How to Calculate Duties and Taxes on Imports to South Korea

How to Calculate Duties and Taxes on Imports to South Korea involves a clear process based on the product's classification, value, and origin. Import duties and taxes are mandatory levies determined by the Harmonized System (HS) code and the customs valuation of the goods. For low-value shipments intended for personal use, the Korea Customs Service (KCS) provides a significant exemption: both import duty and the 10% Value Added Tax (VAT) are typically waived if the total value is USD 150 or less.

Customs duties in South Korea are calculated based on the specific tariff rate assigned to a product's classification under the Harmonized System (HS) code. The KCS uses the internationally recognized HS code structure, which is extended to a national tariff line for precise duty application. The standard tariff rate is often around 8%, but the actual rate can vary significantly, ranging from 0% under Free Trade Agreements (FTAs) to much higher rates for sensitive products like certain agricultural goods. To accurately calculate import tax in South Korea, importers must first determine the correct HS code and the applicable duty rate, which may be a preferential rate if a valid Certificate of Origin is provided under an FTA.

The core of how import duty is calculated in South Korea rests on the customs valuation method and the application of the Value Added Tax (VAT). South Korea assesses customs duties on a Cost, Insurance, and Freight (CIF) basis. This means the dutiable value includes the price of the goods, plus the cost of shipping (freight) and insurance to the port of entry in South Korea. This CIF value is the base upon which the ad valorem (percentage) duty rate is applied.

Once the customs duty is calculated, the 10% Value Added Tax (VAT) is then applied. Crucially, the VAT base is not just the CIF value, but the sum of the CIF value plus the calculated customs duty. This compounding effect is vital for importers estimating their total landed cost. Certain luxury items and durable consumer goods may also be subject to a Special Excise Tax, typically ranging from 10% to 20%, which further increases the total tax burden.

For businesses and individuals looking for an import tax calculator South Korea solution, the process requires three key inputs: the correct HS code, the CIF value, and the country of origin to check for FTA benefits. All formal import declarations are processed through the Korea Customs Service's electronic clearance system, UNI-PASS. This system facilitates the electronic submission of all required documents, including the commercial invoice, bill of lading, and Certificate of Origin, ensuring compliance and efficient clearance. The use of a Personal Customs Clearance Code is mandatory for e-commerce imports by individuals.

Understanding the de minimis rule is essential for low-value shipments. The USD 150 threshold for personal use is a significant advantage, as it provides a complete exemption from both duty and VAT, streamlining the clearance process for e-commerce and small parcel imports.

South Korea maintains several special import rules to facilitate trade. The most notable is the low-value shipment regime for personal imports, which grants a duty and tax exemption up to USD 150. Furthermore, under the Korea-US Free Trade Agreement (KORUS FTA), the de minimis threshold for US-origin goods is set higher at USD 200, providing an additional competitive advantage for American exporters. Businesses should also explore the benefits of South Korea's Free Trade Zones (FTZs), which allow for the storage, manufacturing, and re-export of goods with customs duties and taxes deferred or exempted until the goods enter the domestic market.