The Container Deposit System Management Organization

◦ Refund to the consumer’s account using POS or the container deposit-seller app

- ①Scan the barcode (consumer serial number) of the consumer app using POS or the container deposit-seller app ⇒ ②Scan the barcode of the label on the disposable cup

※ The refund is immediately processed in the consumer app (consumers can transfer the money to their personal account registered in the app)

◦ Cash refunds

- ①Select the POS cash refund function (headquarters’ guide) or the [Refund in cash?] (Is this supposed to be verified? Why is it in brackets and a question mark?) option in the seller app ⇒ ② Scan the barcode of the label on the disposable cup ⇒ ③Refund the consumer in cash

※ Deposits returned in cash at the store are transferred the next day to the store account registered in the “Disposable Cup Deposit Payment Management System”

◦ According to an authoritative interpretation of the National Tax Service, the deposit fee is an amount subject to be returned, therefore, when considering the nature of a transaction, the deposit is excluded from taxation and income tax deduction.


* Deposit excluded from income tax deduction
Since the container deposit must be returned to the person who returns the container, etc., in accordance with Article 15-2 of the 「Act On The Promotion Of Saving And Recycling Of Resources, the deposit fee is not included in the tax base as it cannot be considered as the supply of goods subject to income tax deduction under the Value Added Tax Act due to the nature of the transaction.
- An authoritative interpretation of the National Tax Service [(Income statutory interpretation 2021-3180(2021.06.29.)] has the same effect.

*Non-taxation of deposits (Basic Principles 29-61-6 of the Value Added Tax Act)
① Deposits that businesses receive to guarantee the recovery of containers or packaging shall not be included in the supply price. (Amended on December 23, 2019)

② If the container and packaging supplied under the condition that it be returned cannot be recollected, and the container price and packaging cost are reimbursed in the form of a compensation, it shall be included in the supply price. (Amended on December 23, 2019)

◦ Biodegradable containers are considered as disposable cups and, therefore, are eligible for the deposit system.

◦Although PLA plastic, known as biodegradable plastic, decomposes when buried in the ground at a temperature of 60 degrees for more than 6 months, this landfill method is currently not used in Korea. Therefore, in the absence of a proper decomposing system and disposal facility for biodegradable plastic, it is believed that the impact of biodegradable plastic on the environment is no different from general plastic.

◦ Deposits are monetary receipts received under the condition of return, and, therefore, are not subject to taxation.
- Refer to Value-Added Tax Act, Written-20220, Regulation [Laws and Regulations Section-1943], June 28, 2022 and Article 29 of Value-Added Tax Act.

◦ Handling subsidies are obligatory expenses and are not subject to taxation. They are verified by the invoice issued by COSMO.
- Refer to Article 15-2 (4) of Act on the Promotion of Saving and Recycling of Resources.

◦ The amount of the cash refunded to consumers by the store will be deposited on the next business day to minimize the burden on the business owner. If it falls on a weekend or holiday, it will be deposited on the next business day.

◦ The help center (1522-0082) is operating currently for inquiries about the Disposable Cup Deposit System on weekdays and weekends from 9:00 AM to 9:00 PM.

◦ The headquarters keeps additional labels in stock for situations where labels are urgently needed at the store.

- For spare labels to keep, you can order labels for stock management individually.

◦ Ordering labels for stock management (The order price unit is the same as the existing label)

- Maximum order quantity: Depending on the number of stores, the following order quantities are possible:

◦ Number of stores (Sejong/Jeju)
- Over 50 stores: maximum order quantity (roll unit, any type) of 100
- 31-50 stores: maximum order quantity (roll unit, any type) of 80
- 11-30 stores: maximum order quantity (roll unit, any type) of 50
- 10 or fewer stores: maximum order quantity (roll unit, any type) of 20

- The deposit, label fee, and handling subsidies should be paid within 8 weeks.

- However, you cannot make additional orders for stock labels for 8 weeks after the order.

.◦ Receiving and activating the deposit refund label

After receiving the labels from the headquarters, activate the label through (1) Container Deposit – Business Entity App or (2) POS.

‧ (1) Log in to the “Container Deposit – Business Entity” app you downloaded, and click on [Label Receipt Entry] on the main screen.

‧ (2) Label activation through POS follows the guidance* from the headquarters.

* This feature's implementation and usage may differ for each brand.

- When scanning the barcode attached to the label roll package* (or parcel box) with the barcode scanner in the “business-entity” app, the entire deposit refund label within the roll (or parcel box) is activated.

* 1 roll = 1,000 labels

※ If the barcode on the roll or parcel box cannot be scanned, you can directly enter the serial number.

※ Activation for each label is not needed if activated during the sales preparation.

❖ Cautions:

⦁ If the label is provided to a consumer while it is not activated, the consumer might not receive the deposit back.

⇒ Only activated labels should be provided to consumers.

⦁ It takes a maximum of 3 weeks to the destination after the label manufacturer (KOMSCO) receives the label order.

※In urgent cases, contact the headquarter to supply labels for stock management.

❖ Notes:

⦁ Deposit, label fee, and handling subsidies are paid in batches by the headquarters.

- The headquarters pays the deposit to COSMO within five weeks after ordering labels.

※ As an exception, for label orders before November 26, 2022, the deadline for deposit payment is extended to December 31.

- Label fees and handling subsidies are paid by the headquarter to COSMO in advance after ordering labels.

※ For priority areas, label fees (6.99 KRW per piece) and handling subsidies for standard containers (4 KRW per piece) are supported.

※ For non-standard containers, handling subsidies (10 KRW per piece) should be paid in batches.

⦁ If you lose the label, you can report it to COSMO for disposal.

※ After activating the label, the deposit can be refunded, so it should be shared with custody and management.

⦁ Delivery fee from KOMSCO (Korea Minting, Security Printing & ID Card Operating Corporation) is free for orders of 3 rolls or more, regardless of the label type (paper, plastic, etc.).

* The delivery fee for orders of 2 rolls or less is sent by collect on delivery.

◦ Transfer and takeover of labels within the same brands are possible. The settlement depends on the agreement between stores.

◦ The deposit label will be activated upon submission of the label receipt.