Korea

Country starter pack
Business practicalities in Korea
61
Other import duties
For items that are not covered under KAFTA, there are
a variety of other applicable import duties across various
goods. These are often referred to in the Korean context
as “custom duties”.
Customs valuation: The dutiable value of imported
goods includes the cost of the goods as well as insurance
and freight (CIF). In 2008, the Korea Customs
Service introduced the Advanced Customs Valuation
Arrangement (ACVA), which provides a mechanism
for taxpayers and the customs service to agree to an
appropriate dutiable value of imported goods sourced
from related parties.
Exemption or abatement: The following goods may be
exempt from or eligible for reduction in customs duties:
• Goods for diplomats, government use and academic
research
• Foreign goods for use in the defence industry and
environmental pollution control
• Raw materials for the production of aircrafts
• Goods to be re-exported
• Deteriorated or damaged goods
• Re-imported goods.
Refunds: With goods intended for use in the
manufacturing or processing of goods to be exported, and
for which customs duties have already been paid at the
time of importation, duties will be refunded up to the limit
of the amount of customs duties previously paid.
Indirect tax: A flat 10 per cent value-added tax (VAT)
is imposed on all imports unless customs duties on such
imports are exempt. An individual excise tax of five to 20
per cent is also levied on the import of automobiles and
certain luxury items. Rates vary depending on the type
of product. Tariffs and taxes must be paid within 15 days
after goods have cleared customs.
Taxable value and exemption: The taxable value of
imported goods is equal to the total amount of the
transaction value for customs duties, individual excise tax
and liquor tax (if any).
The following goods, on which customs duties are exempt,
may also be exempt from VAT:
• Goods imported as commodity samples and
advertising materials
• Goods re-imported after export
• Goods imported temporarily under the terms of reexport
• Duty-free goods.
Additionally, under the Special Tax Treatment Control
Law (STTCL), a qualified foreign invested corporation
may be exempt from customs duties, individual excise tax
and VAT on capital goods imported by such companies or
contributed in-kind by a foreign investor.
FTA Tool
To further explore the benefits of KAFTA for Australian
businesses, refer to the FTA Tool developed by the
Export Council of Australia. This website helps Australian
exporters navigate the basics of Australia’s Free Trade
Agreements (FTAs) quickly and easily. Businesses can
search by country and industry to discover how FTAs can
make doing business easier.
www.ftatool.com.au
Import regulations
The Korean Government requires that all importers have
a general licence or a special licence for all imported
items. Import licence applications are administered
by government agencies or by the relevant industrial
associations after performing screenings. Each specific
licence covers only one transaction and is necessary in
order to secure credit letters. The Ministry of Strategy
and Finance is required to pre-approve imports that are
to be exempt from customs duties. Restrictive regulations
govern the content and safety of products. Some
consumer goods such as food, pharmaceuticals and toys
are subject to more stringent examination.
Import requirements and documentation: The documents
necessary to obtain import permission vary depending on
the type of product, its origin and the type of business
in which the applicant is engaged. The following is a
summary of the basic documents and information
necessary to apply for an import permit.