All goods being imported from foreign countries into Korea must have their customs duties prepaid. Customs duties are calculated by multiplying the tax base of the tariff by the tariff rate. The tariff tax base is either the value of the imported goods or the quantity. The tariff rate is provided on the tariff rate table by group of items. As the tax rate applies to each HS Number (Harmonized System Number) corresponding to an item or a group of items, the tariff is affected by the decision on which value should be regarded as the taxable value or how the taxable value is decided.
If the value is the tax base of the tariff, it is an "ad valorem duty" and if the quantity is tax based, it is called a "specific commercial duty." The value, which is the tax base of the ad valorem duty, is called the "taxable value." Korean customs valuations on taxable values reflect the relevant provisions of the WTO Valuation Agreement. (For more information, visit www.customs.go.kr)
Taxable values on imported goods are assessed by various methods. The valuation method, which decides taxable value by transaction value, is called the first method. However, for cases other than sales, the transaction value cannot be used as the base for taxable value. In these cases, the taxable value is determined by reviewing the following methods successively.
Customs Duties Refund
A customs duties refund refers to a situation where the Korean government returns certain customs duties to the customs duties payers under specific conditions. It is part of the export support system that aims to enhance the international price competitiveness of Korean export goods. Under the system the Korean government returns to the exporters or the manufacturers of export goods the customs duties they paid when they imported raw material for export goods.
Cases not recognized as sales
- Goods imported free of charge
- Goods imported for consignment sale where sale prices are determined by auctions etc.
- Goods imported to be sold in the local market under the exporter`s responsibility
- Goods imported by legally dependent entities such as branch offices etc.
- Goods imported under a lease agreement
- Imported goods for gratuitous lease
- Goods imported to be disposed within Korea at the consignor`s expense (such as industrial waste etc.)
- Imported goods with restriction for their use and dealings
To be eligible for a customs duty refund:
(a) The exporter or the export goods manufacturer should have the Certificate of Import Declaration,
(b) The customs duties for the goods were paid or the goods were granted for batch payment of customs duties, and
(c) The goods were produced and submitted for customs duty refunds within two years after the import declaration and filed for customs duties refunds within two years after the goods were submitted for export.