발 간 등 록 번 호

For Foreigners Guide to Customs Declarations

For Foreigners Guide to Customs Declarations
September 2015

Government Complex Daejeon
189 Cheongsaro Seo-gu Daejeon, Korea
www.customs.go.kr

11-1220000-000376-14

For Foreigners

Guide to Customs Declarations
September 2015발 간 등 록 번 호
11-1220000-000376-14

For Foreigners

Guide to Customs Declarations
September 2015

Commissioner's Message
I would like to express my deep gratitude to all tax payers forfaithfully meeting their obligations to pay customs duties despite
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the importance of a correct customs declaration cannot be stressed
HQRXJKIn some cases, however, administrative procedures in customs
domain are so complex and hard to understand that even those trying and willing to make a
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have and to proactively provide them with informative they need, so as to ease the burden of
WKRVHVHHNLQJWRPDNHDFRUUHFWFXVWRPVGHFODUDWLRQIn an effort to meet the public demand, the Korea Customs Service has released a new Guide
to costoms declarations for duty-payers to help duty payers who have been trying to makea correct customs declaration but had difficulties with little information on the customs
SURFHGXUHV
7KLVGuide provides some new features: new sections on import and export declarations as
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business activities for exporting and importing companies while ensuring that the practice ofPDNLQJFRUUHFWFXVWRPVGHFODUDWLRQVWDNHVURRW7KDQN\RX
September 2015

Kim Nak-Hoe

Commissioner
Korea Customs Service

Introduction
About the Correct Customs Declaration
In principle, importers should voluntarily make customs declarations exactly based on actual
transactions. That is, importers have a responsibility and obligation to prepare required
documents and meet conditions for clearance, and declare the amounts of duties to be paid
to a customs. Both during and after clearance, customs examines whether the duty amounts
declared and paid are accurate, and whether the statutory requirements are being fulfilled byaudit and investigation programme.
When an error is found in the declared information, the importer may be subject to asurcharge or judicial action by customs. In this case, the importer would have to makea lump-sum payment of duties still not reflected in the sales cost or face administrative
sanctions, which may pose a serious difficulties to the importer's business.
To prevent such fiascos, customs should be trying to maintain partnership with importers, andprovide information on the customs declaration and counselling services. On the importers'part, they need to faithfully prepare what is required under the Customs Act and relevantlaws, and correctly make import declarations.
In order to help importers check and avoid errors from the moment they prepare forimportation, this year the Korea Customs Service publishes a guide book of Giuide to costoms
declarations which includes all the information that importers should know.
And what is unique about this guide is that it covers various fields of customs administrationand provides basic and comprehensive information on customs that might be useful for duty
payers.

About the Content of the Guide
This Guide is designed to introduce how customs administration works and how tomake a correct customs declaration to importers preparing themselves for customs audit
and investigations. But what is in the Guide has no legal binding, so please refer to theCustoms Act or other relevant laws for exact grasp of your customs issues. And for moredetails about the content of the Guide, please contact divisions under "for more information"in the Guide or "125 Korea Customs Service Call Center (☎ 125 without an area code)."ContentsⅠ/FDFTTJUZPG$PSSFDU$VTUPNT%FDMBSBUJPO$PSSFDU$VTUPNT%FDMBSBUJPOBTUIF#BTJTPG#VTJOFTT.BOBHFNFOU ⲸⲸⲸⲸⲸⲸ Ⅱ

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Ⅰ
Necessity of Correct
Customs Declaration

Correct Customs Declaration 01
as the Basis of Business Management

10

For Foreigners Guide to Customs Declarations

ⅠNecessity of Correct Customs Declaration

01

Correct Customs Declaration
as the Basics of Business Management

Prepare Yourself to Make a Correct Customs Declaration
Ÿ To import goods from abroad, you need to electronically make an importdeclaration to a customs. And an importer should submit required documents
necessary for importation to faithfully declare information of their value andthe amounts of customs duties of the goods.
Ÿ During the clearance stage, the head of the customs will check on whether
the import requirements necessary for public health, social safety andenvironmental protection are met. Even after the goods are cleared, the headof the customs will audit whether the duty amounts declared and paid are
UHDVRQDEOHDQGZKHWKHUVWDWXWRU\REOLJDWLRQVDUHEHLQJIXO¿OOHG
Ÿ An importer making errors in customs declaration is subject to compulsory
collection or judicial treatment, which may pose a great challenge to his/her business management as the importer would have to make a lump-sum
payment of duties or be under strict clearance management by the customs.
Ÿ The importer should prevent such violations by seeking help from experts,
including customs brokers, or making the most of the Korea Customs
Service's website or Customs Customer Service Center from the point of
preparing for importation.

Korea Customs Service11

Ⅰ. Necessity of Correct Customs Declaration

Ÿ The importer should share information on importation, such as transaction
value, foreign exchange rate and clearance requirements, with the related
division within his/her company and provide his/her customs broker, etc.,with accurate information on the import for the purpose of making an exact
customs declaration.
Ÿ To make a correct customs declaration gives the importer an opportunity
to enhance the credibility of his/her company to a new level, and deepena relationship based on trust and maintain partnership with the customs
authorities.

12

For Foreigners Guide to Customs Declarations

ImportStage

Preparation for a
Correct Declaration

Processing
PeriodPurchase Oder

Application for Adance Customs
Valuation Ruling (ACVA)

1 year, 1 month

Shipment
shipment

Application for AEO Certification

6 months

Sea/Air
Transportation

Application for Advance Origin Ruling

90 days

Arrival at Korea

Application for Advance HS Classification Ruling

30 days

ImportDeclaration
Declaration
AcceptanceTax Payment

Post-ClearanceManagement

Checking on Value Declaration, Import
Requirements, Marking of Origin, etc.

Tax Bill

15 days

Self-Correction of Errors

6 months

Self-Modification of Errors

2 years, 5 years

Claim to Customs for Rectification of Errors

2 months

Application for Customs Refund

2 years

Post-Clearance Management of Goods
subject to Duty Exemption

Designated period
by items

Korea Customs Service

13

ⅠNecessity of Correct Customs Declaration

Prepare for a Correct Customs Declaration and Trade at the Same
Time

Ⅱ
Guide to Import &Export Clearance

Import Clearance 01
Export Clearance 02
Clearance of Express Cargo, Postal Items 03
and Overseas Retail Goods
Clearance of Moving Goods 04
Duty Exemption, Installment Payment of 05
Duties, and Post-Clearance Management
Drawback 06
Bonded Factory 07
Marking of Origin 08
Intellectual Property Rights 09
Personal Clearance Unique Code No. 10ⅡGuide to Import & Export Clearance

01

Import Clearance

Import ClearanceŸ Import clearance refers to a series of procedures for the release of imported
goods. The importer declares the goods to be imported to the head of a
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of import declaration to the declarant to ensure that the imported goods arelegitimately declared. All these procedures are dealt in the KCS internetbased electronic clearance system, so called UNIPASS.

How and When to DeclareŸ+RZ : transmit the data to the KCS through UNIPASS*.
※ Use the Korea Customs Service's UNI-PASS (http://portal.customs.go.kr) for online applications
and declarations, including import declarations, and contact the UNI-PASS technical support
center (☎1544-1285) for more information on how to use the system.

Ÿ'HFODUDQW: a customs broker, a cargo owner or a goods owner
Ÿ:KHQ : in principle, the importer should declare import after the goods arriveat the port, however even import declaration is allowed before the goods
arrive at the port to ensure expedite clearance.
Required Documents① Basic document : an import declaration form (through the EDI, or Internet)② Additional documents : an invoice, a packing list, a B/L, a C/O, a certificate ofinspection (Quarantine), etc.

Korea Customs Service

17

Ⅱ. Guide to Import & Export Clearance

Inspection for Import Goods Methods and Disciplinary MeasuresŸ Selections subject to inspection : selected among import declarations, basedon risk management technique and cargo data analysis.

▲ Purpose of inspection: to ensure the accuracy of import declaration, including
description of goods, quantity, country of origin, and trademark
Ÿ Inspection costs : borne by the cargo ownerŸ Inspection methods : whole cargo inspection, partial cargo inspection, orcomponent analysis by customs laboratory
Ÿ Disciplinary measures against import declarations with errors : correction of
HUURUV¿QHVDQGLQGLFWPHQWIRUFULPLQDOSHQDOW\

Acceptance of Declaration
ŸThe head of a customs accepts an import declaration if it is found to have noerrors in the import inspection and documentary checking.
However, a correction may be requested, or the customs clearance may besuspended in the following cases:
Cases for Corrective Requests① When requested information is missing in the declaration form; and② When the check of the declaration form finds that a document to be attached is missing,or evidential documents needs to be supplemented.

18

For Foreigners Guide to Customs Declarations

① When the declaration form needs to be supplemented because important matters, such as
requested information or evidential documents, are missing;② When the declaration may fails to meet statutory requirements or secure public health, etc.;③ When pursuing a indictment or an investigation for customs fraud;④ When the quality, etc. are marked in the goods falsely or misleadingly pursuant to Article 230-2of the Customs Act; and⑤ When it takes a long time to meet the requirements asked by cusotms clearance check.

Ÿ After the declaration is accepted, the importer is required to pay taxes,
including customs duties.
* In principle, high compliance businesses can enjoy tax payment incentive of the exemption ofsubmitting customs bond security.

Ÿ$IWHUWKHDFFHSWDQFHRILPSRUWGHFODUDWLRQDFHUWL¿FDWHRILPSRUWGHFODUDWLRQ
is issued.
* The certificate of import declaration is equipped with various tools to prevent it from being
counterfeited or falsified: the customs special seal, a watermark (the logo of the Korea Customs
Service), issuance serial numbers, a 2-D bar code, and a "copy" mark.

Release of the Goods
Ÿ$IWHUWKHLPSRUWGHFODUDWLRQDFFHSWDQFHLVFRQ¿UPHGWKHJRRGVDUHUHOHDVHG
from the bonded warehouse/area.
* Goods urgently needed, such as raw materials for production, may be released before the acceptanceof the import declaration.

*RRGV6XEMHFWWR&XVWRPV&RQ¿UPDWLRQDERXW&OHDUDQFH
Requirements
Ÿ For goods sXEMHFW WR FXVWRPV FRQ¿UPDWLRQ DERXW FOHDUDQFH UHTXLUHPHQWV
the head of the customs checks whether they meet permission and approvalrequirements, and other conditions, for import goods under relevant laws
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Article 226 of the Customs Act).
Korea Customs Service

19

ⅡGuide to Import & Export Clearance

Cases for Clearance Suspension

Ⅱ. Guide to Import & Export Clearance

Relevant Laws and the Specific Goods(1) Drugs, and medicinal herbs, subject to thePharmaceutical Affairs Act:(a) Drugs and sanitary aids;(b) Drugs for self-treatment (limited to drugs for selftreatment or relief and other items designated by
the Minister of Food and Drug Safety in accordancewith paragraph 6 of Article 57 of the Regulations
on the Safety of Medicines, Pharmaceutical
Goods, etc.);(c) Medicinal herbs; and(d) Veterinary drugs.

Requirements•A standard customs clearance prediction
report by the Chairman of the Korea
Pharmaceutical Traders Association•A recommendation for exemption of importrequirements confirmation•An inspection certificate, a sample
collection certificate or an import approval(requirements confirmation statement by
the head of an institute in charge of quality
inspection of medicinal herbs designatedby the Minister of Food and Drug Safety or
the Director General of the National Instituteof Food and Drug Safety Evaluation•A standard customs clearance prediction
report by the Chairman of the Korea
Animal Health Products Association(2) Goods subject to the Act on the Control of Narcotics,
etc.

•An import approval (requirements
confirmation) statement by the Minister ofFood and Drug Safety(3) Foods, food additives, utensils, containers andpackaging for foods, and fishery products, subject to
the Food Sanitation Act•A confirmation certificate for importdeclaration of foods, etc. issued by thehead of a regional office for food and drug
safety(4) Plants, seeds, wood, gemstone, and processed
wood, subject to the Plant Protection Act•A quarantine certificate for import plants, averification statement for processed goods,
or a statement of exclusion of prohibited
goods, by the Commissioner of the Animal
and Plant Quarantine Agency(5) Goods subject to the Control of Livestock and Fish
Feed Act•A certificate of feed import declarationby the head of an institute in charge of
feed import declaration designated by
the Minister of Agriculture, Food andRural Affairs (the Chairman of the National
Agricultural Cooperative Federation, theChairman of the Korea Feed Association,and the Chairman of the Korea Feed
Ingredients Association)

20

For Foreigners Guide to Customs Declarations

Requirements(6) Goods subject to the Act on the Prevention ofContagious Animal Diseases•A quarantine certificate for animals by theCommissioner of the Animal and Plant
Quarantine Agency(7) Goods subject to the Livestock Products Sanitary
Control Act•A certificate of import declaration of livestock
products issued by the Minister of Food andDrug Safety (and the head of a regional office
for food and drug safety or an inspection
director)(8) Goods subject to the Electrical Appliances Safety
Control Act:(a) Electrical appliances subject to the safety certification
system;(b) Electrical appliances subject to the self-regulatory
safety confirmation system; and(c) Electrical appliances subject to the supplier's
declaration of conformity•A safety certificate by the head of a safety
certification agency•A self-regulatory safety confirmation
declaration statement by the head of an
institute for self-regulatory safety confirmation•The supplier's declaration of conformity by the
manufacturer and importer(9) Goods subject to the Act on the Transboundary
Movements of Hazardous Wastes and Their Disposal•A statement of confirmation of waste importpermission issued by the head of basin(regional) environmental office(10) Prohibited substances for import, and goods for TRQ
administration under international conventions, subject
to the Act on the Control, etc. of Manufacture of Specific
Substances for the Protection of the Ozone Layer•An import confirmation statement by the
President of the Korea Specialty Chemical
Industry Association(11) Goods subject to the Foreign Exchange Transactions
Act•A certificate of import declaration on payment
means, etc. issued by the head of customs
house•A declaration (change) of means of payment,
etc. issued by the governor of the Bank of Korea
or the president of a foreign exchange bank(12) Firearms, knives, swords and explosives for military use
among the goods subject to the Defense Acquisition
Program Act•An import permit issued by the Minister of the
Defense Acquisition Program Administration(13) Goods subject to the Toxic Chemicals Control Act:(a) Restricted substances;(b) Prohibited substances;(c) Talc; and(d) Poisonous substances•An import permit for restricted substances issued
by the head of basin (regional) environmental
office•An import permit for prohibited substances issued
by the head of basin (regional) environmental
office•A plan for manufacturing and selling imported
talc ore or a certificate verifying whether thesubstances constitute prohibited substances•An import permit for poisonous substances
issued by the Chairman of the Korea Chemical
Management Association

Korea Customs Service

21

ⅡGuide to Import & Export Clearance

Relevant Laws and the Specific Goods

Ⅱ. Guide to Import & Export Clearance

Relevant Laws and the Specific Goods

Requirements(14) Goods subject to the Asbestos Safety Management
Act•An import license for substances that may
contain asbestos issued by the head ofbasin (regional) environmental office(15) Goods subject to the Nuclear Safety Act:(a) Nuclear materials; and(b) Radioisotopes and radiation generating devices(16) Goods subject to the Control of Firearms, Knives,
Sword, Explosives, etc. Act:(a) Pistols, rifles, machine guns, gun powder andexplosives; and(b) Other guns and their parts, knives and swords, fireprocessed articles, gas sprayers, electronic shockmachines and crossbows(17) Goods subject to the Wildlife Protection andManagement Act (except for processed goods notclearly distinguishable):(a) Wild animals;(b) Wild animals and plants in danger of extinction(including species in danger of international
extinction); and(c) Wile animals and plants causing ecologicaldisturbance•A written import requirements verification
issued by the Nuclear Safety and Security
Commission•A written import requirements verification
issued by the Korea Radiation Safety
Foundation•An import permit from the Commissioner
General of the Korean National Police
Agency•An import permit from the Commissioner ofa regional policy agency•An import permit for wild animals from acity mayor, governor and the chief of theborough•An import permit for wild animals and plants
in danger of extinction (species in danger ofinternational extinction) issued by the headof basin (regional) environmental office•An import permit for wild animals and plants
causing ecological disturbance issued by
the head of basin (regional) environmental
office(18) Goods subject to the Inter-Korean Exchange andCooperation Act•A written approval for carry-in from the
Minister of Unification(19) goods subject to harmfulness inspections among
those subject to the Fertilizer Control Act•A certificate of heavy metal inspection
pass (exemption) from the President of the
National Academy of Agricultural Science(20) Drinking spring water and water purifiers among thegoods subject to the Drinking Water Managerment
Act•A certificate of import declaration issued bya mayor or governor

22

For Foreigners Guide to Customs Declarations

(21) Goods subject to the Seed Industry Act:(a) Food crop seeds;(b) Vegetable seeds;(c) Mushroom spawn;(d) Medicinal herb seeds; and(e) Soilage and feed crop seeds or green manure seeds

Requirements•A written import requirements verification by
the President of the Foundation of Agri. Tec.
Commercialization and Transfer•A written import requirements verification by
the President of the Korean Seed Association•A written import requirements verification by
the President of the Korean Society for Seed
Science and Industry orthe President of the
Korea Forest Service•A written import requirements verification by
the Chairman of the Korea Medicine Herbal
Association or the President of the Korea
Forest Service•A written import requirements verificationby the Chairman of the National Agricultural
Cooperative Federation(22) Goods subject to the Cosmetics Act•A standard customs clearance prediction
report by the Chairman of the Korea
Pharmaceutical Traders Association(23) goods subject to the Functional Health Foods Act•A certificate of import declaration of functional
health foods by the head of a regional officeof the Ministry of Food and Drug Safety(24) Goods subject to the Medical Devices Act:(a) Medical devices; and(b) Veterinary devices•A standard customs clearance prediction
report by the Chairman of the Korea Medical
Devices Industry Association or the Chairmanof the Korea Pharmaceutical Traders
Association•A standard customs clearance prediction
report by the Chairman of the Korea Animal
Health Products Association(25) Goods subject to the Safety, Management, etc. of
Human Tissue Act•A standard customs clearance prediction
report by the Chairman of the Korea
Pharmaceutical Traders Association(26) Industrial products subject to safety certification andindustrial products subject to safety self-assurance
among the goods subject to the Quality Control and
Safety Management of Industrial Products Act•A written confirmation that the products
are the same models, issued by safetycertifying institutions or testing and inspection
institutions for safety self-assurance•A verification of the sample of industrial goods
and a written confirmation of pre-clearanceby safety-certifying institutions or institutions
for safety self-assurance report

Korea Customs Service

23

ⅡGuide to Import & Export Clearance

Relevant Laws and the Specific Goods

Ⅱ. Guide to Import & Export Clearance

Relevant Laws and the Specific Goods

Requirements(27) Wiretapping equipment among the goods subject to theProtection of Communications Secrets Act•A permit for wiretapping equipment by the
Minister of Science, ICT and Future Planning(28) Goods subject to the Occupational Safety and HealthAct:(a) Goods containing asbestos;(b) Prohibited goods for manufacturing, etc.; and(c) Goods subject to safety certification•An import permit for prohibited goods for
manufacturing issued by the head of aregional employment and labor office ora written confirmation by the President of
the Korea Occupational Safety and HealthAgency•An import permit for prohibited goods for
manufacturing issued by the head of aregional employment and labor office•A written confirmation of safety certification
by a safety certifying institution or a written
confirmation of conformity based on the
results of documentary checking(29) Biological agents and toxins among the goods subject
to the Act on the Control of the Manufacture, Export andImport, etc. of Specific Chemicals and Chemical Agentsfor the Prohibition of Chemical and Biological Weapons•An import permit by the Minister of Trade,Industry and Energy(30) Goods subject to the Aquatic Life Disease Control Act•An import quarantine certificate by the
President of the National Fishery Products
Quality Management Service(31) Goods subject to the Wastes Control Act•A written confirmation of import declaration ofwastes issued by the head of basin (regional)
environmental office(32) Goods subject to the Radio Waves Act:(a) Goods subject to conformity assessments or materials
and equipment for which a conformity assessment
has been applied for; and(b) Materials and equipment eligible for exemption ofconformity assessments•A written confirmation of conformity
assessments or pre-clearance issued by the
Administrator of the National Radio Research
Agency•A written confirmation of conformity
assessment exemption issued by the
Administrator of the National Radio Research
Agency (except for cases where theexemption confirmation is ommited)(33) Highly dangerous pathogens among the goods subject
to the Infectious Disease Control and Prevention Act•A certificate of permission for carry-in andacquisition declaration of highly dangerous
pathogens issued by the Minister of Healthand Welfare(34) High-pressure gas cylinders among the goods subject
to the High-pressure Gas Safety Control Act•A written confirmation of application forcylinder inspection issued by the Korea Gas
Safety Corporation

24

For Foreigners Guide to Customs Declarations

ⅡGuide to Import & Export Clearance

Flow of Import Clearance Processing
Carry-in(Place of Storage)

Fulfillment ofRequirements(Cargo Owner)

Import Declaration(Declarant)

Declaration
Processing(Customs)•Goods from abroad are stored in the bonded area.

