[Game & Digital Content Licensing Deep Dive ⑧] Closing a Game Business in Korea: Is Tax Deregistration Enough? — The 30-Day Closure Reporting Rule for Game Production and Distribution Businesses
![[Game & Digital Content Licensing Deep Dive ⑧] Closing a Game Business in Korea: Is Tax Deregistration Enough? — The 30-Day Closure Reporting Rule for Game Production and Distribution Businesses cover](https://24twwbxsszxyfawd.public.blob.vercel-storage.com/blog/game_closure_card_en_01-LTNgmfK2V7sscWs7oD7Gir3wYnmMBU.png)
Hello, I'm Jean Ji, a Certified Administrative Agent in Korea.
Consider the following situation.
Company A has decided to shut down the game business it has operated for several years.
It has terminated its game services.
Its office lease has been closed out.
It has also completed the closure of its Korean business registration for tax purposes.
Internally, the company believes that the shutdown process is now complete.
Then, while organizing old records, someone finds the company’s game production business registration certificate and game distribution business registration certificate.
The person in charge asks:
“We already closed our business registration for tax purposes. Do we also need to separately report the closure of these game-business registrations?”
The short answer is that if a registered game production or game distribution business itself has been discontinued, a separate closure procedure under Korea’s Game Industry Promotion Act should be reviewed.
Under Article 30 of the Game Industry Promotion Act, a registered, licensed, or reported business that discontinues the relevant operation is generally required to report the closure to the competent local government within 30 days from the date the business is discontinued.
In other words, tax deregistration and closure of a game-business registration are not the same legal procedure.
However, this does not mean that the two procedures must always be handled entirely separately.
The current Enforcement Rule provides mechanisms that can connect tax closure reporting with game-business closure reporting in certain circumstances.
There is another issue to consider.
If the game business is being transferred to another company, the matter may involve business succession rather than closure.
If an administrative sanction procedure is already underway, the closure report itself may be restricted.
If the same type of business is restarted at the same location within one year, the former operator’s legal status may also become relevant again.
For that reason, closing a game business in Korea requires more than checking whether a tax deregistration has been completed.
The company should determine what is actually being discontinued, which registrations remain, and whether another operator will continue the business.
Game & Digital Content Licensing Deep Dive Series
- Do game developers and distributors need separate business registrations?
- When should a game rating be obtained in Korea?
- Where should you apply for a Korean game rating?
- Do game updates require a new rating?
- What must be disclosed when a game includes probability-based items?
- Who handles Korean regulatory procedures when an overseas-developed game is launched in Korea?
- What happens when the representative, address, or registered game business items change?
- Is tax deregistration enough when closing a game business? — This article
- What happens to existing registrations when acquiring a game company or game business?
1. Tax Deregistration and Game-Business Closure Are Not the Same Procedure
It helps to think about how a game business begins.
Receiving a general business registration does not automatically complete the registration required for a game production or game distribution business.
Article 25 of the Game Industry Promotion Act generally requires a separate registration for a game production business or game distribution business.
The same distinction matters when the business ends.
Closing the company’s business registration for tax purposes does not necessarily mean that the game production or distribution registration maintained by the competent local government has automatically been cleared at the same time.
Article 30 of the Game Industry Promotion Act establishes a separate closure-reporting obligation when a registered or reported business is discontinued.
The two procedures should therefore be distinguished.
Tax deregistration = closure of the business registration for tax purposes
Game-business closure report = termination of a registered or reported business under the Game Industry Promotion Act
If a game company has been subject to both systems, it should review how both administrative relationships are being closed.
2. The Key Number for Game-Business Closure Is Also 30 Days
In Article 7 of this series, we examined the 30-day period applicable to certain changes involving representatives, business premises, and registered items.
A similar number matters when a game business is completely discontinued.
Article 30(1) of the Game Industry Promotion Act generally requires a registered, licensed, or reported business operator to report the closure to the competent local authority within 30 days from the date the business is discontinued.
The relevant date should not automatically be assumed to be the date someone clicked the closure function in a tax system.
