Customs duties

Normal rates and notification requirements

Where are normal customs duty rates for your jurisdiction listed? Is there an exemption for low-value shipments, if so, at what level? Is there a binding tariff information system or similar in place? Are there prior notification requirements for imports?

The applicable normal customs duty rates are shown in the Harmonised System of Korea, which is available at unipass.customs.go.kr/clip/index.do. The normal customs duty rate for industrial products imported into Korea is generally 8 per cent ad valorem, while the customs duty rates for agricultural products are generally much higher.

An exemption for low-value shipments applies to goods valued at US$150 or less if such goods are considered self-use goods.

Depending on the imported products, Korean importers may be subject to certain certification, reporting or approval requirements stipulated under various laws and regulations governing the importation of such products (ie, other than the Customs Act), such as the Pharmaceutical Affairs Act, the Medical Devices Act and the Chemicals Control Act, among others. While there are generally no prior notification requirements for imports, Korean importers seeking to import certain pharmaceutical and medical device products are required to submit a pre-importation report to the relevant industry association before obtaining customs clearance, and the relevant industry association’s acceptance of such report is a precondition for customs clearance.

Importers seeking to import any products that are subject to additional requirements under laws and regulations other than the Customs Act are strongly encouraged to ensure full compliance in view of the KCS’s aggressive enforcement actions.

Special rates and preferential treatment

Where are special tariff rates, such as under free trade agreements or preferential tariffs, and countries that are given preference listed?

The texts of the various FTAs to which Korea is a member and preferential tariff rates thereunder are available at www.customs.go.kr/kcshome/main/content/ContentView.do?contentId=CONTENT_ID_000002349&layoutMenuNo=23266. Information relating to preferential treatment provided under GSP programmes maintained by Korea is available at https://unipass.customs.go.kr/clip/index.do.

How can GSP treatment for a product be obtained or removed?

The MOSF may determine the scope of GSP treatment as applied to particular products and countries upon receiving an opinion from interested parties. If a domestic industry or interested party believes that continuing with a GSP programme may cause (or is likely to cause) material damage to the domestic industry, such industry or party may file a petition with the MOSF seeking to suspend the GSP programme.

When the MOSF determines that it is not proper to levy general preferential tariffs, such as the increase in imports of certain preferential goods, which may cause serious damage to domestic products that produce the same or similar products, the application of the general preferential tariffs to designated goods and country of origin may not be made. In addition, when the Minister of Strategy and Finance decides that it is improper to impose the general preferential tariffs considering the income level of the particular preferential tariff beneficiary country, the proportion of total amount of imports from the target country, the degree of international competitiveness of the specific preferential goods of the target country, and other circumstances, the application of general preferential tariffs can be excluded.

Is there a duty suspension regime in place? How can duty suspension be obtained?

Subject to KCS’s review and approval, a customs bonded area or free trade zone may be established where the movement of goods into such areas or zones would not give rise to customs duty implications in Korea, unless the goods actually enter into the territory of Korea, in which case the applicable customs duties and other import-related taxes will be payable. Also, certain Korean importers may be exempt from the general requirement that all applicable customs duties and other taxes should be paid at the time of customs clearance, provided that such importers qualify for and participate in the monthly aggregate programme (which would allow the importers to pay customs duties etc on a monthly basis) and collateral programme (allowing the importers to delay payment of customs duties etc for up to 15 days).

Challenge

Where can customs decisions be challenged in your jurisdiction? What are the procedures?

If the KCS issues a notice prior to the imposition of customs duties, an importer may appeal such pre-imposition to the Customs Appeal Committee (CA Committee), which is a committee composed of high-ranking customs office officials and civilian experts that hears Korean importers’ grievances regarding KCS’s expected duty impositions. A Korean importer may appeal the pre-imposition to the CA Committee within 30 days upon receiving the pre-imposition notice.

If the CA Committee decides to adopt the KCS’s pre-imposition, the KCS will then issue a final imposition notice. In such case, the Korean importer would be required to pay the additional duties and other taxes as indicated in the final imposition notice within 15 days after the receipt thereof, regardless of whether the importer decides to further appeal the KCS’s decision. Appeal against the pre-imposition notice to the CA Committee is an optional remedy to taxpayers (ie, is not a mandatory procedure). If taxpayers decide not to appeal to the CA Committee, KCS will issue the final imposition notice.

After paying the additional imposition as set forth in the final imposition notice, the next step is to appeal the final imposition to the Tax Tribunal (TT), the Board of Audit and Inspection of Korea (BAI) or the KCS. For practical reasons, however, taxpayers typically choose to appeal to the TT because the KCS is likely to uphold the decisions made by regional customs offices. Any appeal before the TT must be filed no later than 90 days after receiving the final imposition notice. Such appeal to the TT, BAI or KCS is a mandatory preliminary procedure before initiating an administrative litigation (ie, taxpayers must appeal to the TT, BAI or KCS before filing complaint to court).

The TT is a quasi-judiciary body under the jurisdiction of the Prime Minister’s Office, separate from the KCS. A final determination from the TT is made by a panel of four members, which is composed of two senior government officials associated with the MOSF (which has jurisdiction over the KCS authorities) and two civilian experts. The TT is statutorily required to make its decision within three months from the date of filing an application for appeal. In practice, however, a typical TT proceeding takes much longer than three months, and in many cases more than one year, depending on the TT’s caseload and the complexity of the issues raised in the appeal.

Finally, a Korean importer may appeal the decision made by the TT to the administrative court, the High Court and ultimately the Supreme Court of Korea.