•The cargo owner is required to prepare for fulfillment of requirements,
a recommendation for TRQ, and a recommendation for tax reduction or
exemption before import declaration.
•Organizations with electronic network links may apply for andsubmit verification of requirements, a recommendation for TRQ, a
recommendation for abatement, online.

•A declarant fills out an import declaration form and transmits it to thecustoms clearance system.
•The customs clearance system automatically decides that it is subject tocargo inspection or inspection based on documents or inspection free,and notifies the importer that the declaration had been received.

•For the declaration subject to inspection, a physical inspection is done,
the declaration subject to Non-physical inspection based on documents.
•For the paperless (P/L) declaration, the customs checks importdeclaration through the unipass system.
•If no problem is found in the checking results, the declaration will beapproved and registered.

Submission of
Security or Advance
Payment•The cargo owner should provide the customs with security for tax
payment or pay taxes in advance to have the goods delivered.

Declaration
Acceptance•The declaration will be accepted automatically in the clearance system if
tax payment has been made, or security has been provided.

Goods Release•The cargo owner makes a request for goods release to the operator of
the bonded area (Storage place) to release the goods from the bonded
area.

Post-Clearance
Payment•The cargo owner is required to pay taxes within 15 days from the dateof declaration acceptance.

(Cargo Owner)

Korea Customs Service25

Ⅱ. Guide to Import & Export Clearance

02

Export Clearance

Providing Accurate Information in Making an Export Declaration.
Ÿ An exporter should make a correct customs declaration in accordance withlaws relating to trade and customs clearance, such as the Customs Act and theForeign Trade Act.
ŸAny false information in the export declaration or exportation without
export declaration may be subject to punishment on charges of false report,
smuggling, or price manipulation under the Customs Act.

Document Checking or Inspection may be Carried out in Export
Clearance.
Ÿ,QH[SRUWGHFODUDWLRQFDVHVWKHFXVWRPVFHUWL¿HVZKHWKHUWKHUHLVDQ\YLRODWLRQ
under the Customs Act or the Foreign Trade Act, and whether the export isillegal. When no risk is found, customs grants an expedited clearance.

Making an Export Declaration to the Head of the Customs with
Jurisdiction over the Place of Storage.
Ÿ The exporter should make an export declaration to the head of the customs
house with control over the place where the export goods are stored or may
be subject to punishment on a false report charge.

The stolen or still Registered Used-Cars and Lost or Stolen
Cellphones, etc. can not be Exproted.
Ÿ Before exporting used cars (including construction machinery), you have to
FDQFHOWKHLUUHJLVWUDWLRQDWYHKLFOHUHJLVWUDWLRQRI¿FHV

26

For Foreigners Guide to Customs Declarations

Association for ICT Promotion whether they are lost or stolen.
Ÿ For the above-mentioned goods, customs conducts examination andinspections to check whether the goods are lost or stolen, and whether theirregistration has been cancelled.

Making Shipment within 30 days from the Date of Export
Declaration Acceptance.
Ÿ Within 30 days from the date on which the export declaration is accepted, youneed to load the goods on the transport means abroad. However, the period
can be extended by up to a year.

Checking Whether the Goods are Subject to Export Control when
Making an Export Declaration.
Ÿ You need to get an approval from relevant institutions to export goods
subject to 『The Directive on the Designation of Goods Subject to Customs&RQ¿UPDWLRQRI&OHDUDQFH5HTXLUHPHQWVDQG0HWKRGVRIWKH&RQ¿UPDWLRQ
under Article 226 of the Customs Act』 or goods that are subject to the Export
Control under Article 19 of the Foreign Trade Act.

Korea Customs Service

27

ⅡGuide to Import & Export ClearanceŸ Before exporting used-cellphones, you have to check with the Korea

Ⅱ. Guide to Import & Export Clearance

Relevant Laws

Goods Concerned(1) Act on the Control of Narcotics, etc.

• Goods subject to the 「act on the control of narcotics, etc.」(2) Grain Management Act• Goods subject to the grain management act(3) Act on the Transboundary Movementsof Hazardous Wastes and Their
Movements• Goods subject to the 「act on the transboundary movementsof hazardous wastes and their movements」(4) Foreign Exchange Transactions Act• Goods subject to the foreign exchange transactions act(5) Control of Firearms, Knives, Swords,
Explosives, etc. Act• Pistols, rifles, machine guns, artillery, gunpowder andexplosives• Other guns and their parts, swords, fire-processed articles,
spray guns, electroshock weapons, and crossbows(6) Wildlife Protection and Management Act• Wild animals• Wild animals and plants in danger of extinction• Wild animals and plants subject to approval for taking outof Korea(7) Cultural Heritage Protection Act• Goods subject to the cultural Heritage protection act(8) Inter-Korean Exchange and Cooperation
Act• Goods subject to the Inter-korean exchange andcooperation act(9) Nuclear Safety Act• Nuclear materials• Radioisotopes and radiation generating devices(10) Act on the Prevention of Contagious
Animal Diseases• Goods subject to the act on the prevention of contagious
animal diseases(11) Wastes Control Act• Goods subject to the Wastes control act(12) Act on the Preservation, Management
and Use of Agro-fishery Bio-resources• Ginseng seeds

28

For Foreigners Guide to Customs Declarations

Ÿ Export refers to the process of making an export declaration to a customs,
getting the declaration accepted and loading exporting goods to a vessel(aircraft) abroad.
Ÿ Export ProcedureSigning an
ExportContract

L/C Arrival

Securing
ExportGoods

Transportingto theLoading Port

Loading

Departure

Loading Schedule
Finalized

Export Declaration (Within 30 days)

Ÿ Export Processing Procedure
Export Declaration

RM-based
Cargo Selection
Inspection of Goods(before Acceptance)
Low Risk
Inspection-freeDocument
Checking

Transportation

Inspection of Goods(before Loading)Loading ontoa Vessel/Aircraft

Korea Customs Service

29

ⅡGuide to Import & Export Clearance

Flow of Export Clearance Processing

Ⅱ. Guide to Import & Export Clearance

03

Clearance of Express Cargo, Postal Items
and Overseas Retail Goods

Clearance of Express CargoŸ In the past, most express cargo transported documents, catalogues, samples,or goods donated by relatives (trading partner companies) located in foreign
FRXQWULHV 5HFHQWO\ KRZHYHU WKH SURSRUWLRQ RI RYHUVHDV JRRGV GLUHFWO\bought through websites and tramsported in has been rapidly growing.
Ÿ For express cargo, X-ray inspections and random inspections are conductedto prevent any illegal import of dutiable goods or prohibited items from being
processed uncheckedly.
※ Declaring a false value of goods intentionally or importing a trade-prohibited item from being
processed uncheckedly may subject to punishment pursuant to the Customs Act.

Clearance Methods for Express CargoŸ/LVWHG,PSRUW'HFODUDWLRQ
/LVWHG ,PSRUW 'HFODUDWLRQ LV D FOHDUDQFH PHWKRG ZKLFK DOORZV JRRGV WR EH
cleared only with an invoice with the names, phone numbers and addresses of
the consigner and the consignee, and the description, price and weight of thegoods. In this case, the resident registration ID number (including personal
clearance unique code) of the owner is not necessary.
/LVWHG,PSRUW'HFODUDWLRQPD\DSSO\IRUJRRGVIRUSHUVRQDOXVHRUVDPSOHVWR
be used at businesses, priced at USD 100 (200 dollars for the U.S.) or lower ifthey are not one of the following goods excluded from listed declaration :30

For Foreigners Guide to Customs Declarations

ⅡGuide to Import & Export Clearance

Goods Excluded from Listed Import Declaration① Drugs, ② Medicinal herbs, ③ Wild animal products, ④ Goods subject to quarantine,such as agricultural, fishery and livestock products, ⑤ Health functional foods, ⑥ Goods
suspected of violating intellectual property rights, ⑦ Foods, alcoholic beverages andtobacco, ⑧ Cosmetics (limited to functional cosmetics, cosmetics containing placenta,
cosmetics containing steroids, and harmful cosmetics, including those with unidentified
elements), ⑨ Goods for which new content has been added to a B/L or an air waybill inaccordance with correction of M/F, ⑩ Goods whose description, standard, quantity, price,
etc. are inaccurately put in the customs list, ⑪ Goods subject to customs confirmation ofclearance requirements (firearms, swords, gun powder, narcotics, etc.) under Article 226of the Customs Act

Ÿ6LPSOL¿HG,PSRUW'HFODUDWLRQ
6LPSOL¿HG LPSRUW GHFODUDWLRQ PD\ DSSO\ IRU JRRGV SULFHG KLJKHU WKDQ 86'
100(200 dollars for the US) and no more than USD 2,000.
7KHKHDGRIWKHFXVWRPVZRXOGDOORZJRRGVWREHFOHDUHGZLWKRXWDLQVSHFWLRQ
if the declared details, such as the description, value, etc. of the goods, aredeemed accurate. However, for some goods, including prohibited goods for
LPSRUW VLPSOL¿HG LPSRUW GHFODUDWLRQ LV QRW DOORZHG ,Q WKLV FDVH DQ LPSRUWdeclaration should be made following the procedures of the ordinary importdeclaration.
Ÿ2UGLQDU\,PSRUW'HFODUDWLRQ
$QRUGLQDU\LPSRUWGHFODUDWLRQLVUHTXLUHGIRUJRRGVSULFHGDWKLJKHUWKDQ86'
2,000, and goods excluded from the listed import declaration and the simplifed
one.

Duty Exemption for Express CargoŸ Goods for the listed import declaration are tax-free. Among goods subject
to an import declaration, only those for personal use whose total customs
YDOXHLQFOXGLQJWKHYDOXHRIWKHJRRGVDQGIUHLJKWLVQRPRUHWKDQ.5:

Korea Customs Service31

Ⅱ. Guide to Import & Export Clearance

150,000 are exempted from customs duties and VAT. However, the tobacco
consumption tax and the individual consumption tax will still be charged.
:KHQWKHWRWDOFXVWRPVYDOXHVXUSDVVHV.5:FXVWRPVGXWLHVDQG
VAT will be charged for the total customs value.

Clearance Procedures for Postal Items
Ÿ*RRGV SULFHG DW QR PRUH WKDQ D FHUWDLQ YDOXH .5:  LQ FXVWRPV
value, including the value of goods and freight), such as goods donated topeople residing in Korea by their relatives in foreign countries, are exemptedfrom customs duties and tax.
Ÿ:KHQ D FXVWRPV RI¿FLDO H[HPSWV D SRVWDO LWHP IURP WD[ RQ WKH VSRW LW LV
WUDQVIHUUHGWRWKHSRVWRI¿FHLQWKHMXULVGLFWLRQRYHUWKHDGGUHVVHH)RUGXWLDEOH
postal items, the addressee should pay the duties to have them cleared, and
VRPHJRRGVFDQEHFOHDUHGRQO\ZKHQLPSRUWUHTXLUHPHQWV HJFHUWL¿FDWHRIquarantine) are met.

Import Declaration Methods for Postal Items
Ÿ6LPSOL¿HG,PSRUW'HFODUDWLRQ
6LPSOL¿HG LPSRUW GHFODUDWLRQ PD\ DSSO\ IRU SRVWDO LWHPV H[FHSW IRU WKRVH
subject to ordinary import declaration. Even when the consignee does notdeclare the import duties to customs, the amounts of customs duties or whether
it is duty-free are determined based on the details of the goods in the customs
declaration form.
:KHWKHULWLVGXW\IUHHRUGXWLDEOHLVGHFLGHGEDVHGRQWKHYDOXHTXDQWLW\DQG
the purposes for receiving goods. After determination of whether it is dutiable
or not, and the amounts of duties, the postal items are delivered from the post
RI¿FHWRWKHFRQVLJQHH7KHFRQVLJQHHFDQJHWWKHJRRGVDIWHUSD\LQJWKHGXWLHV32

For Foreigners Guide to Customs Declarations7KH IROORZLQJ JRRGV DUH VXEMHFW WR RUGLQDU\ LPSRUW GHFODUDWLRQ DQG WKHLU
import declaration would be made through a customs broker. For the importrestricted goods, evidential documents, such as a recommendation, permission
or approval, should be attached as prescribed by laws relevant to the items.
Goods Subject to Ordinary Import Declaration① Goods subject to customs confirmation of clearance requirements pursuant to Article
226 of the Customs Act② Goods subject to duty exemption (goods being able to be exempted from duties
according to the application for duty exemption)③ Raw materials for export and other goods for which a drawback is sought in accordancewith the Act on Special Cases concerning the drawback of Customs Duties, etc. Leviedon Raw Materials for Export④ Goods for commercial purpose⑤ Purchased goods whose value surpasses USD 1,000⑥ Gifts whose customs value is over 5 million won⑦ Goods for which the consignee applies for a ordinary import declaration

Korea Customs Service

33

ⅡGuide to Import & Export ClearanceŸ2UGLQDU\,PSRUW'HFODUDWLRQ

Ⅱ. Guide to Import & Export Clearance

04

Clearance of Moving Goods

First, Check Whether you are an Immigrant or Transient.
Ÿ,PPLJUDQW- A Korean citiznship (except for permanent residents in a foreign country) who
has set a residence in a foreign country and lived for no less than one year
(6 months when accompanied by his/her family)- A foreigner or a permanent Korean resident in a foreign country who has set
a residence in Korea and is going to live for no less than one year (6 months
when accompanied by his/her family)Ÿ7UDQVLHQW
- A Korean citizenship (except for permanent residents in a foreign country) who
has set a residence in a foreign country and stayed for no less than 3 months but
less than a year (no less than 3 months but less than 6 months when accompaniedwith his/her family)- A foreigner or a permanent Korean resident in a foreign country who has set
a residence in Korea and is going to stay for no less than 3 months but lessthan a year (no less than 3 months but less than 6 months when accompanied
by his/her family)

Basically, Moving Goods Imported by Immigrants are Duty-Free;
but Check whether there is any Mandatorily Dutiable Goods, andif any, Shall Make a Declaration for them.
Ÿ'XW\)UHH- Goods deemed for family use in general, considering their features, quantity
and usage, which were used for 3 months or longer before arrival at Korea,
and is deemed to be used continuously after arrival

34

For Foreigners Guide to Customs Declarations

- Vessels, aircrafts and cars (except for cars exported from Korea when atleast 3 months have passed since their registration with the former place ofresidence)- Jewelry, pearl, tortoiseshells, coral, amber, ivory, and goods made of them,
ZKHQWKHLUXQLWSULFHLV.5:PLOOLRQRUKLJKHU- Goods that have not been used for 3 months or more

Korea Customs Service

35

ⅡGuide to Import & Export ClearanceŸ0DQGDWRULO\'XWLDEOH,WHPVⅡ. Guide to Import & Export Clearance

Flow of Moving Goods Processing

Preparation ofDocuments•An import declaration form, moving-goods declaration, and a packing list
•A passport or resident ID card (when necessary), and a copy of the B/L
and the air waybill•A customs passenger declaration form or a confirmation statement forclearance details•A visa by status of stay, employment agreements, an alien registration
card, address declaration form, and other documents needed to verify
the period of stay•Car titles and registration cards, premium receipts, and other evidential
documents for the purchase and registration of cars
•For transient, lease contracts and other documents that prove their stay
•A letter of attorney (proxy) in case of customs procedure by proxy

Arrival andClearance
Reservation•First, ask a domestic agent of the vessel company (transportationcompany) whether moving goods have arrived and which customs to
make a declaration.
•Go on to KCS electronic clearance system (http://portal.customs.go.kr)
and reserve clearance based on information on shipping documents.
•Lastly, consult with the employee of the transportation company who will
carry the cargo to the destination to decide when to visit the customs.

ImportDeclaration•The immigrant (including his/her family) may directly declare the import andget help from customs brokers and other experts in customs duties.

Document
Checking or
Import Inspection•About 10 percent of moving goods may be selected as the target of
inspection.
•Document checking and inspections are conducted to find out if there isany mandatorily dutiable goods or goods inappropriate for moving goods.

Determination of
Whether the Goods are
Exempt from Duties•Exemption clearance applies to most moving goods. For cars and othermandatorily dutiable goods, a notice of assessment is issued.

Issuance of a tax
Bill, Tax Payment
and Release ofMoving Goods•A notice bill of tax payment is issued for dutiable goods.
•Where a notice of tax payment is issued, the import declaration would
be accepted after the tax is paid; and the import declaration for tax-free
goods would immediately be accepted and released from the storage.