The statutory wording focuses on when the business was discontinued.
If the actual end of operations and the tax deregistration date are different, the facts should first be organized to determine which date is relevant to the game-business closure.
For example, assume that all game services and game-related operations ended at the end of August, while the office and tax registration were not formally closed until September.
In that situation, it may be inappropriate to calculate the game-business filing period solely from the later tax-processing date.
For a closure report, the question is not only what was closed, but when the relevant game business actually ceased operating.
3. What Documents Are Required? — Closure Report and Existing Registration Certificate
The basic filing itself is relatively straightforward.
Under Article 22 of the current Enforcement Rule of the Game Industry Promotion Act, a person reporting closure submits the prescribed closure report form together with the relevant license, registration certificate, or notification certificate to the competent local government.
A game production business would therefore review its game production business registration certificate.
A game distribution business would review its game distribution business registration certificate.
Losing the certificate does not necessarily prevent a closure report from being filed.
The Enforcement Rule provides for the reason for loss to be stated where the relevant license, registration certificate, or notification certificate has been lost.
For a straightforward closure, two practical questions can therefore be checked first.
Do you still have the existing game-business registration certificate?
On what date was the game business actually discontinued?
Once those two points are clear, the basic filing direction becomes easier to identify.
4. Tax Deregistration and Game-Business Closure Can Be Coordinated
Tax deregistration and game-business closure are legally distinct procedures.
That does not mean a company must always process them completely independently through separate administrative channels.
The Enforcement Rule allows the game-business closure report and the closure report required under Korea’s Value-Added Tax Act to be submitted together to the competent local government in certain circumstances.
The local government can then forward the tax-related closure filing to the competent tax office.
The system also provides for coordination in the opposite direction in specified circumstances, where a closure filing accepted by the tax authority is transmitted to the relevant local government.
The important point is therefore not that the two procedures are the same.
It is that two separate closure procedures can be administratively coordinated.
If tax deregistration has already been completed, a company should therefore avoid assuming that nothing further needs to be checked.
It is more accurate to confirm whether the game-business closure report was also properly transmitted or processed.
5. If Only the Tax Registration Was Closed, Will the Government Automatically Delete the Game-Business Registration?
The Game Industry Promotion Act includes a system for ex officio cancellation of certain registrations.
Article 30 allows the competent local government, after confirming that the business has actually been discontinued, to cancel the relevant license, registration, or notification record where the operator did not file the required closure report.
Current law also allows the local authority, where necessary for that process, to request information from the competent tax office regarding tax closure filings or cancellation of the business registration.
The Enforcement Rule identifies circumstances that may be reviewed when determining whether the business has actually ended, such as termination of the lease, removal of facilities or equipment from the business premises, and tax-related closure information.
Procedures also exist for prior notice before an ex officio cancellation is completed.
Does that mean a business can simply ignore the closure-reporting obligation and wait for the government to remove the registration?
That would not be the correct way to understand the system.
Ex officio cancellation is an administrative mechanism allowing the authority to clean up a registration where the operator has not filed the required closure report.
It does not eliminate the operator’s separate obligation to report the closure within the prescribed period.
Where a business has been properly discontinued, the better approach is to close the regulatory registration at the time of shutdown rather than waiting for a later ex officio process.
6. Does Shutting Down One Game Mean the Entire Game Production or Distribution Business Must Be Closed?
This distinction is particularly important.
Ending service for one game and discontinuing the company’s entire registered game production or distribution business are not necessarily the same thing.
Under the Game Industry Promotion Act, a game production business concerns the business of planning or producing game products.
A game distribution business concerns the business of supplying game products through activities such as importing them or owning and managing relevant rights.
For example, assume Company A ends service for one mobile game but continues developing and distributing other titles.
The end of one game does not necessarily mean that the company’s entire game production or distribution business has been discontinued.
By contrast, if the company stops all relevant development and distribution activity and exits that line of business entirely, a closure report under the Game Industry Promotion Act should be reviewed.
The first question should therefore not simply be:
“Did the game shut down?”
