relevant certificate of permission, designation, or registration thereto. <Amended on Dec. 23, 1994; Dec. 31, 1998; Feb. 29, 2008; Aug. 18, 2015>
(2) The head of the competent tax office who has received an application for designation under paragraph (1) may designate a duty-free shop as requested only when the applicant satisfies all the following requirements: Provided, That in cases of a business entity which engages in the retail business, tailoring, dress making, or shoe-store business within the special tourist zone under the Tourism Promotion Act among the areas occupied by the armed forces of the United Nations or those of the United States of America, the requirement prescribed in subparagraph 1 shall not apply: <Amended on Dec. 31, 1998; Dec. 31, 1999; Dec. 29, 2000; Dec. 31, 2004; Aug. 18, 2015; Jan. 5, 2021>
1. The applicant must not be a simplified taxable person;
2. The applicant must satisfy the standards determined by the Commissioner of the National Tax Service, taking into account expected foreign-tourist users, scale of sales personnel and facilities, financial capability and credit rating, etc. required for operating the aforementioned duty-free shop;
3. Deleted; <Dec. 29, 2000>
4. Deleted. <Dec. 29, 2000>
(3) The head of the competent tax office, upon receipt of an application for designation as a duty-free shop under paragraph (1), shall determine whether to designate the relevant duty-free shop, within seven days from the date of filing the application; and when he or she has designated the duty-free shop, a certificate of a designated duty-free shop as prescribed by Ordinance of the Ministry of Economy and Finance (hereinafter referred to as "certificate of designation") shall be delivered to the applicant: Provided, That where the head of the competent tax office has not made such designation, he or she shall notify the applicant of the ground therefor, without delay. <Amended on Dec. 23, 1994; Dec. 31, 1998; Feb. 29, 2008; Aug. 18, 2015>
(4) When a tax-exempted seller falls under any of the following subparagraphs, the head of the competent tax office may revoke the designation of the duty-free shop. In such cases, the head of the competent tax office shall, without delay, notify it to the relevant business operator and withdraw his or her certificate of designation: <Amended on Dec. 31, 1998; Dec. 31, 1999; Aug. 18, 2015; Dec. 31, 2015>
1. When the permission, designation, or registration under relevant statutes or regulations is revoked;
2. When the relevant duty-free shop is transferred or leased to other persons;
3. When the tax-exempted seller is subject to any penalty or disciplinary measure due to his or her evasion of State or local government taxes of at least 500,000 won;
4. When the tax-exempted seller fails to remit money under Article 10 and thereby is punished at least on two occasions pursuant to the Punishment of Tax Offenses Act during the single taxable period as prescribed in the Value-Added Tax Act;
5. When the tax-exempted seller is punished pursuant to the Foreign Exchange Transactions Act;
6. When the tax-exempted seller becomes disqualified for non-compliance with any of the requirements for designation prescribed in paragraph (2);
7. When the tax-exempted seller requests withdrawal of designation of his or her duty-free shop;
8. When the tax-exempted seller fails to sell any duty-free goods to foreign tourists for six months from the time his or her duty-free shop was designated;
9. When the number of hand-written certificates of sales of goods issued under the latter part of Article 8 (1) during a taxable period under the Value-Added Tax Act accounts for at least 10/100 of the total number of certificates of sales issued under Article 10 (1) during a taxable period: Provided, That this shall not apply where designation of a duty-free shop is obtained during the relevant taxable period or less than 20 certificates of sales are issued under Article 10 (1) during the relevant taxable period;
10. When at least two of the following certificates are issued at least on two occasions after dividing the value of a tax-free article during a taxable period under the Value-Added Tax Act:
(a) Electronic certificates of sales for prompt refund referred to in Article 8 (4);
(b) Certificate of sales as referred to in Article 10 (1).
(5) When a designation of a duty-free shop is revoked due to grounds prescribed in paragraph (4) 3 through 5 and 10, the tax-exempted seller may not have his or her duty-free shop designated for two years from the date when such designation is revoked. <Amended on Aug. 18, 2015; Dec. 31, 2015>
(6) Where a tax-exempted seller temporarily or permanently closes his or her business or a modification occurs in the stated matters in his or her certificate of designation, he or she shall report thereon, applying mutatis mutandisArticle 8 (8) of the Value-Added Tax Act or Article 21 of the Individual Consumption Tax Act; and upon reporting the same, he or she shall submit to the head of the competent tax office (when the duty-free shop is relocated, referring to the head of the competent tax office having jurisdiction over the duty-free shop after the relocation) a report on the temporary or permanent closure of a duty-free shop for foreign tourists in the form prescribed by Ordinance of the Ministry of Economy and Finance, along with the certificate of designation. <Amended on Dec. 23, 1994; Dec. 31, 1998; Dec. 31, 2007; Feb. 29, 2008; Jun. 28, 2013; Aug. 18, 2015; Feb. 17, 2021>
(7) Upon receipt of a report submitted under paragraph (6), the head of the competent tax office shall verify the details of the modification occurred and correct the relevant matters stated in the certificate of designation and re-issue it. <Amended on Dec. 31, 1998; Aug. 18, 2015>