36

For Foreigners Guide to Customs Declarations

ⅡGuide to Import & Export Clearance

Tips on Moving Goods Clearance• [Notice] transient may not get clearance for their cars as moving goods. Whendeclaring moving goods, they are required to submit an evidential document forstaying abroad (e.g. a lease contract).
• How to Reserve Clearance
1) Prepare an authorized ID (an authorized ID for online banking can also be used)
2) Access and log onto the Korea Customs Service electronic clearance system (http://
portal.customs.go.kr)
3) Apply for reservation
4) Check the results with the reservation number When moving goods arrive at moving
goods storage sites (Seoul, Incheon, Yongdang and Daejeon), please make a reservation
online by 2 PM on the day before the desired date of clearance. After submission of theapplication, the confirmed final date of clearance will be notified.

• Inspection of Moving Goods- In clearance of moving goods, they may be subject to whole inspection, partial inspection
or inspection exemption, depending on what the goods are and how faithfully the immigrant
declared information on the goods.
- A whole inspection would be conducted when there is a difference between the declared
information and the results of a partial inspection, when there is a change in residence,or in cases where the description, quantity and the purchase price of the goods are notclearly specified in the main item declaration form.
- In case of an intentional false report of the details of the goods, the immigrant may besubject to punishment in accordance with the Customs Act.

• Cautions on Clearance of Cars
- A car registration card, a car title, or other documents that can prove the registration,issued by the government of the exporting country should be submitted, or release will not
be granted to the car as moving goods.
- For cars that are admitted as moving goods, they should be listed on the import declaration
form; and it is not allowed to register them in the name of a person other than theconfirmed immigrant or a family member accompanying him/her.
- When more than two cars are carried in, only one of them is admitted as a moving item,
and the others are subject to ordinary import clearance.

Korea Customs Service37

Ⅱ. Guide to Import & Export Clearance

05

Duty Exemption, Installment Payment of
Duties, and Post-Clearance Management

Customs Duty Exemption is Designed to Support the Achievementof Government Policy Goals.
Ÿ In principle, customs duties are imposed on import goods. In some cases,
however, import goods are partially or fully exempted from customs duties
unconditionally or under certain conditions, when the importer or the import
goods meet certain requirements, to help realize particular policy goals.

Customs Duty Exemption may be Applied for Differently Dependingon the Uses and Condition of the Import Goods, Applicable Laws,
etc.
Ÿ Even for identical import goods, some may be exempted from duties whileothers may not depending on their uses and condition, the date of importdeclaration, and applicable laws. The importer thus should make an accurate
import declaration for the goods concerned and must apply for duty exemption
before the acceptance of declaration.

Customs Duty Exemption Application Shall be Applied for before
the Import Declaration is Accepted.
Ÿ To get customs duty exemption, the importer have to apply for duty exemption
to the head of a customs before the acceptance of the import declaration for
the goods concerned.
Ÿ The deadlines for the following special cases are as follows:

38

For Foreigners Guide to Customs Declarations

•Where duties are collected pursuant to Article 39(2) (Notice of Duty Imposition by the customs) of the
Customs Act⇒ Within 5 days from the date on which the payment bill is received•Where an application for duty exemption has not been submitted before the acceptance of the importdeclaration⇒ Within 15 days from the date on which the import declaration is accepted (limited to cases where thegoods concerned have not been released from the bonded area)

The Legal Grounds for Customs Duty Exemption and Exemption
Rates are as Follows:
Legal
GroundCustoms
Act

ArticleContent

Exemption
Rate

Article 88

Exemption from Customs Duty on Goods for Diplomats, etc.

100%

Article 89

Reduction or Exemption of Customs Duties for Goods of Uneven
Tariff Rates

100%

Article 90

Reduction or Exemption of Customs Duties for Goods Used for
Scientific Research

80% (50%)

Article 91

Exemption from Customs Duties for Goods for Religion, Charity andthe Disabled

100%

Article 92

Exemption from Customs Duties for Goods, etc. Used by Government

100%

Article 93

Exemption from Customs Duties, etc. for Particular Goods

100%

Article 94

Exemption from Customs Duties for Small-sum Goods, etc.

100%

Article 95

Reduction or Exemption of Customs Duties for Goods, etc. Used toPrevent Environmental Pollution

30%

Article 96

Exemption from Customs Duties for Travelers' Personal Effects,
Moving Goods, etc.

100%

Article 97

Exemption from Customs Duties for Re-exportation

100%

Article 98

Reduction or Exemption of Customs Duties for Re-exportation30~85%

Article 99

Exemption from Customs Duties for Re-importation

100%

Article100

Reduction due to Deterioration

Amount of
Value
Reduction

Article101

Reduction of Customs Duties on Overseas Trusted and Processed
Goods

Amount ofExport Value

Korea Customs Service

39

ⅡGuide to Import & Export Clearance

Deadlines for Applying for Customs Duty Exemption(Article 112(2) of the Decree of the Customs Act)

Ⅱ. Guide to Import & Export Clearance

Legal
GroundArticleContent

Exemption
Rate

Article118

Reduction of Customs Duties

50% (30%)

Article118-2

Reduction or Exemption of Customs Duties for Overseas KoreanEnterprises on Their Return to Korea

100% (50%)

Article121-3

Exemption from Customs Duties, etc.

100%

Article121-7

Duty Exemption for Gold Bullion Imported to Supply to the Gold
Exchange

100%

Article121-10Exemption from Customs Duties on Import Goods of Companies
Located in Jeju High-tech Science and Technology Complex

100%

Article121-11

Exemption from Customs Duties on Import Goods of Companies
Located in Jeju Investment Promotion Zone

100%

Article140

Duty Exemption for the machinery, the equipment, etc. for
Undersea Mineral Resources Development

100%

Others-

Article 8 of the Act on Special Cases of the Customs Act for the
Implementation of Free Trade Agreements
Article 46.1 of the Act on Designation and Management of Free
Trade Zones

Agreement-

SOFA, the international civil aviation agreement, other agreementswith other countries, etc.

Act onRestriction ofSpecific
Preferenlial
Tax
Treatment

You are Eligible for Iinstallment Payment of Customs Duties in the
Following Cases:
Ÿ Installment payment of customs duties for plant facilities and its machinery- You can get an approval for installment payment of customs duties where
SODQWIDFLOLWLHVDQGPDFKLQHU\EDVLFLQVWDOODWLRQVHWFQRWL¿HGE\WKH0LQLVWHU
of Strategy and Finance meet the following conditions (Article 107 of the
Customs Act and Article 59 of the Circular of the Customs Act):•When the goods shall not be parts;•When the goods shall not be exempted from customs duties;•When the amounts of customs duties of the goods shall be 5 million won or higher(1 million won or higher for SMEs); and•Whent the goods shall not be subject to provisions on flexible tariff(Articles 51 through 72 of the Customs Act).

40

For Foreigners Guide to Customs Declarations

manufacturers- You can get an approval for installment payment of customs duties where
goods imported for direct use by small and medium-sized manufacturers meetthe following conditions (Article 107 of the Customs Act and Article 59 of the
Circular of the Customs Act):• Where the business shall be an SME pursuant to Article 2 of the Framework Act
on Small and Medium Enterprises and a manufacturer under the Korean Standard
Industrial Classification; and• Where the goods shall fall under the category of goods of Chapters 84, 85 and 90
of HS Code and shall not be exempt from customs duties; the amounts of customs
duties of the year shall be 1 million won or higher; and there shall be difficulties indomestic manufacturing confirmed by the head of relevant ministry.

Ÿ Period of installment payment of customs duties- The period of installment payment of customs duties may be up to 5 years
depending on the amounts approved by customs. For more information on
goods and institutions eligible for installment payment of customs duties,
please refer to Annex 4 under Article 59(2) of the Circular of the Customs Act.
Ÿ An application for installment payment of customs duties should also be madebefore the acceptance of the import declaration (Article 126 of the Circular of
the Customs Act).

Goods Exempted From Duties are Subject to Customs
Surveillance for a Fixed Period of Time.
Ÿ:KHUHVSHFL¿FWDULIIIRUVSHFLDOXVHGXW\H[HPSWLRQRULQVWDOOPHQWSD\PHQW
of customs duties are applied, the goods shall be subject to follow-up
surveillance for a certain period of time to ensure policy effectiveness andsecure customs receivables.

Korea Customs Service

41

ⅡGuide to Import & Export Clearance

Ÿ Installment payment of customs duties for small and midium-sized

Ⅱ. Guide to Import & Export Clearance

Flow of Post-Clearanle Management
Import Declaration and Applicationfor Specific Tariff, Duty Exemption
or Installment Payment(Submission through the EDI-Based
Import Clearance System)

Automated Handover andAcceptance of Goods Subject
to Follow-up Management(Import Clearance Section. →Follow-up Management Section)

42•Submission of an application form during the period fromthe import declaration to the acceptance of the importdeclaration•Electronilal handover of goods subject to follow-up
management from a customs in the jurisdiction to acustoms in the place of installment, and correction andregistration after examination of whether the follow-up
management period is appropriate

Management of Goods
Subject to Follow-up
Management•Transfer of the authority to do follow-up management•Application for confirmation of whether the goods are
eligible for specific use tariff and confirmation•Application for an approval for use for other purposes(transfer or lease) and approval•Declaration of a change in the place of installment (use)and acceptance•Declaration of devastation and confirmation•Application for an abolition or export approval and approval

Selection of Goods Subject
to Follow-up Management•Electrically automated selection of the goods to inspect•Random selection by customs officalConfirmation against
Follow-up Management•Confirmation based on submitted documents•Confirmation at the spot

Registrationof the확인결과 등록
Confirmation Results•Find-outs from confirmations•Situation of compliance with laws

Finish to Follow-up
Management•Notification of follow-up management completion

For Foreigners Guide to Customs Declarations

Drawback

A Drawback Refers to Rreturn of Customs Duties paid During
Importation if Requirements under the Act on Special Cases
Concerning the Drawback of Customs Duties, etc. Levied on Raw
0DWHULDOVIRU([SRUWDUH6DWLV¿HGŸ Where imported raw materials are used for export, the exporter or producer
may apply for a drawback and get back the duties paid during the importation.
Ÿ To get a drawback, products manufactured or processed with raw materials
eligible for a drawback should be provided for export, etc. within 2 years
from the date of acceptance of the import declaration for the raw materials,
and an application for a drawback should be made within two years from thedate on which the goods were provided for export, etc.
Import of
Raw Materials

Manufacturing& Processing

Raw Materials for a
Drawback

2 years
Export Implementation
PeriodApplication fora Drawback

Export of Goods
2 years
Export of Raw Materials
Eligible for a Drawback

Drawback Application
PeriodThere are Two Types of Drawbacks: Individual Drawbacks which
5HTXLUHWKH3URRIRI7D[3DLGDQG6LPSOL¿HG)L[HG'UDZEDFNV
which do not so.
Individual Drawback

Simplified Fixed Drawback• A refund of customs duties paid for the quantityof the raw materials used for export goods• Required documents: a document verifying theexport, a document proving the tax paid, and acalculation bill of raw material requirements• A refund in accordance with the list of simplified
fixed drawback rates, which presents fixedamounts of drawbacks for every KRW 10,000
in export value• Required documents : a document verifying theexportKorea Customs Service

43

ⅡGuide to Import & Export Clearance

06

Ⅱ. Guide to Import & Export ClearanceŸ,QVLPSOL¿HG¿[HGGUDZEDFNV¿[HGDPRXQWVRIGUDZEDFNVDUHSDLGIRUHYHU\.5:LQH[SRUWYDOXHEDVHGRQWKHOLVWRIVLPSOL¿HG¿[HGGUDZEDFNUDWHV IRU RQO\ 60(V XQGHU$UWLFOH  RI WKH )UDPHZRUN$FW RQ 6PDOO DQG0HGLXP(QWHUSULVHVZKLFKPHHWDOORIWKHIROORZLQJFRQGLWLRQV
①0DQXIDFWXUHUV WKDW UHFHLYHG QR PRUH WKDQ .5:  PLOOLRQ LQ DQQXDOGUDZEDFNV LQFOXGLQJWKHGUDZEDFNVUHFHLYHGE\VXEPLWWLQJDFHUWL¿FDWHRI
tax payment for raw materials) during the year in which an application for
drawback is made and the two years just before the year; and②%XVLQHVVHVWKDWUHFHLYHGQRPRUHWKDQ.5:PLOOLRQLQWKHGUDZEDFN
of the year in which an application for a drawback (including the drawback
UHFHLYHGE\VXEPLWWLQJDFHUWL¿FDWHRIWD[SD\PHQWIRUUDZPDWHULDOV LV
made.
Ÿ,Q VLPSOL¿HG ¿[HG GUDZEDFNV \RX PD\ DSSO\ IRU D GUDZEDFN ZLWKRXWD FHUWL¿FDWH RI WD[ SD\PHQW IRU UDZ PDWHULDOV GXULQJ LPSRUWDWLRQ DQG D
calculation bill of raw materia1 requirements.
Ÿ An individual drawback refers to a refund made based on the amounts ofcustoms duties paid for the import of raw materials used for manufacturingexported goods.
To get an individual drawback, you need to calculate the amounts of every
type of raw materials used for manufacturing exported goods ("raw material
requirements") to calculate the amounts of customs duties paid for each of
the raw materials. As a result, individual drawbacks are more accurate in
the amounts of drawbacks but more complex in calculating the raw material
UHTXLUHPHQWVWKDQVLPSOL¿HG¿[HGGUDZEDFNV44

For Foreigners Guide to Customs Declarations

Import of raw
Materials•You should have the evidence that you have paid customs duties for raw
materials imported from abroad.
•Where the raw materials were purchased in Korea, you need to prove theamounts of customs duties paid with a certificate of tax payment for raw
materials, a partial certificate of import declaration, a average certificate oftax amount, etc.

Manufacturing
Export Goods•To be eligible, the imported raw materials should be integrated with theexported goods physically or chemically.
•Goods consumed in the process of manufacturing the exported goods andtheir packings also constitute raw materials eligible for a drawback.
•To be eligible, you should produce goods with the imported raw materials
and export them within 2 years from the date on which the raw materials
were imported.

Calculation of
Raw Material
Requirements•You may choose one of the 6 methods prescribed in the 「Directive on
raw material requirements Calculation, Management and Examination」
to calculate the raw material requirements of raw materials used for
manufacturing the exported goods.

Application fora Drawback•Apply for a drawback within 2 years from the date on which the raw
materials were provided for export, etc.

Payment of theDrawback•After confirmation of information on the application form and submitted
documents, the drawback you applied for is remitted to your bank account.

Post-Drawback
Audit•Examination on the accuracy of the drawback amounts is conducted after
payment of the drawback except for those who have been punished for an
illegal drawback or concemed to be excessively refunded.

For More Information▶ Korea Customs Service Taxation Source Audit Division 042-481-7873

Korea Customs Service

45

ⅡGuide to Import & Export Clearance

Flow of Individual Drawback Processing:Ⅱ. Guide to Import & Export Clearance

07

Bonded Factory

What is a Bonded Factory?
Ÿ A bonded factory is a licensed bonded area where manufacturing, processing
and other similar jobs are done with foreign goods, or foreign and domestic
goods as raw materials.
Ÿ Bonded factories allow you to use foreign raw materials with taxation on
KROGZKLFKKHOSVWRHDVH¿QDQFLDOEXUGHQDQGERRVWSURFHVVLQJWUDGH

Flow of Customs Processing about the Bonded FactoryŸOverview
Foreign Goods
Raw Materials

Export andReturnBonded Factory

Domestic Goods
Raw Materials
Other Raw
Materials from
Bonded Factory
Machines andExpendable
Items used at theBonded Factory

46

Carry-in

Declaration
for useManufacturing
andProcessing(Tax Payment on Hold)▶ After carrying in machines, instruments, expendable
items, etc., you may use them after import clearance.

For Foreigners Guide to Customs Declarations

Import[Domestic use]
Raw Materials
Provided for other
Bonded Factories

ⅡGuide to Import & Export ClearanceŸ Goods control processes by the type of raw materials:
Foreign raw
Materials

BondedTransportation

Declaration ofCarry-in

Declaration of the use

RecordKeeping

Goods Carried in fromother Bonded Factories

BondedTransportation

Declaration ofCarry-in-

RecordKeeping

Domestic Goods Eligible
for Drawbacks-

Confirmation ofCarry-in (Form 2-3)-

RecordKeeping

Domestic Goods Ineligible
for Drawbacks

-

-

-

RecordKeeping(Import Declaration)

Ÿ Release procedures from the bonded factory:
Goods for release

Products

Raw Remained
Materials other
items

ExportExportDeclaration

Shipment

Release toother Countries

Release to other
Bonded Factories

Release
Declaration

BondedTransportation

Carry-out other
Bonded Factories

ImportImportDeclaration

Taxation

Carry-out
Korea

Scrap

Customs
Approval

Distruction,
discard

Ÿ Work process outside the bonded factory:- You may carry out a part of bonded processing outside the bonded factory if
it is necessary for developing domestic processing industy for foreign traders.
·Application for procesing
outside the Bonded
Factory·Customs Permission·Completion Report

Customs
Surveillance andSupervision

BondedFactory·Release of Raw Materials·Carry-in of Processed
Goods[Including Remained
other Itans]

Workshop Outside
Bonded Factories

Korea Customs Service47

Ⅱ. Guide to Import & Export ClearanceŸ Temporary bonded processing at other bonded factories:- You may carry out a part of bonded processing at another bonded factory
other than the initial one.

Customs House with Jurisdiction
over a Bonded Factory

Customs with Jurisdiction over
Another Bonded Factory

Application and Permission/
Report of Completion

Declaration of Direct Carry-in of Raw Materials
Declaration of Direct use of Raw Materials

Carry-in and Release of Goods

First Bonded
Factory48[Bonded Transportation]

For Foreigners Guide to Customs Declarations

Another
Bonded Factory

ⅡGuide to Import & Export Clearance

08

Marking of Origin

The Country of Origin means the Nationality of the Goods.
Ÿ The country of origin refers to the country where the goods are extracted,
produced, manufactured, or processed, and is different from a country ofcapital investment, a country of design performance, a country providing
technology, or a country owning the trademark.
Ÿ In general, the country of origin is a country with a political entity, but in some cases
an area which is not an independent country* may also be a country of origin.
* Special zones with an independent customs territory or autonomy, such as Hong Kong,
Macao, Guam, and Samoa Islands, may be a country of origin. However, regional or
economic alliances, such as the EU, NAFTA, and ASEAN, are not recognized as countriesof origin (Article 8 of the directive on the Operation of the Country of Origin System).

