A Short, Easy-to-Read Guide

Looking to Import to South Korea? Here’s What You Need to Know.

The ins and outs of South Korea’s customs clearance process.

Over half a century ago, South Korea claimed a backwater economy that was closely compared to those of Indonesia and Kenya, both of which were floundering economically. Now, South Korea is ranked 12th in terms of GDP and is a highly sought-after trading partner. In fact, as of this year, South Korea is engaged in as many as 15 Free Trade Agreements (FTA), with 11 more being negotiated. Alongside the United States, China, Hong Kong, Mexico, and India, South Korea holds much of the attention of foreign companies looking to take their export market overseas.

The Fundamentals

Before familiarizing yourself with the basic stages of South Korea’s customs clearance procedures, it may be helpful to understand the fundamentals. Below are descriptions of the three most need-to-know characteristics of the South Korean importation process.

First, South Korean customs clearance is unique in that it is conducted under an Electronic Data Interchange (EDI) system. Designed to minimize difficulties and increase the efficiency of customs clearance, EDI allows importers to make an import declaration (a form that allows imported goods to be released immediately upon entering the country under the condition that there is no defect) via a computer, without the importer having to set foot in the country’s Customs House.

South Korean customs clearance also categorizes all imported goods according to the World Customs Organization’s harmonized system, an internationally standardized system of names and numbers to classify traded products. Used by more than 200 economies as well as most customs unions, the harmonized system — upon which South Korea bases its tariffs and collection of international trade statistics — allows for a relatively simple and efficient customs clearance process.

To the good fortune of prospective importers, South Korea is also engaged in a plethora of free trade agreements, meaning it imposes little to no tariffs, quotas, subsidies, or prohibitions on imports. Partnered with countries sporting the world’s largest economies, such as Australia, Canada, the United States, China, India, the European Union etc., South Korea’s low customs tariffs are indeed a boon to international commerce.

The Basic Process

Now let’s embark on a deep dive into the process, from declaring import, paying taxes, to requesting tariff refunds.

Import Declaration

The first thing the owner of the imported goods (or a customs broker) must do upon their arrival in South Korea is declare import. Declaring import entails submitting an import declaration (customs declaration for imports specifically) form, a commercial invoice, a packing list, a BL, a CO, and a certificate of inspection.

Next, the goods undergo an inspection and screening process, the costs of which are borne by the owner of the goods. The purpose of this process, which takes the form of either a cargo inspection or a component analysis by the customs laboratory depending on the good, is to ensure both the accuracy of the import declaration. If the Head of customs has found no errors upon import inspection and documentation check, it will accept the declaration. When the declaration is accepted, the importer is required to make tax payments, including customs duties, before the official certificate of import declaration is issued. The issuance of the certificate of import declaration allows for the release of the imported goods.

Tax Payment

Following customs clearance, the cargo owner must pay taxes incurred within 15 days of the date of the declaration acceptance. Customs duties vary according to the imported good as classified under the harmonized system mentioned above (if you’re interested in what the tariff rates are on specific U.S. goods refer to the online FTA Tariff Tool). The average tariff rate for South Korea hovered at 8% last year. In addition to customs duties, a value added tax (VAT) — a flat rate of 10% in 2020 — on all imported products must be paid based on customs value plus duties. For specific luxury items and durable consumer goods, a special excise tax of 10–20 percent, also applies.

Tariff Refunds

Expenses accrued from paying customs duties and taxes can be large, but they can pared down. If the cargo owner desires a tariff refund, he or she may file a request for a review. According to Article 106–2 of South Korea’s Customs Act, any request for review can be made within the passing of one year from the day on which reliant anti-dumping duties were imposed. If the refund request is accepted, importers may recover a fraction of the amount paid in tariffs.