The Encyclopedia of Korean Culture explains that hasuk, as a lodging establishment, does not differ substantially from a yeoinsuk in terms of function, nature, or structure, and that the primary difference lies in lower costs. Of course, many yeoinsuks that still exist today operate on a short-term or daily basis. However, when viewed in light of the KSIC definition, hasuk appears to differ in that it provides meals in addition to accommodation.
Under the Korean Standard Industrial Classification, the other miscellaneous lodging businesses are defined as follows. Hasuk business falling under this category is not subject to the Public Health Control Act, the Tourism Promotion Act, the Agricultural and Fishing Villages Improvement Act, or the Special Act on the Safety Management of Publicly Used Establishments, nor is there any separate governing statute.
Other miscellaneous lodging business: Industrial activities that operate hasuk businesses, which provide both meals and accommodation together for an agreed period, or other lodging facilities not elsewhere classified.
The scope of lodging was defined in the Lodging Business Act Article 2 as below, but in the 1981 amendment, hasuk business was excluded from the scope of the lodging businesses pursuant to the Lodging Business Act, and in 1986 the Lodging Business Act was replaced by the Public Health Act.
- Under this Act, “lodging business” means hotel business, yeogwan business, yeoinsuk business, and hasuk business.
- “Hotel business” means a business that provides high-grade facilities of Korean-style or Western-style structure and equipment and accommodates persons in return for lodging fees.
- “Yeogwan business” means a business that provides ordinary facilities of Korean-style or Western-style structure and equipment and accommodates persons in return for lodging fees.
- “Yeoinsuk business” means a business that provides facilities and equipment in which lodging spaces are mainly shared by multiple persons and accommodates persons in return for lodging fees.
- “Hasuk business” means a business that, after providing the necessary facilities, accommodates five or more persons and charges lodging fees on a unit basis of one month or longer.
- “Lodging” means the use of the facilities set forth in the preceding provisions with bedding.
At the time, Article 4 of the Enforcement Rules of the Lodging Business Act prescribed the following facility standards for hasuk businesses:
- Ventilation, lighting, illumination, and moisture-proof facilities must be fully provided.
- An appropriate number of toilets must be installed, windows and doors must be fitted with insect screens and moisture-proof facilities, and cleanliness must be maintained at all times.
Meanwhile, according to an official interpretation concerning hasuk business, it is clear that hasuk business constitutes a lodging business subject to value-added tax.
VAT Applicability to Hasuk Business (Ruling No. BuGa 46015-1957-1)
Where a hasuk business is operated independently as a business, providing both meals and accommodation to specified persons for an agreed fixed period, such hasuk business constitutes a lodging business under Article 2(1)2 of the Enforcement Decree of the Value-Added Tax Act and is therefore subject to value-added tax. In addition, where business assets used for such lodging business are transferred, value-added tax shall also be imposed.