Check Whether the Attachment of the Country of Origin is
Required and How to mark the country of Origin.
Ÿ Goods subject to description of the country of origin and the marking methods
are as follows:
Goods Subject to Description of
the Country of Origin Labelling•Import goods listed on the
Annex 8 of the Decree of foreign
trade management•About 55 percent of all import
items - 674 out of 1,224 items in
the four-digit HS Codes(501 industrial products, and 173
agricultural and fishery products)

Marking Methods•Choose one of the following ways to mark the country of origin on
the goods in Korean (including with Chinese characters) or English:- "Country of origin (in Korean, 원산지): country name (in Korean)“ ;"country name (in Korean) produced (in Chinese character, 産)”;“Made in country name”; “Product of country name”;“Made by the name, address and nationality of the manufacturer”;
or “Country of Origin : country name”.
•Put it in a legible font for end buyers in a place which can be easily
located in the process of normal purchase; and•Use printing, stencil, branding, molding, etching, stitching and othersimilar methods.
<See Tips on the Right Way of Marking the Country of Origin in page 51>

Korea Customs Service49

Ⅱ. Guide to Import & Export ClearanceŸ
substantial transformation criteria.
Wholly Obtained Criteria

Substantial Transformation Criteria•Where the import goods are wholly extracted
or produced in one country;•Where at least two countries are involved in the
production, manufacturing and processing of theimport goods;•The country where "substantial transformation"
took place is recognized as the country of origin- The tariff shift rule (HS 6-digit) applies inprinciple, but the value contents criterion or
the processing operation criterion applies forsome exceptional items.
- The country where only simple processing is
performed is not recognized as the country oforigin.
* Article 85 and Annex 9 of the decree on
foreign trade management•Where the country of production is thecountry of origin:- Agricultural products, mineral products orfish catch in most cases

Violations in Marking the Country of Origin and Sanctions
Against them are as Follows:Ÿ Violations in marking the country of origin (in clearance and distribution)• False descriptions of country of origin or descriptions that can mislead end buyers;• Damaging or changing descriptions of country of origin;• Failing to mark the country of origin; and• Any violation of the methods of description of country of origin under the Foreign
Trade Act.

50

For Foreigners Guide to Customs Declarations

ⅡGuide to Import & Export ClearanceŸ Sanctions against violations in marking the country of origin
PhasesSanctions

Description

Clearance

Restriction on
Clearance
and Corrective
Order▶ In case of one of the above-mentioned types of violations in marking
the country of origin* For a minor violation, clearance is granted after correction is made.

Order forDistribution Carry-in to theBonded Area

▶ Where no longer than 3 months have passed from the date ofacceptance of the import declaration and,- Constitutes one of the above-mentioned types of violations in marking
the country of origin; or- Has a description of country of origin different from the one at the timeof acceptance of the import declaration* Release is permitted after corrective measures are taken.

Clearance
andDistribution

Surcharge(Up to KRW
300 million)

Types of
Violation

1st Violation

Falsification,
damage andchangein marking(Clearance) Corrective Order(Distribution)- Unsold goods:Corrective Order- Sold goods:Surcharge(A 30% reduction)

Misleading
marking
Violation of
the marking
methods
Non-marking

Corrective order

2nd
Violation

Corrective
order,
surcharge

3rd Violation

Corrective order,surcharge(A 50% increase)

Corrective order,surcharge(A 30% increase)

Charge andProsecution
Clearance (no more thanand5 years in
Prison andDistribution
KRW 100
million in Fines)▶ Where there is objective evidential data for a falsified description ofcountry of origin;▶ Where the customs house head's corrective orders are not followed;
and▶ Where a certificate of origin or relevant document is completed or
prepared, falsely or in any other illegal manners.

Fines(up to KRW
10 million)▶ In case of rejection, intervention or evasion for an inspection bycustoms to description of country of origin

Distribution※ At the distribution stage, inspections of violations in description of country of origin are conductedby the mayors of cities and the governors of provinces, the National Agricultural Products Quality
Management Service, and the National Fishery Products Quality Management Service as well as
the Korea Customs Service.

Korea Customs Service

51

Ⅱ. Guide to Import & Export Clearance

Tips on the Right Way of Marking the Country of Origin• See Annex 8 of the Decree on Foreign Trade Management for goods designated as the
subjets of marking the origin by the Ministry of Trade, Industry and Energy.
• Mark the country of origin on the goods in Korean (including with Chinese characters) or
English in any one of the following manners:- “Country of origin (in Korean, 원산지) : country name (in Korean)” or “country name (in Korean)
produced (in Chinese, 産)”;- “Made in country name” or “Product of country name”;- “Made by the name, address and nationality of the manufacturer”;- “Country of Origin : country name”; and- In other ways deemed appropriate by the Commissioner of the Korea Customs Service inthe practice of international trade if the country of origin equals to the country of origin under
Article 61 (Criteria of Origin Determination) of the Decree of the Foreign Trade Act.

• Mark the country of origin on the import goods as follows:- Mark it in a legible font for end buyers;- Mark it in a place which can be easily located by end buyers in the process of normalpurchase;- Make sure it is indelible and does not fall out easily;- Use printing, stencil, branding, molding, etching, stitching and other similar methods, during
the manufacturing process (if it is impossible, stamping, labelling, putting a sticker and tagging
are allowed exceptionally); and- Keep in mind that a country of origin (or the country of manufacturing) marked in Korean
pursuant to other laws (Act on Quality Control and Safety Management of Industrial Products,
Food Sanitation Act, etc.) is deemed appropriate only when it is equal to the country of origin
under the Decree of the Foreign Trade Act.

• The criteria of origin determination include wholly obtained criteria, substantial
transformation criteria and whether only simple processing took place.
- See Article 61 of the Decree of the Foreign Trade Act, and Articles 85 and 86 of the Decree
on Foreign Trade Management.

• The Korea Customs Service, city governors and province governors, the National
Agricultural Products Quality Management Service, and the National Fishery Products
Quality Management Service conduct inspections of violation in marking the of countryof origin.

For More Information▶ Korea Customs Service, the Passenger and Simplified Clearance Division 042481-7644, and the Planning and Audit Division 042-481-7897

52

For Foreigners Guide to Customs Declarations

Intellectual Property Rights

Register Your Intellectual Property Rights (IPR) to the Korea Customs
Service in Advance to Protect them from IPR Infringement by others.
Ÿ Pursuant to Article 235 of the Customs Act, an importer or exporter canprotect his/her intellectual property rights (trademark rights, copy rights,
variety protection rights, geographical indications rights, patent rights anddesign rights) by registering them to a customs in advance during the inportand export clearance stage.

Trade-Related IPR Protection Association (TIPA) is Entrusted inenrolling and managing IPR Registration Pursuant to the Customs
Act.
Ÿ6LQFH$SULODOO,35UHJLVWUDWLRQVKDYHEHHQSURFHVVHGE\7,3$<RXFDQ
PDNH,35UHJLVWUDWLRQRQOLQH WKH7,3$LQWHOOHFWXDOSURSHUW\ULJKWVUHJLVWUDWLRQmanagement system (http://ipr.e-tipa.org/)) or by visiting (mailing) TIPA.

Flow of IPR Registration
Submission ofa Registration
form•Submit registration form respectively for each intellectual property right (IPR)
pursuant to Article 10 of the Directive on Import and Export Clearance forProtection of Intellectual Property Rights- A registration form, the original register card (certificate of registration), dataon infringement, etc.

Confirmation of theRegistration Formand Computor Input•The contents of registration forms are put into the IPR information systemafter whether the declared information is accurate, whether to permit aparallel import, etc. are decided.

Notificationof the Results•The 「letter of notification of the results of the IPR declaration」 is issued.
- A submitted declaration will be processed within 4 days from the date ofsubmission.

※ Through the Korea Customs Service electronic clearance system, IPR information declared and registeredare shared with local customs houses, facilitating a swift crackdown on IPR infringement at clearance stage.

Korea Customs Service

53

ⅡGuide to Import & Export Clearance09

Ⅱ. Guide to Import & Export Clearance

After an IPR Registration, the IPR is Protected at Clearance
Stage as Follows:
Flow of Withholding Clearance for Goods Infringing IPR
Declaration of an
Import or Export•Selecting out Goods suspected of infringement on IPR
detected

Notification of Goods Suspectedof IPR Infringement•Notifying to IPR holders, and importers or exporters

Within 7 days (within 5 days for perishable goods)

Request for Withholding
Clearance•(IPR holder) Submitting a request for withholding
clearance provicing a surety (100/120 of the customs
value, and 60/100 of the customs value for SMEs)

Withholding Clearance•Notifying to the person who requested for withholding
clearance, and the importer or exporter(Where the IPR holder has notified the customs of a lawsuit filed, or a temporary disposition
decided issued, within 10 days from the date of the notification of withholding clearance)

Extension ofWithholding Period•Notifying in writing to the person who requested
withholding clearance, and the importer or exporter

Request for Permissionof Clearance•(Declarant of export or import) Submitting a request
for acceptance of an export or import declaration, etc.,
supplying a surety (100/120 of the customs value,and 60/100 of the customs value for SMEs)

Confirmation of Whether toPermit Clearance•Deciding within 7 days from the date on which arequest for clearance is madeAcceptance of the Export
or Import Declaration

Return of the Surety54

For Foreigners Guide to Customs Declarations

ⅡGuide to Import & Export Clearance

Tips for Effective IPR Protection•Use the IPIMS to check IPR infringement.
- Protecting intellectual property rights (IPR) will be easier if you use the TIPA IPR registration
management system to declare your IPR to a customs and then register it with the Korea
Customs Service intellectual property information management system (IPIMS).
※ IPIMS (Intellectual Property Information Management System)- The IPIMS is a system that allows customs and IPR holders to share information in real timeon the import of goods at risk of infringing on their IPR, appraisal results, etc.
- Customs notifies the IPIMS user of the import of goods suspicious of infringement on his/her IPR by SMS and e-mail; the IPR holder registers appraisal results with the IPIMS; andthen customs may swiftly take border measures.

Import of Goods
Suspected of Infringement
on Trademark Rights② Notification andChecking① Input

Customs

IPIMS④ Checking the Input Results

Trademark
Rights Holder③ Input of Results

Determinationof Whether
to Permit
Clearance

Withholding
Clearance

Permissionof Clearance•Apply for the use of the IPIMS- Korea Customs Service electronic clearance system (portal.customs.go.kr)> processing>
IPIMS

For More Information▶ Korea Customs Service, the Passenger and Simplified Clearance Division042-481-7638

Korea Customs Service55

Ⅱ. Guide to Import & Export Clearance

10

Personal Clearance Unique Code No.

What is a Personal Clearance Unique Code No.?
Ÿ The Korea Customs Service has the personal clearance unique code system,
allowing you to use your personal clearance unique code instead of yourresident registration number when declaring the import of personal goods, toprevent the leak of personal private information.
Ÿ$SHUVRQDOFOHDUDQFHFRGHLV\RXUSHUVRQDOLGHQWL¿FDWLRQQXPEHU<RXFDQJHW
one immediately after making an application on the Korea Customs Service
personal clearance code issuance site (https://p.customs.go.kr) and use it
continuously.

How to get a Personal Clearance Unique Code No.,Ÿ You can get your personal clearance code on the Korea Customs Service
LVVXDQFHVLWHDIWHULGHQWLI\LQJ\RXUVHOIZLWKDQDXWKHQWLFDWHGFHUWL¿FDWH IRUbanks or general purposes) without having to become a member of the site.
Ÿ When it is impossible to get the personal clearance code online for not using
DQ DXWKHQWLFDWHG FHUWL¿FDWH V\VWHP IDLOXUH HWF \RX FDQ JHW RQH IURP WKH&XVWRPVRI¿FLDOLQFKDUJHDWDFXVWRPVE\GLUHFWO\YLVLWLQJWKHFXVWRPVZKHUH
is located near your current staying place.

56

For Foreigners Guide to Customs Declarations

Section in Charge

Phone No.

Seoul Main Customs

Customs Operation Section

02-510-1063

Anyang Customs

Tax Payment Audit Section

031-596-2015

Sokcho Customs

ⅡGuide to Import & Export Clearance

Customs

033-820-2123

Daejeon Customs

Tax Payment Audit Section

042-717-2262

Cheonan Customs

Tax Payment Audit Section

041-640-2326

Cheongju Customs

Tax Payment Audit Section

043-717-5742

Guro Customs

02-2107-2516

Seongnam Customs

031-697-2580

Uijeongbu Customs

031-540-2614

Donghae Customs

033-539-2672

Daesan Customs

041-419-2718

Chungju Customs

043-720-2004

Paju Customs

031-934-2807

Wonju Customs

033-811-2854

Goseong Customs

033-680-5123

Incheon Airport Customs

Tax Payment Audit Section

032-722-4372

Gimpo Customs

Clearance Facilitation Section

02-6930-4999

Incheon Airport International Postal
Customs

Post Inspection Section

032-720-7445

Busan Main Customs

Customs Operation Section

051-620-6054

Gimhae Customs

Clearance Facilitation Section

051-899-7219

Geoje Customs

Clearance Facilitation Section

055-639-7515

Masan Customs

Clearance Facilitation Section

055-981-7011

Yangsan Customs

Tax Payment Audit Section

055-783-7301

Korea Customs Service

57

Ⅱ. Guide to Import & Export Clearance

Customs
Changwon Customs

Section in Charge

Phone No.

Tax Payment Audit Section

055-210-7635

Yongdang Customs

051-793-7132

Sasang Customs

051-793-7722

Sacheon Customs

055-830-7804

Busan Postal Customs

055-783-7411

Jinju Customs

055-750-7902

Tongyeong Customs

055-733-8021

Incheon Main Customs

Customs Operation Section

032-452-3032

Suwon Customs

Tax Payment Audit Section

031-547-3692

Ansan Customs

Tax Payment Audit Section

031-8085-3831

Bupyeong Customs

032-509-3716

Daegu Main Customs

Customs Operation Section

053-230-5116

Gumi Customs

Tax Payment Audit Section

054-469-5632

Pohang Customs

Clearance Facilitation Section

054-720-5715

Ulsan Customs

Clearance Facilitation Section

052-278-2253

Gwangju Main Customs

Customs Operation Section

062-975-8026

Gwangyang Customs

Clearance Facilitation Section

061-797-8413

Mokpo Customs

Clearance Facilitation Section

061-460-8515

Yeosu Customs

Clearance Facilitation Section

061-660-8632

Gunsan Customs

Clearance Facilitation Section

063-730-8713

Jeju Customs

Clearance Facilitation Section

064-797-8814

Iksan Customs

Clearance Facilitation Section

063-720-8906

Jeonju Customs
Pyeongtaek Customs

58063-630-8950
Clearance Facilitation Section

For Foreigners Guide to Customs Declarations

031-8054-7026

Ⅲ
Guide to Taking
Advantage of FTAs

Advance Origin Ruling 01,VVXDQFHRIWKH&HUWL¿FDWHRI2ULJLQ 02
Approved Exporter 03
2ULJLQ9HUL¿FDWLRQ 04
Criteria for Country of Origin Determination 05
Taking Full Advantage of FTAs 06
Rights of Duty Payers 07
LQ)7$2ULJLQ9HUL¿FDWLRQ

Korea Customs Service

59

Advance Origin Ruling

Process of Advance Origin RulingStage

DetailsWho

Key Information

Application

Application foradvance origin ruling

Applicant• Submit documents (an application form andrequired documents)• Fees: KRW 30,000

Check if Required
Document is Missing

Section Receiving
the Application• Check the application form and otherdocuments

Revision andRejection

Section Receiving
the Application• Revision : for 5 days or more
• Reject the application if there is a reason forrejection

Acceptance of the
Application

Section in Charge• Keep the application registry and check
whether the fees have been paid

Examination Prior to
Review

Sectionin Charge• Examine within 90 days

Modification
Rejection

Sectionin Charge• Modification : 5 days of more
• Reject the application if there is a reason forrejection

Review andConsiderationby the Division in
chargeSectionin Charge• If there are at least 2 divisions in charge, notify
and announce integrated results that include
all of the results from the divisions in charge

Sectionin Charge• Till 7 days before the deadline of processing

Sectionin Charge• Submit to the committee : when the division in
charge finds it difficult to decide(e.g., country of origin verification committee:)

Submission

DecisiontoConduct
examination

Submission to theCommittee
for Determination

Korea Customs Service

61

ⅢGuide to Taking Advantage of FTAs

01

Ⅲ. Guide to Taking Advantage of FTAs

Stage

Notification andAnnouncement

Post
Management

DetailsWho

Key Information

Issuance of
the Advance RulingStatement

Sectionin Charge• Notify the results to the applicant• Processing period : within 90 days from thedate of submission

Announcement of
the Results Online

Sectionin Charge• Announce the results with the advance ruling
announcement system for country of origin,etc. (FTA portal)

Applicant• When the applicant disagrees with the results• Protest period : 30 days from the date of thenotification

Sectionin Charge• Processing period : 30 days within the dateof submission• Correction request : within 20 days

Applicant andthe Sectionin Charge• Change or cancel information submitted for theadvance origin ruling to reflect any change infacts or circumstances

Protest&AppealAdvance RulingResult Change

62

For Foreigners Guide to Customs Declarations

02,VVXDQFHRIWKH&HUWL¿FDWHRI2ULJLQŸ A C/O can be issued through institutional or self-issuance: customs or the
Korea Chamber of Commerce and Industry (KCCI) may issue a C/O after
FRQ¿UPLQJZKHWKHUWKHJRRGVVDWLV¿HVWKHUHTXLUHPHQWVRIWKHFRXQWU\RIRULJLQor an exporter, producer or importer may voluntarily issue a C/O after verifying
the country of origin, and completing and signing the form.
(Article 9-2 (1) of the Act on Special Cases of the Customs Act for the Implementation of Free Trade
Agreements)

Contracting
Countries

Institutional Issuance

Voluntary Issuance

Singapore, ASEAN, India
and Peru• Exporter : Chile, Peru, the EU and Turkey• Exporter or producer : EFTA, Australia and Canada• Exporter, producer or importer : the US•Peru : Institutional issuance and voluntary issuance by approved exporters go side-by-side
for first 5 years from the day after the date on which the agreement take effect; the voluntaryissuance of the country of origin only shall be issued starting from the 6th year
•EU : For export goods priced at more than €6,000, the voluntary issuance of origin
declarations by approved exporters whose origin certification ability have been certified bya customs is being admitted.

Korea Customs Service

63

ⅢGuide to Taking Advantage of FTAs

$VD3URRIRI*RRGV3URGXFHGLQ.RUHDD&HUWL¿FDWHRI2ULJLQ&2 LVD'RFXPHQW5HTXLUHGWR(QVXUHWKH*RRGV%HQH¿WIURPFTA Tariff Rates in the Export Destination.