It should be:
“Did the registered game production or distribution business itself end?”
Without that distinction, a company may confuse the closure of a single title with the closure of the regulated business itself.
7. A Company Can Continue to Exist Even After Closing Its Game Business
Closing a game business does not necessarily mean dissolving the corporation itself.
A corporation may discontinue its game production or distribution business while continuing to operate other lines of business.
Conversely, if the corporation itself is being wound up, game-business closure may be only one part of a broader set of corporate and tax procedures.
This article focuses specifically on how to address a game production or distribution registration under the Game Industry Promotion Act.
When the entire company is being shut down, it is useful to separate three questions.
Will the corporation continue to exist?
Will the general business registration remain active or be closed?
Will the registered game production or distribution business itself be discontinued?
These questions may appear similar, but they concern different administrative relationships.
8. If Another Company Will Continue the Game Business, Closure May Not Be the First Step
Now assume Company A is not eliminating the business entirely.
Instead, it plans to transfer the game business to Company B.
Company A will no longer operate that business.
But Company B will continue the existing games and related operations.
Should the sequence simply be:
Company A closes → Company B applies for a new registration?
Not necessarily.
Article 29 of the Game Industry Promotion Act provides for succession to an existing operator’s status in specified circumstances, including certain business transfers and corporate mergers.
Where a game business is transferred to another company, the first issue may therefore be whether the transaction constitutes business succession rather than closure.
If the business itself continues under another operator, filing a closure report first may not always reflect the correct legal structure.
In a game-business transfer or M&A transaction, the company should first determine who is continuing the existing game business, what business assets or rights are being transferred, and whether the existing regulatory status is being succeeded to.
This issue will be examined more closely in Article 9 of this series.
9. Can a Company Close the Business Before a Suspension Order to Avoid the Sanction?
This is an especially important issue under the current rules.
Following amendments to Article 30 of the Game Industry Promotion Act, closure reporting may be restricted while certain administrative sanctions are in effect or while the procedure for imposing such sanctions is underway.
The rules also address the period beginning with prior notice of a contemplated administrative disposition under Korea’s Administrative Procedures Act.
Accordingly, if a company has already received prior notice concerning an alleged violation, it should not assume:
“We are shutting down anyway, so we can simply close the business before the sanction is imposed.”
Under the current framework, there are situations where the closure report cannot proceed in the ordinary way during that period.
The same issue may arise where an administrative suspension or another relevant sanction is already in effect.
In such a case, the first step is not preparing the closure form.
The company should first determine the current stage of the administrative-sanction procedure.
10. Does Closing and Re-registering Mean the Business Starts Completely From Zero?
There is another provision to consider when a business closes and later resumes.
Article 29(2) of the Game Industry Promotion Act addresses certain situations where a person whose registration has been cancelled following closure seeks to register or report the same type of business again at the same location within one year.
In those circumstances, the legal status of the previous operator may still become relevant.
A company should therefore not automatically assume:
“If we close now and register again later, the new registration will be completely unrelated to the past.”
The Act also contains provisions under which the effects of certain previous administrative sanctions or ongoing sanction procedures can continue in specified succession situations.
Closure followed by re-registration is therefore not always a complete regulatory reset.
If the company plans to restart the same type of game business at the same location within a relatively short period, it should review how the new registration may interact with the previous regulatory history.
11. What Should a Company Check Before Closing a Game Business?
The closure form itself may look simple.
In practice, the more important task is classifying the company’s current business structure before submitting the form.
Step 1 — Identify What Is Actually Ending
Determine whether only one game service is ending.
Determine whether the game production or distribution business itself is ending.
Separately determine whether the corporation itself is also being wound up.
Step 2 — Check Whether Another Operator Will Continue the Business
Determine whether the business is actually disappearing.
If another company or transferee will continue it, review whether business succession applies.
Step 3 — Identify the Actual Cessation Date
Determine when the game business actually stopped operating.
Compare that date with the tax deregistration date.
Step 4 — Check for Administrative Sanctions
Determine whether a suspension order is already in effect.
Check whether prior notice of an administrative disposition has been received.
