Korea Certified Customs Attorney SJ

  Under Article 4 and 30 of the VALUE-ADDED TAX ACT ( 부가가치세법 ), 10% VAT is levied on the importation of goods unless exempt from VAT pursuant to Article 27 of the ACT. VALUE-ADDED TAX ACT   Article 27 (Importation of Tax-Free Goods) An importation of any of the following goods shall be exempt from value-added tax: 1. Unprocessed foodstuffs (including agricultural products, stock farm products, marine products, and forest products which are served for food) which are prescribed by Presidential Decree; 2. Books, newspapers, and magazines, which are prescribed by Presidential Decree; 3. Goods which are imported by academic research organizations, educational institutions, the Korea Educational Broadcasting System established under the Korea Educational Broadcasting System Act, or cultural organizations for scientific, educational, or cultural purposes and which are prescribed by Presidential Decree; 4. Goods which any for...

  If importers are uncertain about the appropriate HS Code to use when filing an import declaration of a product, they can apply for an advance ruling on tariff classification under the Article 86 (1) of the CUSTOMS ACT ( 관세법 ). CUSTOMS ACT Article 86 (Advance Rulings on Tariff Classification Applied to Specific Goods) (1) A person who intends to import or export goods, a manufacturer of goods to be exported, a licensed customs broker, a customs brokers' corporation, or a corporation for handling clearance under the Licensed Customs Broker Act (hereinafter referred to as "licensed customs broker, etc.") may file an application with the Commissioner of the Korea Customs Service for an advance ruling on the tariff classification on attached Schedules of Tariff Rates to be applied to the relevant goods prior to filing an export or import declaration pursuant to Article 241 (1), accompanied by documents prescribed by Presidential Decree.   ...

  For the same royalty payment, if the tax authority views it as ‘irrelevant to imported goods’ while the customs authority sees it as ‘related to imported goods’, importers may feel embarrassed. However, importers should keep it in mind that customs duties and internal taxes are levied under separate laws with different tax purposes, taxable objects, tax bases, and tax calculation methods. Viewing the imposition of internal taxes according to internal tax laws as affecting the imposition of customs duties or as double taxation is not accurate.   Below is the summary of a tax tribunal appeal case (Case No. 조심 2022 관 0142 ). Exporter A sold Product A, which carried a trademark, to a Korean importer, Company A. Company A paid only the price of Product A to Exporter A. Subsequently, Exporter A and Company A jointly invested and established Company B in Korea. Exporter A then sold the same Product A to Company B, requiring Company B to pay both the Product A price and a royal...

  On October 12, 2023, Seoul Customs issued guidance advising importers to pay overseas sellers directly for imported goods instead of utilizing agencies such as customs clearance or transportation agencies. This is because, in accordance with Article 16 of the FOREIGN EXCHANGE TRANSACTIONS ACT ( 외국환거래법 ), if a resident pays money to a person who is not a party to the transaction in question, the payment must be reported in advance. In a standard buy & sell transaction, only the buyer and seller are recognized as parties to the transaction. Therefore, if you are contemplating paying a customs clearance agency for convenience, you should reconsider.   However, if the value of the imported goods doesn’t exceed USD 5,000, you can utilize the customs clearance agency to pay for the goods without reporting a third-party payment. This is because, in accordance with Article 5-10 (1) 1 of the   FOREIGN EXCHANGE TRANSACTIONS REGULATION ( 외국환거래규정 ), an amount of USD 5,000 o...

  On October 12, 2023, the Seoul Newspaper uploaded an interesting article regarding customs litigations after Congressman Taeho Jung raised an issue about customs investigation involving multinational companies based on the materials submitted by the Korea Customs Service, covering January 2019 to August 2023.   (Original news link: https://www.seoul.co.kr/news/newsView.php?id=20231012002005 ) Main points of the article are that: ·       Korean entities of multinational companies are reluctant to submit data and materials requested by customs auditors. They claim that the requested information is irrelevant to Korea Customs or that it is stored on overseas servers, which causes delays and difficulties in customs investigations. -       Delays and rejections in submission of customs investigation data (Domestic companies vs Multinational companies): 23 vs 51 for January to August 2023 ·       Sinc...

  Under effective statutes, various regulatory frameworks are established to protect consumers’ interests and public safety. Businesses dealing with relevant goods are required to comply with these regulations. However, in some cases, businesses may negligently fail to follow these regulations, even when penal provisions exist, especially if the competent government agency does not investigate violations. When such negligence becomes widespread, and the agency deems it necessary to strengthen the enforcement of a regulatory framework, they issue a letter urging strict compliance. Businesses should take such letters seriously because the agency may initiate a comprehensive investigation and impose penalties for any violations that remain uncorrected.   On Sep. 27, 2023, the Animal and Plant Quarantine Agency (APQA) issued the following letter after noticing that many transactions involving imported beef or pork intended food (including dressed carcasses, dressed meat, packe...

  In transactions between related parties, post-adjustment is commonly made based on the difference between the target margin and the actual margin calculated after the sale of imported goods. Since ‘the value of any part of the proceeds of any subsequent resale, disposal or use of the imported goods that accrues directly or indirectly to the seller’ is an additional element of customs valuation under the transaction value method, it is natural for Customs authorities to focus on the periodic payments made between the related parties. It used to be a common practice for importers to correct the customs value of imported goods when paying the difference, considering it as part of the proceeds from the imported goods, and not to correct the customs value of imported goods when receiving the difference, treating it as an adjustment of profit. It was absurd to apply a double standard when the reason for the post-adjustment remained the same. Importers appealed Customs’ decision, filed ...