Ⅲ. Guide to Taking Advantage of FTAs

Follow Rules and Guidelines Stipulated in the Trade Agreement in
Issuing a C/O to Enjoy FTA Preferential Tariff rates at Customs of
the Contracting Country.
Ÿ,QVWLWXWLRQDO,VVXDQFH- To apply for the issuance of a C/O, you have to submit an application for C/O
issuance with following documents attached to customs or the KCCI before
the completion of shipment.
Documents to be Attached• New Issuance

1. A copy of the export certificate (unnecessary if electronic confirmation is possible)
or other equivalent documents
2. An invoice or contract agreement
3. A certificate of originating status (when the producer and the exporter are
different each other)
4. An origin verification questionnaire<grounds> Article 6(1) of the Act on Special Cases of the Customs Act for the
Implementation of Free Trade Agreements• Reissuance

1. A statement of reason<grounds> Article 6(7) of the Act on Special Cases of the Customs Act for the
Implementation of Free Trade Agreements• Correction in
Issuance

1. The original of the C/O
2. A document proving the reasons for correction
3. A statement of reasons<grounds> Article 6(9) of the Act on Special Cases of the Customs Act for the
Implementation of Free Trade Agreements

Ÿ9ROXQWDU\,VVXDQFH%DVHGRQDFHUWL¿FDWHRIRULJLQDWLQJVWDWXVRUZULWWHQVWDWHPHQWLVVXHGE\WKH
producer, the exporter should complete the C/O form under the FTA, issue a
C/O with an authorized signatory's signature or seal, and keep the C/O registry.
* The exporter should designate a signatory and prepare a signature card.
- Changing or adding signatories : list the signature, division, title and name of the newsignatory, the date of designation, and the reasons for designation- Lifting the signatory status : list the date of lifting the status and the reasons

64

For Foreigners Guide to Customs Declarations

A C/O is Issued as Follows:Ÿ Institutional Issuance

Korea
Customs
Service
Webpage

Customs
Clearance
Portal Approval
for usePurchasea Digital
Certificate

Login

Completea C/OApprovalfrom theCustoms
House

Issuance(Print out)

Register the
Applicant's
Signature

Purchasea Digital
Certificate

Login

Completea C/OCertificationby theKCCIIssuance(Print Out)> By KCCI
OnlineKCCI
Webpage

Visit the KCCI and submit the completed form to get a C/O.

Ÿ Voluntary IssuancePrepare a
Signature card

Designate a
SignatoryIssuance andSignature

Keep and Manage the
C/O Registry

Attached form #7of the notification

Signature, division
name, title, name,designation
date, reasons fordesignation

1. Name of the trade agreement
2. Country of origin and thecriteria for country of origin
determination
3. Name of the exporter
4. Phone number of the exporter
5. Fax number of the exporter
6. Signature of the exporter
7. Date of signature by theexporter

Attached form #13 of the notification
1. Serial number and date of issuance
2. Export declaration serial number andthe date of acceptance3. Description, standard, HS and quantity
4. Country of origin, and producer or
supplier
5. Name of the trade agreement applied
6. Criteria for country of origin
determination

Korea Customs Service

65

ⅢGuide to Taking Advantage of FTAs

> By Customs
OnlineⅢ. Guide to Taking Advantage of FTAs

03

Approved Exporter

Approved Exporter (AE)Ÿ The approved exporter is a system that allows exporters with origin
FHUWL¿FDWLRQ DELOLW\ FHUWL¿HG E\ WKH FXVWRPV DXWKRULWLHV WR HQMR\ VLPSOL¿HG
procedures in C/O issuance or submission of attached documents, or to issue
C/Os themselves.

Depending on the Approval Category, Approved Exporters are
Divided into Two Groups: Approved Exporters by Business andApproved Exporters by Item.
Ÿ To be recognized as an approved exporter by business, an applicant should
SDVVH[DPLQDWLRQRIZKHWKHULWVPDLQLWHPV WRLWHPV IXO¿OOFULWHULDIRU
country of origin determination, and its overall country of origin management
ability.
Ÿ7R EH FHUWL¿HG DV DQ DSSURYHG H[SRUWHU E\ LWHP DQ DSSOLFDQW VKRXOG SDVV
examinations of whether its HS 6-digit code items meet the criteria forcountry of origin determination as prescribed by the relevant trade agreement.
An applicant failing to meet the criteria for approved exporter by business
PD\DSSO\IRUDFHUWL¿FDWLRQRIDSSURYHGH[SRUWHUE\LWHP

66

For Foreigners Guide to Customs Declarations

Approved
Exporter by BusinessApproved
Exporter by Item

All trade agreements and all items

The relevant trade agreements and HS
6-digit code items

Term of Validity

3 years

2 years

Certifying Authority

Main Customs (Seoul, Busan, Incheon, Daegu and Gwangju) and Pyeongtaek
Customs (under control of the Korea Customs Service)

Certification
Criteria① Origin certification ability② Compliance with laws
③ Designation of an origin management
coordinator in charge① Origin certification ability for all HS
6-digit code items② Designation of an origin management
coordinator in charge%HQH¿WVIRU$SSURYHG([SRUWHUVŸ Under FTAs with countries with the institutional C/O issuance system, such
as ASEAN, Singapore, India and Peru, all the approved exporter needs to
VXEPLWLVDQDSSOLFDWLRQIRUPIRU&2LVVXDQFHZLWKVLPSOL¿HGSURFHGXUHVin document submission and examinations, including exemption of local
YHUL¿FDWLRQŸ Under the Korea-EFTA FTA with the voluntary C/O issuance system, anapproved exporter who has submitted a letter of commitment when applying
for AE designation may skip the exporter's signature on the origin declaration
form. Under the Korea-EU FTA and the Korea-Peru FTA, approved exporters
have the right to voluntary C/O issuance for export goods priced at higher
WKDQ(85DQG86'UHVSHFWLYHO\Korea Customs Service

67

ⅢGuide to Taking Advantage of FTAs

Scope of Benefits

Ⅲ. Guide to Taking Advantage of FTAs

4XDOL¿FDWLRQ $VVHVVPHQW IRU JUDQWLQJ WKH $SSURYHG ([SRUWHU&HUWL¿FDWH
Ÿ By preparing an application form with required documents, approved
H[SRUWHUV FDQ DSSO\ IRU D DSSURYHG H[SRUWHU FHUWL¿FDWH WKURXJK WKH .RUHDCustoms Service Internet clearance portal system, or electronic clearance
V\VWHP6HQGWKHUHTXLUHG¿OHVLQWKHHOHFWURQLFGRFXPHQWIRUPDWŸ7KH KHDGV RI 0DLQ &XVWRPV H[FHSW IRU ,QFKHRQ $LUSRUW &XVWRPV  DQG3\HRQJWDHN&XVWRPVSURFHVVDSSOLFDWLRQVIRUDSSURYHGH[SRUWHUFHUWL¿FDWHV
Within 20 days from the date of the submission, the heads of the Customs
ZRXOGFKHFNZKHWKHUWKHDSSOLFDQWVPHHWUHTXLUHPHQWVIRUFHUWL¿FDWLRQDQG
JUDQWFHUWL¿FDWHVLIWKH\GRVR
Ÿ:KHUH WKHUH LV DQ\ GRFXPHQW PLVVLQJ RU LW LV GHHPHG GLI¿FXOW WR YHULI\whether criteria for country of origin determination are met, the heads of theFXVWRPVPD\UHTXHVWVXSSOHPHQWDU\FRUUHFWLRQZLWKD¿[HGGD\SHULRG
Ÿ$QDSSURYHGH[SRUWHUZKRZDQWVWRH[WHQGWKHFHUWL¿FDWH VWHUPRIYDOLGLW\should apply for the extension to the head of the customs who issued theFHUWL¿FDWHE\GD\VEHIRUHWKHH[SLU\Ÿ An approved exporter should notify the head of the customs of any change
LQ FHUWL¿FDWH LQIRUPDWLRQ VXFK DV WUDGH QDPH DGGUHVV WKH UHSUHVHQWDWLYH V
name, and the country of origin management coordinator.

68

For Foreigners Guide to Customs Declarations

Assessment Process
1. Application/submission(Via UNI-PASS or Application in Writing)Main Customs (Seoul, Busan,
Incheon, Daegu, Gwangju) and
Pyeongtaek Customs (Under the KCS)

3. Documentary checking(Correction Request if Necessary/
Examination at the Spot)

If theRequirements
are not met,
correction
Revision Request
or Rejection

4. Certificate Issuance(Within 20 days)

3. Comply with the correction request
5. Report any change in certificate information(name of the representative, address,
business registration number, country of origin
management coordinator, etc.)

5. Change of Contents in the
Cirtificate/Acceptance(Within 7 days)

6. Apply for extension at least 30 days before
the expiry

6. Apply for Extension of the
Validity Term
(3 years for Certificate by Business/
2 years for Certificate by Item)

7. Check whether to maintain the certificate- Self-examination (once) and customs
selective management within the term ofvalidity

7. Post-Management ofApproved Exporters
If the Certification
Requirements are
not Met1. Required documents① A certificate application form
② Origin verification questionnaires for main
export items (products)③ Documents proving information on the origin
verification questionnaires- Certificates of originating status- Certificates of domestic manufacturing, etc.
④ The C/O ledger⑤ Details about the origin management
coordinator⑥ Other materials- System instructions, country of origin
management work manuals, etc.

8. Follow the corrective order within the period
If Legal

8. Corretive Order(At Least 30days) Requirements
are not Met

9. Submit explanatory materials in case of ahearing

9. Cancellation of theCertificate(Hearing)

Korea Customs Service

69

ⅢGuide to Taking Advantage of FTAs

2. Application submission

ApplicantⅢ. Guide to Taking Advantage of FTAs

04

2ULJLQ9HUL¿FDWLRQ2ULJLQ9HUL¿FDWLRQLV3HUIRUPHGWR&KHFNZKHWKHULWLV$SSURSULDWH
to enjoy the FTA Preferential Treatment.
Ÿ2ULJLQYHUL¿FDWLRQUHIHUVWRFRXQWU\RIRULJLQLQYHVWLJDWLRQVRUH[DPLQDWLRQV
conducted for domestic importers, domestic exporters and producers, country
RI RULJLQ FHUWL¿FDWH LVVXLQJ DXWKRULWLHV DQG WKH H[SRUWHUV DQG SURGXFHUV RI
FRQWUDFWLQJFRXQWULHVWR.RUHDLQRUGHUWR¿QGRXWLILWLVDSSURSULDWHWRDSSO\FTA preferential tariff rates and check the countries of origin of ex/imported
goods.

Depending on the Investigation Target, Country of Origin
Investigations are Divided into Investigations for Imported Goods
and Investigations for Exported Goods.
Ÿ Country of origin investigations for imported goods are targeted at goods
eligible for FTA preferential tariff rates which are imported to Korea from its
contracting partners.
- Based on who conducts the investigations, there are two types of origin
YHUL¿FDWLRQGLUHFWYHUL¿FDWLRQDQGLQGLUHFWYHUL¿FDWLRQ,QGLUHFWYHUL¿FDWLRQthe customs of the importing country directly investigates the exporters of
LWVFRQWUDFWLQJSDUWQHU,QLQGLUHFWYHUL¿FDWLRQWKHFXVWRPVRIWKHLPSRUWLQJ
FRXQWU\DVNVWKHFXVWRPVRIWKHH[SRUWLQJFRXQWU\HWFIRUYHUL¿FDWLRQDQG
the customs, etc. carries out a country of origin investigation for the exporter.

70

For Foreigners Guide to Customs Declarations

[Types][Target Goods][Customs in Charge]

ExportVerification

Korea→(Export)→ContractingPartnerIndi- Partner →→ Koreanrect Customs (Request) KCS (Investigation) Exporter

ImportVerification

PartnerIndi- KCS → Partner → Country's(Request) Customs (Investigation)
rect
Exporter

Contracting Partner→(Import)→Korea

Partner→ Country's
Direct KCS (Investigati
on)Exporter→(or)PartnerCountry's
ProducerŸon goods exported to contracting partners conducted by Korean Customs
based on request from the customs authorities of the contracting partners.
①Verification Request

PartnerCountry's
Customs ⑧ Notification of Results
Office② Investigation Order

KCS⑦ Report ofInvestigation Results

Main
Customs③ Investigation Notice④ Submission ofMaterials⑤ Notification of
Investigation Results

Exporter⑥ Protest (Selective)Ÿconcerned.
FTAs

Indirect Verification

Direct Verification

Deadlinefor Reply

1. Written inquiry and request for
information
2. Investigation visit to the exporter

Korea-Chile

KoreaSingapore(Gradual
Application)

1. Request for an origin verificationquestionnaire and information to
the exporter or producer throughthe customs of the exporting
country

Korea-EFTA

Request for verification to thecustoms of the exporting country(Attendance at verification allowed
if necessary)

2. Investigation visit to the exporter(Written consent required)

30 days within
the date ofsubmission

10 months

Korea Customs Service

71

ⅢGuide to Taking Advantage of FTAs

OriginVerification

Ⅲ. Guide to Taking Advantage of FTAs

Indirect Verification

Direct Verification

Deadlinefor Reply

KoreaASEAN(Gradual
application)

1. Request for verification toa certifying authority of theexporting country

2. Investigation visit to theexporter(written consent
required)

2 months(6 months at
the maximum)

Korea-India(Gradual
application)

1. Request for verification toa certifying authority of theexporting country

2. Investigation visit to the exporter(Written consent required)

3 months(6 months at
the maximum)

Korea-EU

Request for verification to thecustoms of the exporting country(Joint investigations allowed if
necessary)

FTAs

10 months

Korea-Peru

Request for verification to theauthorities of the exporting country

1. Request for documentarymaterials to the exporter throughthe authorities of the exporting
country
2. Investigation visit to the exporter

Korea-US

Request for verification to thecustoms of the exporting country(Limited to textiles and apparelproducts)

1. Request for information to theexporter or written inquiry
2. Investigation visit to theworkplace of the exporter(Written consent required)

Korea-Turkey

Request for verification to thecustoms of the exporting country(Attendance at verification allowed
if necessary)

KoreaAustralia

Request for verification to acertifying authority of the exporting
country

KoreaCanada

72

150 days

12 months

10 months

1. Written request to the exporter
2. Investigation visit to the exporter
1. Written inquiry to the exporter
2. Investigation visit to the exporter

For Foreigners Guide to Customs Declarations

30 daysFollow-up Measures will be taken according to the Origin
VŸ
payable and duties paid (including penalties), will be collected.

Exclusion Cases of Preferential Tariff① Where an importer, or an exporter or producer of a contracting partner fails to submit arequired document, or has falsified a required document or provided information different
from facts without any justifiable reason;② When the Commissioner of the Korea Customs Service or the head of a customs requests
a direct investigation to the customs authorities of the contracting partner:- Where no results have been sent back within the deadline for reply- Where the reply does not include necessary information; or- Where the reply says that the goods concerned violate country of origin regulations;③ When the Commissioner of the Korea Customs Service or the head of a customs directly
investigates the exporter or producer:- Where the goods concerned have been found violating country of origin regulations;- Where materials from the importer or exporter of the contracting partner do not include
information needed to check the accuracy of country of origin;- Where there has been no reply as to a written investigation, or there has been no reply to arequest for consent to spot investigation or a disagreement with spot investigation; and- Where access to ledgers needed to verify supporting documents for country of origin or relatedmaterials has been rejected during spot investigations with no justifiable reasons, or no suchmaterials have been kept;④ Where it is impossible for the Commissioner of the Korea Customs Service or the headof a customs to conduct investigations of the country of origin because the business of
the investigation target has gone bankrupt or shut down, or the target's whereabouts are
unknown, or due to other equivalent reasons;⑤ Where the investigation target has rejected, interrupted or shunned written or spot
investigations by the Commissioner of the Korea Customs Service or the head of acustoms and⑥ Where the importer fails to prove that goods which have arrived at Korea via a country which
is not the country of origin fulfill transportation principles stipulated in the trade agreement.

Korea Customs Service

73

ⅢGuide to Taking Advantage of FTAsa case for exclusion of preferential tariff, the difference between the duties

Ⅲ. Guide to Taking Advantage of FTAs

Ÿ Application of preferential tariff may be limited for identical goods exported
by an exporter of a contracting partner to Korea if the exporter has falsely or
wrongly put key information in supporting documents for country of origin
repeatedly.
Ÿ Rejecting or interrupting a country of origin investigation or not keeping
or penalties.
Violation

Disposition

1. Completing and issuing supporting documents forcountry of origin, or having supporting documents forcountry of origin issued, by deception or illegally

Penalties(Article 22)

Fines for
Negligence(Article 24)

74

2. Using supporting documents for country of origin for
purposes other than the original purpose or transferring

No more than KRW
20 million in penalties

3. Not keeping documents that prove the country oforigin, etc.
Completing and issuing supporting documents for countryof origin, or having supporting documents for country oforigin issued, by submitting information differently fromfacts

No more than
KRW 3 million
in penalties

1. Not submitting documents within the deadline
2. Rejecting, interrupting or evading a country of origin
investigation

No more than KRW
10 million in fines fornegligence

Failing to correct the customs value or make an amended
declaration, etc.

No more thanKRW 5 million
in fines for negligence

For Foreigners Guide to Customs Declarations

05

Criteria for Country of Origin Determination

Necessity of Criteria for Country of Origin Determination

goods whose country of origin is one of the contracting partners enjoy tariff
EHQH¿WVIURPWKH)7$
Ÿ An exporter needs to meet criteria for country of origin determination under
the FTA to have its goods recognized as goods produced in Korea.

Checking of Criteria for Country of Origin Determination
Ÿ Checking criteria for country of origin determination for export goods<How to find the criteria for country of origin determination>▶ YES FTA portal (http://www.customs.go.kr/)→Korean→country of origin criteria→choose
the FTA concerned→search the criteria for country of origin determination for the goods
concerned※ You can check the country of origin on FTA-PASS, a country of origin management systemprovided by the Korea Customs Service for free.

Types of Criteria for Country of Origin Determination
Ÿ There are two types of criteria for country of origin determination.
*HQHUDOFULWHULDDUHJHQHUDOUXOHVFRPPRQO\DSSOLHGWRDQXPEHURILWHPV
* General criteria consist of basic principles and special cases by sector (supplementary criteria).

&ULWHULDE\LWHPUHIHUWRUXOHVDSSOLHGRQO\WRVRPHSDUWLFXODUJRRGV⇒ Both general criteria and criteria by item are applied in determination of the country of origin.

For More Information▶ Korea Customs Service, Director General for Free Trade Agreement Enforcement Planning,042-481-3226, 3206

Korea Customs Service

75

ⅢGuide to Taking Advantage of FTAs

Ÿ An FTA is aimed at increasing trade among the contracting countries; so only

Ⅲ. Guide to Taking Advantage of FTAs

06

Taking Full Advantage of FTAs

How to take Advantage of FTAs in Export Clearance

76

Check if the FTA
has taken Effect•Check if the FTA between Korea and the country of export destination
has taken effect after the signing of the FTA

Check the HS
Code(1-1)•The preferential tariff and criteria for country of origin determination are
decided based on the HS Code.
•Make sure you check the HS Code with the importer of the contracting
partner country as it may be different from the Korean HS Code.

