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South Korea’s Import Duty & Tax Guide

Business · 5 Mins Read

South Korea’s Import Duty & Tax Guide

Do you miss shopping in the streets of Hongdae and Dongdaemun? If you have travelled there recently after the opening of the borders, it can be disconcerting to see the empty streets as most of your favourite shops have closed down due to the impact caused by the COVID-19 pandemic. 

As businesses move online and e-commerce shopping becomes more popular, foreign brands are starting to export their products overseas in the hopes of expanding their businesses worldwide. In May 2022, goods exported into South Korea increased 32% year-on-year in May 2022, matching market forecasts of 31.9% and accelerating sharply from a 18.6% rise in the prior month, according to statistics by the Trading Economics. South Korea continues to be a huge e-commerce hub due to its consumer culture and high internet usage rate of 93% in the country, reports Statista 

Thinking of exporting your goods to South Korea? Read on to find out more about South Korea's import tax and duties, which goods are exempt, and where to pay the duties.

How to calculate South Korea’s import duty rates

If you are importing goods from Malaysia, you need to be aware of South Korea's import duty rates. South Korea uses the Harmonised System code (HS) to determine the amount of tax on each imported good. According to Santander Trade, the average duty rate is 8%, with a higher rate for products such as seafood, clothing, and tobacco. 

In addition, all imports and domestically produced goods are subject to Value Added Tax (VAT) at 10%, with reference from the International Trade Administration. VAT, also known as goods and services tax in some countries, is a tax levied on the price of the product at each stage of production. Excise duty of 10% to 20% is also levied on certain luxury goods. If you import alcohol, you will need to pay for liquor tax. According to the Foreign Agricultural Sercive, all alcohol is subject to 72% liquor tax per litre.

Although duties are levied on all imports, South Korea has a de minimis limit of ₩150,000. Imports exceeding this value are subject to customs duties.

South Korea VAT guide

If you are still unsure of whether your imported goods are exempt from VAT, the following table provides a guide to the rates, using reference from Avalara.

VAT Rate Type Goods and Services
10% Standard All other goods and services
0% Zero Exports and relevant transportation services, international services, financial and insurance services, certain administrative and support services for businesses

Types of South Korea customs tariff

Tariffs or custom taxes, is a tax on goods that is imported from overseas. South Korea has three main customs tariffs, namely the general customs tariff, the preferential customs tariff, and the reciprocal tariff.

  • General customs tariff: Goods not covered by the other two tariffs. Imported goods must pay all applicable duties and taxes.
  • Preferential Tariff: According to Ministry of Trade, Industry and Energy, the Preferential Tariff is given to countries that have signed a Free Trade Agreement (FTA) with South Korea. Under the FTA, goods are divided into immediate tariff reduction, staging reduction, and non-scheduled products with fixed duty rate. Under the Korea-ASEAN FTA, goods originating from ASEAN countries are categorised as Normal Track, Sensitive List, and Highly Sensitive List. Importers interested in applying for preferential tariffs under the FTA can visit the South Korean customs site for more information. 
  • Reciprocal Tariff: If a country that has signed a FTA with South Korea exports a sensitive product that retains its non-scheduled or high duty rate, South Korea will still apply the same rate even though the goods are eligible for tariff elimination. This is only applicable for countries under the Korea-ASEAN FTA agreement.

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Which imported goods are subject to customs duties and taxes in South Korea?

The following items are subject to internal taxes and duties as described in South Korea’s Customs Act and Internal Tax-Related law

  • Goods that a domestic resident receives with a total cost of more than US$150

  • Items with a taxable value of more than US$250 to be used as samples

Goods exempted from import tax

If you are exporting to South Korea for the first time, you may wonder if there are certain goods that are exempt from import tax. Goods which are exempt from South Korea’s customs duties include:

  • Commodity samples and promotional materials

  • Re-imported goods that are exported previously

  • Temporarily imported goods subjected to re-export

  • South Korea Duty-free goods

In addition, the Special Tax Treatment Control Law (STTCL) states that a certified foreign enterprise can be exempted from South Korea’s custom duties, individual consumption tax, as well as VAT on the imported assets used by companies or in-kind contributions made by foreign investors.

How to pay South Korea's import customs duties & taxes

According to Export Gov, all taxes and tariffs need to be paid within 15 days after customs clearance. 

Payment can be made via internet banking, visiting the bank, or with a credit card through the custom’s agency web portal. South Korea’s customs e-clearance portal system, UNI-PASS, offers a one-stop service, including the ability to pay customs duties. 

Import into South Korea with a reliable shipping partner

With the rise of e-commerce activities in South Korea, many overseas companies are starting to see the potential in exporting their products to South Korea. Exporting your goods can be confusing due to unfamiliarity of a country’s local laws and customs duties. This is why an experienced international shipping and logistics partner is needed as they can help their customers get the necessary information to clear customs.

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