If a sanction procedure is underway, review the closure-reporting restriction first.
Step 5 — Review the Existing Registration Documents
Locate the game production and game distribution registration certificates.
If a certificate has been lost, organize the reason for the loss.
Step 6 — Coordinate Tax and Game-Business Closure
If tax deregistration has not yet been completed, determine whether the tax and game-business closure filings can be coordinated.
If tax deregistration has already been filed, confirm whether the game-business closure report was also properly transmitted and processed.
This shows why the central question is not simply:
“Where do we submit the closure form?”
The more useful sequence is:
business cessation → succession → administrative sanctions → cessation date → game-business registration → tax deregistration
12. How Should Company A Handle Its Situation?
Return to Company A.
Its game services have ended.
Its office has been closed.
Its tax-related business registration has also been terminated.
But its game production and distribution registrations still appear to remain.
The first thing the company should review is not the tax-closure screen.
First, determine whether only one title ended or whether the game production and distribution businesses themselves were completely discontinued.
Second, determine whether another company acquired or continued the game business or related rights.
If another company succeeded to the business, business succession may need to be considered before ordinary closure.
Third, identify the actual date on which the game business was discontinued.
If closure reporting is required, the 30-day period should be checked from the relevant cessation date.
Fourth, determine whether an administrative sanction or prior-notice procedure is underway.
If so, the current statutory restrictions on closure reporting may apply.
Fifth, review the existing game production and distribution registration certificates and organize the documents needed for closure.
Finally, if tax deregistration has already been completed, confirm whether the game-business closure was also properly connected and processed.
Following this sequence helps avoid a situation where the company has completed its tax closure but does not know whether its game-industry registration remains active.
What Can the Company Handle Internally, and When Is Additional Review Useful?
If the entire game production or distribution business is simply being discontinued, no other operator is taking over the business, there is no pending administrative sanction, and both the cessation date and registration status are clear, the company may be able to prepare the closure report internally by reviewing the Enforcement Rule and official government guidance.
The existing registration certificate and actual cessation date can be checked first.
If tax deregistration has not yet been completed, the company can also review whether the two closure procedures can be coordinated.
More detailed review may be appropriate where only part of the game business is being discontinued, another company will continue the service, a business transfer or merger is involved, the company plans to re-register at the same location, or an administrative sanction or prior-notice procedure is already underway.
In those situations, the existing game-business registrations, business-transfer structure, actual cessation date, sanction-related documents, and current operating status should be reviewed together to determine whether the matter involves closure reporting, business succession, a restriction on the timing of closure, or another administrative procedure.
Conclusion: If the Game Business Required Registration to Begin, That Registration Also Needs to Be Addressed When the Business Ends
Return to Company A’s original question.
“We already closed our business registration for tax purposes. Do we still need to separately report the closure of our game production and distribution businesses?”
If the company was registered as a game production or game distribution business and that business itself has been discontinued, the closure-reporting requirement under Article 30 of the Game Industry Promotion Act should be reviewed.
Under the current framework, the closure report is generally required within 30 days from the date the business is discontinued.
The filing generally involves the prescribed closure report and the existing registration certificate, with procedures available where the certificate has been lost.
Tax deregistration and game-business closure are separate procedures, although administrative mechanisms exist to coordinate the two.
However, if the game business is being transferred to another company, the issue may involve business succession rather than closure.
If only one game ends while the company continues other game operations, it should first be determined whether the registered business itself has actually been discontinued.
If an administrative sanction or sanction procedure is already underway, closure reporting may also be restricted.
And restarting the same type of business at the same location within one year does not necessarily mean that all previous regulatory relationships have disappeared.
Ultimately, the key question is not whether the company clicked “close business” in a tax system.
It is whether the game services, game production or distribution registrations, tax registration, any business succession, and the company’s current administrative status have all been brought into alignment.
If your company has closed or is preparing to close a game business in Korea, a free initial review can help determine whether a closure report, business succession procedure, or another administrative step should be considered based on the existing registration, actual cessation date, succession structure, and current administrative status.