Check FTA
Tariff Benefits•After finding the HS Code of the export goods, check if there are FTA
tariff benefits that you can enjoy from the contracting partner country[tariff benefits=(general tariff rate of the contracting partner-FTA tariffrate)×export value]•The FTA tariff rate is based on the contracting partner's schedule ofconcession as the goods will be exported to the contracting partnercountry.

Check Criteria for
Country of Origin
Determination(1-2)•Meet criteria for country of origin determination by HS Code to enjoy
FTA tariff benefits•Criteria for country of origin determination- General criteria (basic principles and special cases by sector) andcriteria by item

C/O Issuance(1-3)＊The C/O is an official document proving the goods are produced in
Korea, and it is a document required to apply FTA tariff rates in the
country of export destination.
＊Follow standards and guidelines under the FTA in issuing a C/O toensure FTA tariff rates are applied by the customs of the contracting
partner country.

Keep
Export-Related
and other
Documents(1-4)＊In the application of FTA preference, post-clearance verification isconducted in principle. For this, exporters and producers are required
to keep relevant materials.
- Exporters : keep materials for 5 years from the date of export
declaration acceptance- Producers : keep materials for 5 years from the date of completionof supporting documents for C/O

For Foreigners Guide to Customs Declarations

How to take Advantage of FTAs in Import Clearance.
Check if the FTA
has Taken Effect•Check if the FTA between Korea and the exporting country hastaken effect after the signing of the FTA•The preferential tariff and criteria for country of origin determination
are decided based on the HS Code.
•Consult with customs brokers and other experts, or apply for advanceclassification ruling to the Customs Valuation and Classification
Institute to find the HS Code

Check FTA
Tariff Benefits•After finding the HS Code of the imported goods, check if there
are FTA tariff benefits under tariff schedules [tariff benefits=(Korean
general tariff rate-FTA tariff rate)×import value]•Check the offer list of each country under the trade agreement tofind the FTA tariff rate

Prepare Supporting
Documents(2-2)•Request a C/O and other supporting documents to the exporter ofthe contracting partner country•Check the form of the C/O, the certifying authority, seal, criteria forcountry of origin determination, etc.

Apply for Applicationof Preferential Tariff(2-3)•You may apply for and enjoy application of preferential tariff before
and after import declaration acceptance.
•An importer should submit an application form for preferential tariff
application when making an import declaration in order to enjoy FTA
tariff rates.

Keep Relevant
Documents(2-4)•In the application of FTA preference, post-clearance verificationis conducted in principle. For this, importers are required to keep
supporting documents from exporters, producers, etc.
- Importers : keep the documents for 5 years from the date of importdeclaration acceptance

Korea Customs Service

77

ⅢGuide to Taking Advantage of FTAs

Check the HS Code
(2-1)

Ⅲ. Guide to Taking Advantage of FTAs

07

5LJKWVRI'XW\3D\HUVLQ)7$2ULJLQ9HUL¿FDWLRQ

You may get help from Experts.
Ÿ7KHSHUVRQVXEMHFWWRDVSRWLQYHVWLJDWLRQQHFHVVDU\IRUYHUL¿FDWLRQRIFRXQWU\of origin may have lawyers or customs brokers attend the investigation or
make their statement.

<RXPD\3URWHVWWKH5HVXOWVRI2ULJLQ9HUL¿FDWLRQ

Customs

NotifyInvestigation
Results

Receive theProtestRequestCorrection(Within 30 days)

Investigation
TargetReceive theInvestigation
Results

ProtestReceive theAdditional
Documents

Notify theProtestResults(Within 20 days)
Receive theRequest for
Correction

SubmitAdditional
Documents(Within30 days)

Not Accepted:
Exclusion from
Preference
Accepted:
Amendment to
Results

Receivethe Protest
Results

1. An Applicationform
2. Additional
Documents

Ÿ An investigation target (exporter, producer or importer) who disagrees withthe results of a country of origin investigation may make a protest to theCommissioner of the Korea Customs Service or the head of the customs
ZLWKLQGD\VIURPWKHGDWHRIQRWL¿FDWLRQRILQYHVWLJDWLRQUHVXOWV- When there is a protest, the Commissioner of the Korea Customs Service or
the head of the customs would examine the case, and notify the results to theapplicant within 30 days.

78

For Foreigners Guide to Customs Declarations

- Where the details or procedures of the protest is deemed inappropriate or tohave room for correction, the Commissioner of the Korea Customs Service
RUWKHKHDGRIWKHFXVWRPVPD\UHTXHVWFRUUHFWLRQZLWKD¿[HGSHULRGRIQR
longer than 20 days.
ⅢGuide to Taking Advantage of FTAs

※ Required Documents for Protest① An application form for protest② A document with the name, address or place of residence of the applicant③ Date of notification of investigation results and the investigation results④ The description, standard, usage, and the exporter, producer or importer of thegoods⑤ Main points and the details of the protest

<RXPD\/RGJHDQ2EMHFWLRQWRWKH5HVXOWVRI2ULJLQ9HUL¿FDWLRQŸ Aduty payer may apply for remedies (make an objection) against any measuresng ways:

PeriodHead ofthe Office of Review

Office of Review(Committee in
Charge)Pre-Taxation
Deliberation

Within 30 days fromthe date of pretaxation notice

Head of the customs or
the Commissioner of the Korea
Customs Service (when at least
KRW 500 million is charged)

Customs Appeal
Committee

Examination Request

Within 90 days
from the dateof notification of
disposition

Commissioner of the Korea
Customs Service

Customs Appeal
Committee

Adjudication Request

Within 90 days

Chairman of the Tax Tribunal

Tax Tribunal
Judge Council

Examination request to
the Board of Audit andInspection of Korea

Within 90 days

Chairman of the Board of Audit
and Inspection of Korea

Audit Committee

Types of Request

Korea Customs Service

79

Ⅲ. Guide to Taking Advantage of FTAs

Ÿ The exporters or producers of Singapore, or the exporters or producers ofChile, may make examination or adjudication requests against the results ofcountry of origin investigation pursuant to Article 119 of the Customs Act.

For More Information▶ Korea Customs Service, Office of Origin Support Officer, 042-481-3233

80

For Foreigners Guide to Customs Declarations

Ⅳ
Guide to Customs
Valuation

Value Declaration 01
Customs Valuation 02
Advance Customs Valuation Ruling 03
Advance Customs Valuation 04
Arrangement for Related Parties (ACVA)
Application Priority of Customs Duty Rates 05&ODVVL¿FDWLRQRI*RRGVLQWKH1RPHQFODWXUH 06$GYDQFH&ODVVL¿FDWLRQ5XOLQJ 07

01

Value Declaration

Value Declaration
Ÿ When making an import declaration, customs duty payers are required todeclare the value of the goods to the head of the customs.
Ÿ In the value declaration, you are required to submit documents on importrelated
than customs value computation.

7KH 9DOXH 'HFODUDWLRQ PD\ QRW EH 1HFHVVDU\ LQ WKH )ROORZLQJ
Cases:
Ÿ Where the same goods are imported on the same conditions repeatedly;Ÿ Where there is no value to be added to the price paid or to be payable by thebuyer for goods sold for export to Korea other than freight and insurance
premiums incurred until the goods arrive at the port of entry; andŸ:KHUHGHWHUPLQLQJWKHFXVWRPVYDOXHLVQRWGLI¿FXOWDVIROORZVKorea Customs Service

83

Ⅳ. *XLGHWR&XVWRPV9DOXDWLRQtransactions, and materials on matters of customs value determination otherⅣ. Guide to Customs Valuation

1. Goods imported by the government or local governments;
2. Goods for government procurement;
3. Goods imported by public institutions;
4. Goods exempt from customs duties or internal taxes, etc.;
5. Goods imported as machinery, parts thereof, or raw materials for the defense industry(Limited to those with import confirmation or import recommendation granted by an
institution relating to the goods concerned);
6. Raw materials for export;
7. Goods imported by special research institutes under the Support of Special ResearchInstitutes Act;
8. Goods with no more than USD 10,000 in customs value among those designated by theCommissioner of the Korea Customs Service; and9. Other goods where the Commissioner of the Korea Customs Service deems it is notdifficult to determine the customs value.
- Article 46(1) of the Notification on Determining the Customs Value of Imported Goods• Goods with no more than USD 10,000 in customs value (Except for goods subject to internal taxes
and goods for partial import declaration)• Goods subject to specific duties (Except for goods whose duty rate changes according to the price)

Mandatory Cases SXEMHFWWRValue Declaration- Where other factors (commissions, packing container expenses, production
DVVLVWFRVWVUR\DOWLHVDQGOLFHQVHIHHVRUSRVWLPSRUWEHQH¿WV VKRXOGEHDGGHG
to the price actually paid or payable;- Goods subject to customs duties levied by customs;- Goods subject to provisional value declaration;- Goods subject to taxation prior to dearance by customs audit teams;(e.g. goods exempt from duties, goods for installment payment of customs
GXWLHVDQGJRRGVXVXDOO\GHFODUHGE\GHOLQTXHQWV - Where the customs value is determined by valuation methods #2 through #6;- Where there is a value to be added to the price actually paid or payable of the
LPSRUWHGJRRGV HJVHWRIIDQGLQGLUHFWSD\PHQWV DQG

84

For Foreigners Guide to Customs Declarations

- Where there is a discount pursuant to subparagraphs 1 (restrictions on the
GLVSRVLWLRQ RU XVH  RU  FRQGLWLRQ RU FRQVLGHUDWLRQ  RI$UWLFOH    RI WKH&XVWRPV$FW

Provisional Value Declaration system
Ÿ<RXPD\PDNHDSURYLVLRQDOYDOXHGHFODUDWLRQZKHQWKHYDOXHKDVQRWEHHQ
GHWHUPLQHGDVIROORZV

a. The formula for computing the final transaction value should be determined under the contract
between the transaction parties before importation;b. The final transaction value should be determined in accordance with facts after importation; andc. The facts after importation should be based on variables which cannot be controlled by thetransaction parties.

Ÿ$QLPSRUWHUZKRKDVPDGHDSURYLVLRQDOYDOXHGHFODUDWLRQVKRXOGGHFODUHWKH
¿QDOYDOXHEDVHGRQWKHGHWDLOVRIWKHWUDQVDFWLRQFRQWUDFWEHWZHHQWKHEX\HUDQGVHOOHUZLWKLQDSHULRG¿[HGE\WKHKHDGRIDFXVWRPVZLWKLQQRORQJHU
than 2 years.

Korea Customs Service

85

Ⅳ. *XLGHWR&XVWRPV9DOXDWLRQ- Where the goods are primary product, such as crude oil and ore, and the value has notbeen determined as of the date of import declaration;- Where additional values (commission, packing container expenses, production assist
costs, royalties and license fees and post-import benefits) should be added to the priceactually paid or payable for the goods;- Where the business has applied for and got approval for advance customs valuation
arrangement for related parties (ACVA);- Where the head of a customs deems it inevitable for the importer to make a value
declaration based on a provisional value considering the details of the agreement or thecharacteristics of the transaction;- Where it takes a long period of time because the customs value is determined based on
the domestic selling price (method #4);
- Where the delivery of the goods, including plant, under a turnkey contract, has been
completed after quite a long period of time since the first order; and- In other cases where the head of a customs deems it inevitable for the importer to makea value declaration based on a provisional value, and all of the following requirements
are met:Ⅳ. Guide to Customs Valuation

02

Customs Valuation

Customs Valuation
Ÿ Customs valuation refers to "determination of the tax base for the calculation
WKH FXVWRPV GXWLHV RI LPSRUWHG JRRGV RU WKH FXVWRPV YDOXH $FFXUDWH
declaration of the goods' price and HS code is important for accurate
calculation of the customs value.

0HWKRGVIRU'HWHUPLQLQJWKH&XVWRPV9DOXH
Ÿ$UWLFOH    RI WKH &XVWRPV $FW SURYLGHV WKDW WKH FXVWRPV YDOXH LV WKHtransaction value, stipulating that "the dutiable value of imported goods shallbe the transaction price adjusted by adding the amount falling under each of
WKHIROORZLQJVXESDUDJUDSKVWRWKHSULFHDFWXDOO\SDLGRUWREHSDLGE\DEX\HUIRUJRRGVVROGWREHH[SRUWHGWR.RUHD
Adjustments Factors which must be Added to the Price Actually Paid or Payable① Commission and brokerage fees (Except buying commission);② Container expenses and packing expenses;③ Production assist costs expenses and service prices or a difference accruing from thereduced price④ Royalties (Price for the right of reproduction excluded);⑤ Value that is paid and accrues directly or indirectly to sellers after release of import
goods; and⑥ Freight and insurance premiums

Ÿ:KHUHLWLVLPSRVVLEOHWRGHWHUPLQHWKHFXVWRPVYDOXHSXUVXDQWWR$UWLFOHRI
WKH&XVWRPV$FW$UWLFOHVWKURXJKVKRXOGDSSO\LQWKHIROORZLQJVHTXHQLDORUGHUFXVWRPVYDOXHGHWHUPLQHGEDVHGRQWKHWUDQVDFWLRQYDOXHRILGHQWLFDOJRRGVPHWKRG FXVWRPVYDOXHGHWHUPLQHGEDVHGRQWKHWUDQVDFWLRQYDOXHRIVLPLODUJRRGV PHWKRG FXVWRPVYDOXHGHWHUPLQHGEDVHGRQWKHGRPHVWLFVHOOLQJSULFHPHWKRG FXVWRPVYDOXHGHWHUPLQHGEDVHGRQWKHFRPSXWHGYDOXH PHWKRG DQGFXVWRPVYDOXHGHWHUPLQHGEDVHGRQUHDVRQDEOHFULWHULD PHWKRG (The sequence of method 4 and 5 can be switched at the request of the importer.)

86

For Foreigners Guide to Customs Declarations

Methods for Determining the Customs Value System Chart

Sale forexport?

Transaction
value
requirements
have beenmet?

Adjustment
of PAPP

Additional
Factors toTransaction
Value

Deductible
Factors toTransaction
value

Calculationof Customs
Value

Ⅳ. *XLGHWR&XVWRPV9DOXDWLRQOther Customs Valuation metho
ds are applied, such as
T2, T3, T4, T5, T6
in Sequential Order

T1 : Customs value based on the price actually paid or payable
T2 : Customs value based on the transaction value of identicalgoods
T3 : Customs value based on the transaction value of similar
goods
T4 : Customs value based on the domestic selling price
T5 : Customs value based on the computed value
T6 : Reasonable customs value

C1 : Separate payments(Repayment and compensation)
C2 : Indirect payments

A1 : Not goods imported for free
A2 : Not goods imported on consignment
A3 : Not goods sold with the responsibility of the exporter
A4 : Not goods imported by a branch, etc.
A5 : Not goods on lease at a cost or for freeA6 : Not goods whose destruction costs are borne by theconsigner

D1 : Commission and brokerage fees
D2 : Container and packing expenses
D3 : Production-related assists expenses
D4 : Royalties and license fees
D5 : Post-import additional payment
D6 : Freight and insurance premiums

B1 : No limit to use and disposition of imported goods
B2 : No influence of special conditions or consideration on theprice
B3 : No post-import additional payment
B4 : No influence of a relationship between buyer and seller on
the transaction value

E1 : Costs of installation after importation, etc.
E2 : Freight after importation
E3 : Taxes and public utilities' charges in the importing
country
E4 : Interest on deferred payment

Korea Customs Service87

Ⅳ. Guide to Customs Valuation

9DOXDWLRQ0HWKRGIRU&XVWRPV9DOXHRIWKH7UDQVDFWLRQ%HWZHHQ
Related PartiesŸ In principle, the transaction value is the primary factor of the customs value ;and this also applies in related parties’ transactions.
Ÿ:KHQDVSHFLDOUHODWLRQVKLSLQÀXHQFHVWKHWUDQVDFWLRQYDOXHWKHWUDQVDFWLRQ
value in the special relationship should not be selected as a method of thecustoms value, but valuation methods that come after method #2 should beapplied.
Cases of Special Relationships
For the following cases, persons shall be deemed to be related:•The buyer and the seller are officers or directors of one another′s businesses;•The buyer and the seller are legally recognized partners in business;•The buyer and the seller are employer and employee;•Any person diredtly or indirectly owns, controls or holds 5per cent or more of the outstanding
voting stock or shares of both of them;•One of the buyer and the seller directly or indirectly controls the other;•Both of the buyer and the seller are directly or indirectly controlled by a third person;•Together the buyer and the seller directly or indirectly control a third person; or•The buyer and the seller are members of the same family.

