WORLD TRADE  
ORGANIZATION  TN/TF/W/55 
22 July 2005 
 
 (05-3315) 
Negotiating Group on Trade Facilitation Original:   English 
  
 
COMMUNICATION FROM KOREA 
  
 The following communication, dated 21 July 2005, from the Delegation of Korea, is being 
circulated in advance of the Negotiating Group meeting of 25-26 July. 
 
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POST-CLEARANCE AUDIT IN KOREA 
 
 I. INTRODUCTION 
1. In July 1996, the Korea Customs Service (KCS) introduced the Post-Clearance Audit
1 to deal 
with the rapid increase in the volume of imports and exports, and to expedite customs clearance 
procedures.  Under this new audit system, impor ted goods are immediately cleared after Customs 
Officials check basic import declaration documen ts (e.g., invoice and B/L) in conjunction with 
payment of duties and taxes by the importers.  The accuracy of the amount of duties and taxes paid is 
checked after the clearance.   
2. To effectively utilize this new system, KCS established the Audit Bureau, whose main 
responsibility is to prevent customs duty and tax evasi ons as well as to detect  false declarations by 
traders.  This brief introduction of Korea’s Post -Clearance Audit system will hopefully assist other 
Members in expediting their own customs clearance system. 
II. OVERVIEW OF THE POST-CLEARANCE AUDIT SYSTEM IN KOREA 
3. The assessment of customs duties and taxes can be divided into “Pre-Clearance Audit” and 
“Post-Clearance Audit” depending at which stage the audit is being carried out.  The Pre-Clearance 
Audit is performed by Customs Officials prior to  the clearance of import goods, whereas latter is 
conducted by Customs Officials after the clearance of import goods.  
4. The Post-Clearance Audit is categorized into  three groups: Case-by-Case Audit, Planned 
Audit, and Comprehensive Audit.        
- Case-by-Case Audit : Within 90 days after acceptance of import declaration, KCS examines, 
on case-by-case basis, correctness of payment of duties and taxes on selected import cases, which are electronically selected by KCS’ risk management method.  This is mainly a paper-
based audit. 
 - Planned Audit: KCS examines companies' import transaction patterns and items with a high 
risk of tax evasion.  This is either a paper-based or on-the-location audit.    
                                                     
 
1 See Revised Kyoto Convention General Annex Guidelines 7.2.1 for relevant information.  TN/TF/W/55 
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 - Comprehensive Audit: This is a self-assessment audit system conducted by the selected 
companies.  Import cases that Customs Officials have selected as “audit subjects” are self-examined by those selected companies.   
 
5. Under the Korean Customs law, in principle,  KCS utilizes Post-Clearance Audit.  However 
Pre-Clearance Audit is also exercised, among others, under the following exceptional cases: 
− Goods entitled to tariff reduc tion and instalment payment; 
− Goods with large price fluctuations, making th em inappropriate to audit after clearance; 
− Other goods imported by traders deemed untrustworthy declarants by KCS. 
 
III. THE PLANNED AUDIT SYSTEM AND THE COMPREHENSIVE AUDIT SYSTEM 
6. Below is a detailed description of the Planne d Audit System and the Comprehensive Audit 
System, which are the major compone nts of the Post-Clearance Audit. 
7. The Planned Audit System was introduced in 2000 as a complementary scheme to counter 
systematic weakness existing within the Case-by-C ase Audit that can be abused by untrustworthy 
companies dealing with tax-evasion-prone goods.  U nder this audit system, Customs Officials would 
perform audit on import cases that are selected em ploying strategically pla nned investigation with 
latest information on specific areas or items having a high risk of tax evasion.   
 Planned Audit procedure is outlined below: 
 
Select 
Company   Pre-notice to 
Company  Conduct 
Audit (Customs)   Finish 
Audit  
      
8. The Comprehensive Audit System, which was introduced in 2001, is an Importer's Self-
Assessment (ISA) based system.  Here, Self-Ass essment means an audit system where importers 
themselves check the appropriateness and correctness of their customs duties and taxes paid, and the 
legitimacy of customs clearance in complian ce with procedures by Customs regulations.  
9. Under the system, the selected company reports the outcome of the self-assessment to KCS.  
If an incorrect or unfaithful self-assessment report is made to KCS, KCS has authority to conduct a 
paper-based or on-the-location audit and can cancel  the self-assessment status of the selected 
company. 
 Comprehensive Audit procedure is outlined below: 
 
Apply & 
Select 
Company  Notify the “audit 
subject” to the   
Company  Self-Assessment  Report to 
Customs  
 
10. The introduction of ISA helps companies focus more on their own business and relieves them 
from the pressure over future unforeseeable audits by KCS.  The ISA also helps to improve the 
accuracy of duty payment declarations by compan ies since companies with a higher level of 
compliance receive preferential treatment under the name of Comprehensive Audit System while the 
main resources of KCS' Audit Teams focus on high-risk companies.   TN/TF/W/55 
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 IV. BENEFITS OF POST-CLEARANCE AUDIT 
11. 88% of approximately 4 million import declar ations submitted each year underwent Post-
Clearance Audit.  As a consequence, there was a sharp decline in the time taken for customs 
clearance, which has also contributed to cost savings for businesses as well as for the government. 
12. In addition, KCS’ Post Audit Teams detected  violations such as tax evasions or false 
declarations, bringing in about US$100 million in  additional revenues in 2001, and approximately 
US$480 million in 2004, which in return motivated im porters to more carefully and accurately declare 
their goods.  
13. Furthermore, based on KCS’ experience, it is not ed that the Post-Clearance Audit system is 
one of the effective means to facilitate clear ance procedure that does not require significant 
investment in IT infrastructure or additional manpower.  
V. CONCLUSION 
14. The most important purpose for introducing Po st-Clearance Audit in Korea is to accelerate 
customs clearance.  Combined with improvement  in risk management and capacity of customs 
officials, the Post-Clearance Audit can not only re duce the time and burdens associated with customs 
clearance, and provide friendlier environment for comp anies that faithfully pay their duties and taxes, 
but can also contribute to reductions in tariff a nd tax evasions.  In this context, KCS has been 
devoting a substantial amount of time and resources to training programmes for building capacity in 
developing countries, and Korea continues to commi t itself to technical assistance in this field. 
 
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