88

For Foreigners Guide to Customs Declarations

03

Advance Customs Valuation Ruling

8WLOL]DWLRQRIWKH$GYDQFHCustoms Valuation RulingŸ<RX PD\ DSSO\ IRU D 3UHFRQ¿UPDWLRQ RI WKH PHWKRG IRU GHWHUPLQLQJ WKHFXVWRPV YDOXH WR WKH &XVWRPV 9DOXDWLRQ DQG &ODVVL¿FDWLRQ ,QVWLWXWH LQ
DFFRUGDQFHZLWK$UWLFOHRIWKH&XVWRPV$FWŸ3UHFRQ¿UPDWLRQRIWKHPHWKRGIRUGHWHUPLQLQJWKHFXVWRPVYDOXHLVGLYLGHG
LQWR WZR W\SHV DGYDQFH SULFLQJ UXOLQJ $35  IRU SUHFRQ¿UPDWLRQ RI WKHPHWKRGIRUGHWHUPLQLQJWKHFXVWRPVYDOXHRIJRRGVLQWUDQVDFWLRQVEHWZHHQ
independent parties; and advance customs valuation arrangement for related
FXVWRPV YDOXH RI JRRGV LQ WUDQVDFWLRQV EHWZHHQ UHODWHG SDUWLHV LQFOXGLQJ
EHWZHHQWKHKHDGTXDUWHUVDQGDEUDQFKComparison between APR and ACVA
Advance Pricing Ruling (APR)

Advance Customs Valuation Arrangement(ACVA)

Corfirmation
TargetGoods in transactions between
independent parties

Goods in transactions between related parties

Processing
Period30 days

1 year

Implementation Date

Dec. 31, 1990

Jan. 1, 2008

Application
Eligibility

Any duty payers with a transaction
relationship with an exporter abroad

Duty payers with a continued related parties
transaction relationship with the headquarters, or anaffiliated company, abroad* Apply for APR for goods of one-off import

Examination
Process
Office in Charge

Unilateral determination

Consultation with the duty payer → agreement →approval

Customs Valuation and Classification
Institute

Customs Valuation and Classification Institute

Korea Customs Service

89

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Ⅳ. Guide to Customs Valuation

Comparison between APR and ACVA
Advance Pricing Ruling (APR)

Advance Customs Valuation Arrangement(ACVA)Key Matters of
Examination- Check the price actually paidor payable, and additional anddeductible values- Checktransaction
value
requirements (e.g. conditions
or circumstances, limited use
or disposal, and post-import
payment to sellers)- Whether a special relationship influences thetransaction value- Whether the method for determining the customs
value applied for (methods #1 through #6) isapplicable- Whether there is any additional or deductible
value- Whether the customs value is reasonable

Provisional
Declaration

Not applicable

Declare a provisional value at the time of application,and make a final value declaration based on theapproved details

Applied the same as in ordinary
imported goods- During the period from application to approval:
exemption of additional duties- Before an application with the approved details:
a 10 percent exemption of additional duties when
an amended import declaration is madeTerm of Validity

3 years(Limited to verified goods)

3 years (transaction goods identical to the approved
details)

Post-importManagement

Not applicable

Submit annual reports

Legal Grounds

Subparagraphs 1 and 2 of Article
37(1) of the Customs Act

Subparagraph 3 of Article 37(1)of the Customs Act

Additional
Duties90

For Foreigners Guide to Customs Declarations

04

Advance Customs Valuation Arrangement for
Related Parties (ACVA)

'H¿QLWLRQRI$GYDQFH&XVWRPV9DOXDWLRQ$UUDQJHPHQWIRU5HODWHG
Parties (ACVA)
Ÿ$GYDQFH &XVWRPV 9DOXDWLRQ $UUDQJHPHQW IRU 5HODWHG 3DUWLHV $&9$  LV
designed to determine in advance the method for determining the customs
YDOXH RI LPSRUWHG JRRGV LQ WUDQVDFWLRQV EHWZHHQ UHODWHG SDUWLHV LQFOXGLQJ
EHWZHHQDSDUHQWFRPSDQ\DEURDGDQGDEUDQFKDWKRPHWKURXJKFRQVXOWDWLRQ
EHWZHHQGXW\SD\HUVDQGFXVWRPVRQUHTXHVWIURPWKHGXW\SD\HUV
Ⅳ. *XLGHWR&XVWRPV9DOXDWLRQACVA %HQH¿WVWRDuty Payers and Customs AXWKRULWLHVHarmful Effects of Post-Audit
Duty Payers❖ Uncertainties in Business Activities- Exposed to risks, including penalty collection- Method of determining the transfer price notrecognized- Difficulty in appropriate pricing- Competitiveness loss from unstable management

Customs Authorities❖ Difficulty in Securing Public Revenue- Prolonged customs audit- Difficulty computing accurate customs value- Tax conflicts, including appeal to taxation- Wasteful use of administrative power

Tax Cooperation between Customs and Duty Payers
Duty Payers❖ Stable Business Management from Customs
Penalties- Reasonable pricing based on customs value
prediction- Protection of duty payers' rights and interests- Saving costs from exemption of customs
examination, audit- Competitive pricing strategies

Customs Authorities❖ Securing Public Revenue by the Right
Collection of Duty
- Efficient use of administrative capacity- Stability in securing public revenue- Less tax conflicts- Partnership with duty payers

Korea Customs Service91

Ⅳ. Guide to Customs Valuation

ACVA Procedures are as Follows:▶ Advance consultation

Advance
Consultation(Applicant → Classification Institute)▶ Preparation for Application▶ Submission of an Application Form

Application

Preexamination(Applicant → Classification Institute)- Apply for consultation if necessary within 1month from the start of the examination- Appoint the applicant's proxy(E.g. the applicant's customs broker)- Submit an application form and other relevantmaterials- Provisional value declaration(Applicant→Customs)▶ Application Form Check- Request revision if any materials are missing▶ Initial Meeting- Discuss examination direction, etc. and give an
overview of the applicant▶ Documentary Checking- Examine▶ Opinion-Gathering- Get advice from experts, etc. and ask theCommissioner of the Korea Customs Service- Hold a customs valuation council(If Necessary)▶ Consultation on Amendment(Classification Institute → Applicant)(Within 30 days)(Examination on the spot within 5 days if necessary)- Request correction to the details of theapplication- Make an amended application within 30 days
(Applicant → Classification Institute)- Reject the application (E.g. when not cooperating in

Examination
Results(Within 1 year fromthe dateof Application)

Post-notification
Management(3 years)

92▶ Notification of results(Classification Institute → Applicant)▶ Issuance of an ACVA statement(Classification Institute → Applicant)▶ final declaration, etc.
(Applicant → Customs)▶ Submission and Examinationof Annual Reports

For Foreigners Guide to Customs Declarations

examination or not following the requested correction)- Notify the pre-examination results- Get reply from the applicant on whether he/she
agrees within 15 days
- Issue an ACVA statement within 15 days if
the applicant agrees- If the applicant disagrees, it is considered
withdrawal by the applicant- The applicant may be exempted from thecustoms value final declaration- Make an amended declaration or make a claim
for rectification within 2 months- Submit within 3 months from the settlement dateevery year
- Cancel, withdraw or change the approval

ACVA *LYHV\RXWKH)ROORZLQJ%HQH¿WVŸ)URPWKHSRLQWRIDSSOLFDWLRQIRU$&9$XQWLOWKHSRLQWRIDSSURYDO\RXPD\
GHFODUHWKHSURYLVLRQDOYDOXHRIWKHJRRGVDQGPDNHD¿QDOYDOXHGHFODUDWLRQZLWKWKHDSSURYHGGHWDLOVŸ,I\RXPDNHDQDPHQGLQJGHFODUDWLRQDIWHUWKHQRWL¿FDWLRQRI$&9$VWDWHPHQW
for the customs value had already declared and paid before applying for$&9$ \RX ZRXOG EH H[HPSWHG IURP DGGLWLRQDO SHQDOW\ GXWLHV GXH WR
incorrect declaration.
Ÿ2QUHTXHVWIURPWKHDSSOLFDQWEXVLQHVVFXVWRPVZRXOGVXVSHQGFXVWRPVDXGLWIRUWKHJRRGVRI$&9$DSSOLFDWLRQGXULQJWKH$&9$SUHH[DPLQDWLRQSHULRG$XWKRUL]HG(FRQRPLF2SHUDWRU $(2 )RUPRUH,QIRUPDWLRQFor More Information▶ Customs Valuation and Classification Institute, Customs Valuation Division, 042-714-7504

Reference Materials● Introduction to Programme, Regulations and Forms- Korea Customs Service webpage (www.customs.go.kr) > customs administration > tariffclassification/customs valuation > ACVA and customs valuation data base

Korea Customs Service

93

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05

Application Priority of Customs Duty Rates

Types and Priorities of Customs Duty Rates in AGYDQFH
Ÿ7KHW\SHVRIGXW\UDWHV
TypesNational
Tariff

Details and Grounds

Basic Duty Rate

Basic duty rate under the tariff schedules in the Annex of
the Customs Act

Provisional
Customs Duty Rate

Provisionally apply a duty rate different from the basic
duty rate

Flexible Tax Rate

Pursuant to Articles 51 through 75 (except for Article 73) ofthe Customs Act (On anti-dumping duties, countervailing
duties, seasonal duties, adjustment duties, etc.)
Duty rate determined pursuant to a convention oradministrative agreement with a foreign country

Conventional TariffŸ7KHRUGHURISULRULW\LQDSSO\LQJGXW\UDWHV
Priority

Duty Rates

Note

1st

Anti-dumping duty, retaliatory duty,
emergency duty, special emergency
duty on agricultural, forest and livestock products, countervailing duty
and emergency duty for products ofspecified countries

Apply in priority regardless of other any customs
duty

2nd

Beneficial duty and international
cooperation tariff

No. 2 applies only if it is lower than No. 3, 4, 5, 6 inpriority (Except for the bound tariff on agricultural,
forest and live-stock products among international
cooperation tariff rates)

3rd

Adjustment duty, seasonal duty andquota tariff

The quota tariff applies only when it is lower thanNo. 4 in priority

4th

General preferential tariff rate

5th

Provisional duty rate

6th

Basic duty rate

94

For Foreigners Guide to Customs Declarations

Particular Duty Rates Apply in Some CDVHVŸ6LPSOL¿HG'XW\5DWH$Q LQWHJUDWHG GXW\ UDWH RI VHYHUDO UDWHV RI WKH FXVWRPV GXWLHV DQG LQWHUQDO
taxes, etc. is combined into one duty rate.
(1) Goods Subject to the Simplified Duty Rate
① Personal effects of travellers or crew members② Postal items (except for those requiring an import declaration)③ Goods used to repair or replace part of any vessels or aircrafts abroad④ Consignments or unaccompanied baggage① Goods of which tariff rates are zero or goods exempted from customs duties② Raw materials for export③ Goods involved in any violation of the Customs Act④ Goods subject to specific duties⑤ Goods designated by the Commissioner of the Korea Customs Service⑥ The goods concerned, where the owner has requested not applying the simplified duty
rate to all of the dutiable goods during an import declaration

Ÿ&RPSURQLVHG'XW\UDWHV,QFDVHRIDSDFNDJHLPSRUWGHFODUDWLRQIRUPXOWLSOHJRRGVZLWKGLIIHUHQWGXW\rates, the highest duty rate applies on request from the declarant.
Ÿ6SHFL¿HG'XW\UDWHVIRU8VHV,QFDVHRIJRRGVZLWKGLIIHUHQWGXW\UDWHV VXFKDVEDVLFSURYLVLRQDOFRQFHVVLYHÀH[LEOHGXW\UDWHVHWF E\XVHDORZGXW\UDWHDSSOLHVZLWKDSSURYDOIURPWKH
KHDGRIDFXVWRPVIRUXVLQJWKHJRRGVIRUWKHORZUDWHSXUSRVH

Korea Customs Service

95

Ⅳ. *XLGHWR&XVWRPV9DOXDWLRQ(2) Goods Excluded from the Simplified Duty Rate

Ⅳ. Guide to Customs Valuation

06&ODVVL¿FDWLRQRI*RRGVLQWKH1RPHQFODWXUH

5HODWLRQVKLSEHWZHHQWKHCustoms Duty and CODVVL¿FDWLRQ
Ÿ The customs duty rate for import goods is determined based on the HS code.
7KXV DQ DFFXUDWH FODVVL¿FDWLRQ LV UHTXLUHG WR GHWHUPLQH WKH GXW\ UDWH DQGcustoms duty.
Ÿ&RXQWULHV MRLQLQJ WKH :72 EHFRPH +6 FRQWUDFWLQJ VWDWHV ZKLFK VKRXOGFRPSO\ZLWKUXOHVVHWXQGHUWKH+6V\VWHP
Reference Materials• HS code : Harmonized Commodity description and Coding System (HS) codes are 6-digit codes
granted to export and imported goods for classification under the HS Convention. HS codes arereflected in the tariff schedules in the Annex of the Customs Act.
• HSK (Harmonized Commodity Description and Coding System of Korea): The HSK is the Korean
harmonized commodity description and coding system (prescribed by the Minister of Strategy and
Finance). Adding 4 more digits to the HS 6-digit code system, the HSK is a 10-digit classification
code system (EU; 8 digits, and Japan; 9 digits).

96

For Foreigners Guide to Customs Declarations

Nomenclature
1. General Rule for the Interpretation- Consisting of GRI 1 through 6- Legally binding effect having

3. Heading- Chapters are subdivided into 1,224 4-digit
headings- The definitions of headings are legally binding

4. Sub-Heading

2. Legal Note

5. Section- Sections 1 through 21: not legally binding

6. Chapter- Chapter 1 through 97: Chapter 77 suspended- Titles are not legally binding

7. Sub-Chapter- Sub-chapters are limited to some Chapters,
just to enhance understanding.
- Titles are not legally binding

Korea Customs Service

97

Ⅳ. *XLGHWR&XVWRPV9DOXDWLRQ- 466 legal notes to sub-headings, sections
and chapters- Consisting of HS Convention notes anddomestic notes- Legally binding effect- Scopes and definitions of each heading,section, chapter, and goods in competition- Headings are subdivided into 5,205 5- or
6-digit sub-headings- Sub-heading and higher levels ofclassification (1, 2, and 3) are shared globally- The definitions of sub-headings are legallybinding

Ⅳ. Guide to Customs Valuation

07$GYDQFH&ODVVL¿FDWLRQ5XOLQJ

'H¿QLWLRQRIAdvance CODVVL¿FDWLRQRulingŸ$GYDQFHFODVVL¿FDWLRQUXOLQJLVDV\VWHPWKDWDOORZVH[SRUWHUVDQGLPSRUWHUVWRFKHFNZLWKWKH&RPPLVVLRQHURIWKH.RUHD&XVWRPV6HUYLFHWR¿QGRXWZKLFK+6FRGHRIWKHJRRGVWREHH[SRUWHGDQGLPSRUWHGIDOOVXQGHUApplicants for Advance CODVVL¿FDWLRQ RulingŸ7KRVH HOLJLEOH WR DSSO\ IRU DGYDQFH FODVVL¿FDWLRQ UXOLQJ LQFOXGH WKRVH
planning to export or import goods, manufacturers of goods to be exported,and customs brokers, customs service corporations and juristic persons for
KDQGOLQJFOHDUDQFHXQGHUWKH/LFHQVHG&XVWRPV%URNHU$FW
Ÿ,Q JHQHUDO H[SRUWHUV RU LPSRUWHUV DSSO\ IRU DGYDQFH FODVVL¿FDWLRQ UXOLQJ
DQG JHW UHSO\ EHIRUH WKH H[SRUW RU LPSRUW RI JRRGV (YHQ IRU H[SRUWHUV RU
LPSRUWHUVZKRPDGHH[SRUWRULPSRUWGHFODUDWLRQVZLWKRXWJHWWLQJDGYDQFH
FODVVL¿FDWLRQ UXOLQJ WKH\ PD\ DOVR DSSO\ IRU DGYDQFH FODVVL¿FDWLRQ UXOLQJ
later to export or import the same types of goods.

Advance CODVVL¿FDWLRQRXOLQJKDVWKH)ROORZLQJEffects:Ÿ,QDFFRUGDQFHZLWK$UWLFOHRIWKH&XVWRPV$FWWKH+6FRGHQRWL¿HGWRWKHDSSOLFDQWDFFRUGLQJWRWKHUHVXOWVRIWKHDGYDQFHFODVVL¿FDWLRQUXOLQJZLOO
equally apply to the same types of goods export or import later (the validity
WHUPZLOOEH\HDU Ÿ)RUJRRGVVKLSSHGIRUH[SRUWWR.RUHDDWOHDVWEHIRUHGD\VIURPWKHGDWHRQZKLFKPRGL¿FDWLRQLVQRWL¿HGWKH+6FRGHEHIRUHPRGL¿FDWLRQPD\DSSO\LI
it is more advantageous to the import declarant.

98

For Foreigners Guide to Customs Declarations

Preparation to Apply for Advance CODVVL¿FDWLRQRXOLQJDQGWKH
ProceduresŸ3UHSDUDWLRQWR$SSO\IRU• A copy of the application form for advance classification ruling• A copy of goods description (including the usage description, component list andproduction process)• A sample (powdered products and liquid products: one sample in case of retailpackaging; 500g or more in powdered products, and 500 ml or more in liquid
products in case of bulk packaging)※ If it is difficult to submit a sample as in the case of machinery, etc., submit a statement of reasons and threepictures as a substitute.

<RXFDQDSSO\WKURXJKWKH.RUHD&XVWRPV6HUYLFHHOHFWURQLFFOHDUDQFHV\VWHPKWWSSRUWDOFXVWRPVJRNU RUE\SRVWRUYLVLW&XVWRPV 9DOXDWLRQ DQG &ODVVL¿FDWLRQ ,QVWLWXWH 7HFKQR UR <XVHRQJJX
Daejoen 214, ☎)D[

Work Process of Advance CODVVL¿FDWLRQRuling
Apply for AdvanceClassification RulingAcceptanceand Examination(Customs Valuation andClassification Institute)

Modification
the Results of AdvanceClassification Ruling

Items

Discription

Issuing
AgencyKorea Customs Service(Customs Valuation and Classification Institute)

TargetGoods for export or import declarations

ApplicantExporters and importers, manufacturers ofexport goods, customs brokers, customs
brokers' corporations, and juristic persons forhandling clearance

Processing
Period30 days(15 days more in case of revision)Fees

KRW 30,000 per item(in case of goods analyses)

How toApply

Online or in writing (by a person or post)[ http://portal.customs.go.kr ]Korea Customs Service

99

Ⅳ. *XLGHWR&XVWRPV9DOXDWLRQŸ+RZWR$SSO\IRU

Ⅴ
Guide to Customs Audit
and Investigation+RZWR'HFODUHDQG3D\&XVWRPV'XW\ 01&RUUHFWLRQRI(UURUVLQWKH'HFODUDWLRQ 02
Self-Correction of Declaration Errors 03
Customs Post Audit 04$XWKRUL]HG(FRQRPLF2SHUDWRU $(2 05&RPSOLDQFH&KHFNLQJ 06
Customs Penaties 07
1RQ,VVXLQJRI9$75HFHLSWIRU7D['HGXFWLRQ 08
Suspension of Customs Audit and 09,QYHVWLJDWLRQVIRU-RE&UHDWLQJ%XVLQHVVHV'XW\3D\HUV¶5LJKWV 10

01

How to Declare and Pay Customs Duty

Duty Payment Declaration
Ÿ In principle, customs duties and internal taxes imposed on import goods should
EHSDLGRQWKHWUDQVDFWLRQE\WUDQVDFWLRQEDVLVRULQDOXPSVXPZLWKLQD¿[HG
period of time. Except for goods subject to a notice of imposition-payment bycustoms, imported goods are the target of declaration-payment by importer.
Ÿ Only the owners of imported goods, or duty payers, may make duty payment
declarations in principle.

In a Duty Payment Declaration, the Followings should be Declared:① The HS code and duty rate of the goods according to the tariff schedule, and theexemption and the legal grounds for exemption③ Whether there is a special relationship and the details about the special relationship④ Other matters to be considered in determining the customs value

Duty Payment Declarations are Subject to Post-Audit
Ÿ For duties declared and paid, the audit is conducted within 5 years after theimport declaration is accepted in principle. However, the audit may be carriedout before the acceptance of the import declaration for the following goods:

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Ⅴ. Guide to Customs Audit and Investigation

customs value for each HS code, and the sum of all of the cust oms values, to be paid
② In case of duty exemption under the Customs Act or a convention, the amounts of

Ⅴ. Guide to Customs Audit and Investigation① Goods for exemption of customs duties or internal taxes② Goods for installment payment of customs duties③ Goods declared by a delinquent(Except for cases where the amounts of delinquent duties are less than KRW 100,000,
or an import declaration is made within 7 days of delinquency)④ Goods declared by a negligent declarant who falls under the criteria prescribed by theCommissioner of the Korea Customs Service⑤ Goods with volatile prices, and other goods deemed by the Commissioner of the Korea
Customs Service to be inappropriate for post audit of the customs duty. In this case an
detemination of whether exemption or installment payment of duties is appropriate isconducted before the declaration acceptance while an examination of the customs duty
and duty rates are done after the acceptance.

The Head of a Customs Issues a Notice of Imposition-Payment
in the Following Cases:① Where customs duties are collected because the case falls under subparagraphs 1
through 6, or 8 through 11, of Article 16 (Timing of Determining Dutiable Subject) of the
Customs Act;
② Where a facility built in a bonded construction site has been operating before theacceptance of the import declaration;③ Where goods carried into a bonded area (including a place which is not a bonded area
but has got permission for storage) have been released before the acceptance of theimport declaration;④ Where the duty payer requests a notice of imposition-payment for reasons prescribedby the Commissioner of the Korea Customs Service;⑤ Where customs duties are collected because an import declaration for goods ofimmediate release has not been made within 10 days from the date of the immediate
release declaration; and⑥ Other cases of inappropriate duty payment declarations as prescribed in the Circular of
the Ministry of Strategy and Finance.

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For Foreigners Guide to Customs Declarations

Duty Payment System and Due Date
Ÿ Where customs duties have not been paid until the acceptance of the duty
payment declaration, a notice bill of duty payment will be issued with thepayment period of 15 days from the date of the acceptance of the duty
payment declaration.
- Those who have paid duties after the acceptance of the duty payment
declaration need not provide security in principle; but the duty payers who
fall under Article 248(2) of the Customs Act are required to offer security.
Ÿ The monthly payment system is designed to promote the convenience of duty
payers faithfully meeting payment obligations: if the duty payers have mademultiple duty payment declarations, and all of their due dates are in the samemonth, the duty payers are allowed to make a lump-sum payment of all of the
duty liabilities by the last day of the month.
- Using this system has an effect equivalent to extending the payment period
by up to 30 days.

lump-Sum Payment for Raw Materials for Export

refunded after their import, the lump-sum payment system under the Act on
Special Cases concerning the Drawback of Customs Duties, etc. Levied on
Raw Materials for Export allows collection of such duties to be suspended
for 1 month to 6 months, ensuring that duties to be paid and refunded offset
each other.
- Among taxes imposed on imported goods, the VAT is excluded from the
lump-sum payment system.

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Ⅴ. Guide to Customs Audit and InvestigationŸ5HÀHFWLQJWKHIDFWWKDWFXVWRPVGXWLHVIRUUDZPDWHULDOVWREHH[SRUWHGDUH

Ⅴ. Guide to Customs Audit and Investigation

The Due Dates of Various Payment Systems are as Follows:
Payment System

Main Purpose

Due Date

Legal Grounds

Declaration and payment
system : within 15 days fromthe date of the acceptance ofthe duty payment declaration
Principle

Payment
in general-

Notice of imposition-payment
system : within 15 days fromthe date of a duty payment
noticeArticle 9(1) of the
Customs Act

Immediate release system :within 15 days from the dateof the import declaration
revision To pay the
Duty
application
deficient value
payment
correction amended To pay thesystem declaration deficient value
Monthly
payment
systemCollection
deferment
systemExceptions

For theconvenienceof duty payers
and saving
financial costs

To mitigate
difficulties fromdisasters, etc.

Article 38-2(4) of the
Customs Act

The day after the date of theamended declaration

Article 38-3(1) of the
Customs Act

The last day of the month
into which the due dates ofduty payments fall

Article 9(3) of the
Customs Act

The date set by the head of
the customs within one year

act of God,etc.

Lump-sumpayment
systemArticle 10 of the
Customs Act, andArticles 15 through 17of the National Tax
Collection Act
Article 107(1) of the
Customs Act

Installment
To build industrial
payment
particular facilities,
systemgoods, etc. support
SMEs, etc.

To defer thedue dateCollection before due To secure tax
date system
receivables

106

The day after the date of therevision application

The date set by the head of
the customs
within 5 years from the dateof approval for installment
payment

Article 107 (2) of the
Customs Act

15th of the month following
the month into which thelast day of the lump-sum
payment period falls (within
6 months)

Article 5 of the Special
Cases concerning the
Drawback of Customs
Duties, etc. Leviedon Raw Materials for
Export

The date fixed by the headof the customs

Article 14 of the National
Tax Collection Act

For Foreigners Guide to Customs Declarations

02

Correction of Errors in the Declaration

Self-Correction of the Customs ValueŸ,IGXW\SD\HUV¿QGGH¿FLHQF\LQWKHGXW\DPRXQWVGHFODUHGDQGSDLGRUDQ\
HUURUVLQFRPPRGLW\FODVVL¿FDWLRQHWFWKH\PD\DSSO\IRUUHYLVLRQRIWKH
customs value to the head of the customs within 6 months from the date of
declaration and payment (self-correction period).
Ÿ$OVRZKHQWKHKHDGRIWKHFXVWRPV¿QGVRXWGH¿FLHQF\LQWKHDPRXQWVRIGXWLHVGHFODUHGDQGSDLGRUHUURUVLQFRPPRGLW\FODVVL¿FDWLRQHWFKHVKHPD\QRWLI\the duty payer of the need to apply for self-correction within the due period.

Amended Declaration
Ÿ:KHQLWLVQHFHVVDU\WRDPHQGWKHGHWDLOVRIWKHGHFODUDWLRQGXHWRGH¿FLHQF\in the duty amounts declared and paid, the duty payer may make an amended
declaration (after the self-correction period).
Ÿ To make an amended declaration, the duty payer should submit an amended
customs. In this case, the duty payer should make the payment by the day
after the date of the amended declaration.

Request for RHFWL¿FDWLRQŸ:KHQWKHGXW\SD\HU¿QGVRXWWKDWKHVKHKDVGHFODUHGDQGSDLGPRUHFXVWRPVGXW\WKDQQHHGHG DIWHUWKHVHOIFRUUHFWLRQSHULRG KHVKHPD\PDNHDUHTXHVWIRUUHFWL¿FDWLRQRIWKHGHFODUHGGXW\WRWKHKHDGRIWKHFXVWRPVZLWKLQ\HDUVŸ7KHGXW\SD\HUVKRXOGVXEPLWDUHTXHVWIRUUHFWL¿FDWLRQIRUPWRWKHKHDGRI
the customs; and the head of the customs would have to rectify the customs

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Ⅴ. Guide to Customs Audit and Investigation

declaration form with the tax base and duty amounts on it to the head of the

Ⅴ. Guide to Customs Audit and Investigation

GXW\RUQRWLI\WRWKHGXW\SD\HUWKDWWKHUHLVQRUHDVRQIRUUHFWL¿FDWLRQZLWKLQ
2 months from the date of the request.

5HFWL¿FDWLRQE\WKH&XVWRPVŸ:KHQWKHKHDGRIDFXVWRPV¿QGVRXWWKDWWKHUHLVPRUHRUOHVVLQWKHFXVWRPV
duty declared by a duty payer according to the results of an examination, the
KHDGRIWKHFXVWRPVVKRXOGUHFWLI\WKHFXVWRPVGXW\$IWHUWKHUHFWL¿FDWLRQRIWKHFXVWRPVGXW\WKHKHDGRIWKHFXVWRPVPD\DJDLQUHFWLI\WKHUHFWL¿HGGXW\Ÿ To rectify the customs duty, the head of the customs should issue a notice of
UHFWL¿FDWLRQZLWKWKHGHWDLOVDERXWWKHSDLGGXW\WRWKHGXW\SD\HU7KHKHDGRI
WKHFXVWRPVZRXOGLVVXHDGXW\SD\PHQWQRWLFHIRUWKHGH¿FLHQWGXW\

Who or How change the declared Duty:
Stage

1st

2nd

3rd

How

SelfCorrection

Notice ofcorrection/correction bycustoms

Application
for revision

Revision
noticeAmendeddeclaration

Rectification

Who

Duty
payer

head of thecustoms

Duty payer

Head of thecustoms

Duty payer

Head of thecustoms

PeriodFrom duty payment declaration(import declaration)
to payment

Within 6 months from the dateof declaration and payment(revision period)

ReasonsMore or less declaration ofcustoms dutyLess payment

Note

From the day after the dateof termination of the revisionperiod to the endof the dutiable periodLesspayment- Correction by customs may be made only to import declaration which are not related to duty
payment.
- No reply to correction notice may be subject to correction by the head of a customs.
- When duty payers find out that they had paid more than needed, they may claim for rectification
within 5 years from the date of the duty payment declaration.

For More Information▶ Korea Customs Service, Corporation Audit Division, 042-481-7958

108

More or lesspayment

For Foreigners Guide to Customs Declarations

03

Self-Correction of Declaration Errors

The Self-Correction System Ensures Stable Business Activities
via Early Determination of the Duty Amounts.
Ÿ:KHUH D GXW\ SD\HU PDNHV DQ DPHQGHG GHFODUDWLRQ IRU GH¿FLHQW FXVWRPVGXW\DIWHUDSRVWDXGLWKHVKHZRXOGKDYHWRSD\DGGLWLRQDOGXWLHVDQGPD\
be subject to penalties. This is why the self-correction system exists to
support stable business activities and ease business burden by enabling early
determination of the amounts of correct duties.

Self-Correction, Amendment and RHFWL¿FDWLRQSystems can all be
used for a Change in Duty Amounts; but they are Distinguishedby Application Period.
Ÿ,Q FDVH RI GH¿FLHQF\ LQ FXVWRPV GXW\ ZLWKLQ  PRQWKV IURP WKH GDWH RI
GHFODUDWLRQDQGSD\PHQWĺDSSO\IRUVHOIFRUUHFWLRQŸ In case of the need to increase the customs duty after the self-correction period
ĺPDNHDQDPHQGHGGHFODUDWLRQRIGHFODUDWLRQDQGSD\PHQWĺPDNHDUHTXHVWIRUUHFWL¿FDWLRQ
Self-Correction

Amended Declaration

Request for Rectification

Application
PeriodWithin 6 months from thedate of payment

After the endof the self-correction
periodWithin 5 years from thedate of declarationand payment

Increase or
Decrease

Increase or decreasein the customs duty

Increase in thecustoms duty

Decrease in thecustoms dutyInterests○

××

Additional Duties

×

○

×

Due Date

The day after the date of
the application for selfcorrection

The day after the date of
the amended declaration

15 days

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Ⅴ. Guide to Customs Audit and Investigation

Ÿ In case of the need to decrease the customs duty within 5 years from the date

Ⅴ. Guide to Customs Audit and Investigation

Ÿ The period for calculating self-correction interests:
BeforeAfter• From the day after the initial due date of duty payment until the date of payment for
self-corrected customs Duty
• From the day after the initial due date of duty payment until the date of the application
for self-correction

Flow of Self-Correction Processing Procedure① Application for Selfcorrection② Examination of Formality
Requirements③ Payment of Deficient
Customs duty
④ Selection of Audit Target
among other Importers

Not Subject to Audit

Subject to Audit⑤ Self-Correction Audit⑥ No Errors⑥ Finding-out deficient
Customs Duty

⑦ Audit Result
Notification

Objection to Self⑦ Notice of Selfcorrection Application correction Application→⑦ Pre-Taxation Notice⑧ Application for Selfcorrection⑧ Rectification to
Increase the Customs duty

⑨ Payment for the
Deficient Customs duty
⑩ Completion

For More Information▶ Korea Customs Service, Corporation Audit Division, 042-481-7958

110

For Foreigners Guide to Customs Declarations

04

Customs Post Audit

Customs Post Audit Checks the Appropriateness and Legality ofClearance.
Ÿ Customs post audit refers to examining whether the customs duty declaredby export or import businesses is accurate and whether their overall export
or import activities are legitimate, including if they meet export or importrequirements, as prescribed in the Customs Act, the Foreign Trade Act andother laws relating to clearance and trade.

The target of Post Audit and how they are done may vary
Depending on the Size of Importer and whether the Declaration
Obligation has been met Faithfully.
Ÿ&XVWRPVSRVWDXGLWLVFDOOHGDVFRPSDQ\DXGLWLQSUDFWLFHDQGFODVVL¿HGLQWR
FRUSRUDWLRQDXGLWZKLFKDUHGRQHSHULRGLFDOO\DQGSODQQHGDXGLWVZKLFKare conducted nonperiodically, according to the following acculately criteria
Planned Audit(Article 110-3(2) of the Customs Act)• Where it is deemed that exporters or importers
have been suspicious of filing a negligent
declaration according to the periodical analysis
of sincerity of their declarations;• Where the duty payers have not been subject tocustoms post audits for a long period of time (atleast for the preceding four years or more); and• Where the head of a customs intends to conduct
a sample survey on a random basis• Where duty payers fail to file a declaration
acculately or perform any obligation to comply
with payment of customs duties;• Where there is a specific suspicion etc. on duty
evasion; and• Where the details of a declaration contain any
data corroborating a suspicion of duty evasion
or error

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Ⅴ. Guide to Customs Audit and Investigation

Corporation Audit(Article 110-3 (1) of the Customs Act)

Ⅴ. Guide to Customs Audit and Investigation

Ÿ Businesses recognized as authorized economic operators (AEOs) are not
VXEMHFW WR FRUSRUDWLRQ DXGLWV )RU VXFK EXVLQHVVHV ZLWK$(2 FHUWL¿FDWH LV
FRQGXFWHGIRUHYHU\WR\HDUVDFRPSUHKHQVLYHDXGLWIRUWKRVHFHUWL¿HG
as an AEO
Business Recognized
as an AEO
Comprehensive Audit

Business not Recognized as an AEO
Corporation Audit

Planned Audit• Official recognition as an
AEO after certification• Comprehensive audit• Businesses with at least USD 30
million in annual import volume
over the past 2 years

conducted for every 3 to
5 years since the AEO
certification• Periodical audit conducted forevery 4 to 5 years• All customs-related sectors canbe a target of the audit• High-risk businesses• Frequent audit of
specific issues• Joint team by divisions incharge of examination• Customs-private partnership(e.g. paid customs duty, foreignexchange and clearance
requirements)

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For Foreigners Guide to Customs Declarations

Flow of Customs Post Audit•A corporation audit notice will be sent at least 10 days before the auidt starts.
•Businesses may apply for postponement of a corporation audit or change inthe place of examination.

Start of
Audit

•Check the identity of the customs officers in charge of the audit.
•Businesses will be informed of the charter of the Taxpayer's Rights.
•Complete an integrity pledge with the customs officers

DuringAudit•Businesses may get help from customs brokers and other customs experts.
•The Customs Integrated Civil Service Center helps protect the rights of duty
payers.

End of
Audit•The audit will be completed within the scheduled period.
(But, it may be extended if necessary.)•Through consulting, businesses will be informed of the results of thecorporation audit, customs administrative systems for business convenience,and how to make a correct customs declaration.

Notification of
Results•The written report of corporation results will be sent.
•Businesses disagreeing with the results may request pre-taxation
deliberation within 30 days.

Issuance of
Notice Bill

•A notice bill of tax payment will be sent.
•Businesses disagreeing with the content of the notice bill may make an
appeal, examination request, or adjudication request, within 90 days.

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Ⅴ. Guide to Customs Audit and Investigation

Advance
NoticeⅤ. Guide to Customs Audit and Investigation

Response Tips on Customs Post Audit• Before a customs post audit, businesses will be informed of the audit schedule.
- A corporation audit notice with details on the audit period and reasons will be sent 10days before the start of the audit to protect the rights of duty payers and help them
prepare for the audit.

• Businesses may postpone the investigation if inevitable reason exist.
- Businesses may apply for postponement of the audit to the head of the customs if there
is inevitable reason which makes getting an audit impossible, such as an act of God.

• Businesses are asked to be cooperative for effective customs post audit.
- Request for submission of materials and inquiries will be made if necessary but not tothe extent that they affect the work performance of businesses; and businesses may gethelp from certified customs brokers or lawyers whenever it is necessary.

• Customs post audit will be conducted for no longer than 20 days.
- The audit will be undertaken for 20 days or less with the export or import size of thebusiness, the numbers of auditors, audit methods, and the scope taken into account. The
audit may be completed within 10 days for SMEs.

• Customs post audit provide an opportunity to prevent customs errors.
- After the end of the customs post audit, "comprehensive customs consulting for acorrect customs declaration" will be provided with a focus on errors found in the audit
procedures.

For More Information▶ Korea Customs Service, Corporation Audit Division, 042-481-7986, and thePlanning and Audit Division, 042-481-7883

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Ⅴ. Guide to Customs Audit and Investigation

Response Tips on Customs Post Audit• Before a customs post audit, businesses will be informed of the audit schedule.
- A corporation audit notice with details on the audit period and reasons will be sent 10days before the start of the audit to protect the rights of duty payers and help them
prepare for the audit.

• Businesses may postpone the investigation if inevitable reason exist.
- Businesses may apply for postponement of the audit to the head of the customs if there
is inevitable reason which makes getting an audit impossible, such as an act of God.

• Businesses are asked to be cooperative for effective customs post audit.
- Request for submission of materials and inquiries will be made if necessary but not tothe extent that they affect the work performance of businesses; and businesses may gethelp from certified customs brokers or lawyers whenever it is necessary.

• Customs post audit will be conducted for no longer than 20 days.
- The audit will be undertaken for 20 days or less with the export or import size of thebusiness, the numbers of auditors, audit methods, and the scope taken into account. The
audit may be completed within 10 days for SMEs.

• Customs post audit provide an opportunity to prevent customs errors.
- After the end of the customs post audit, "comprehensive customs consulting for acorrect customs declaration" will be provided with a focus on errors found in the audit
procedures.

For More Information▶ Korea Customs Service, Corporation Audit Division, 042-481-7986, and thePlanning and Audit Division, 042-481-7883

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05

Authorized Economic Operator (AEO)'H¿QLWLRQRIWKH$(2Ÿ An Authorized Economic Operator (AEO) is a business approved by the Korea
Customs Service as satisfying authorization standards in compliance with the
ODZLQWHUQDOFRQWUROV\VWHP¿QDQFLDOVRXQGQHVVDQGVDIHW\PDQDJHPHQWŸ The AEO is a system based on customs-private partnership under aninternational principle (SAFE Framework), adopted unanimously at theGeneral Assembly of the World Customs Organization (WCO) in June 2005.
An AEO refers to a business engaging in cargo movement that has acquired
UHOLDELOLW\DQGVDIHW\FHUWL¿FDWHVIURPWKHFXVWRPVDXWKRULWLHV%HQH¿WVWRWKH$(2Ÿ%XVLQHVVHVUHFRJQL]HGDVDQ$(2HQMR\YDULRXVEHQH¿WVVXFKDVVLPSOL¿HG
LQVSHFWLRQV DQG SURFHGXUHV OHVV ¿QDQFLDO EXUGHQ DQG RWKHU FRQYHQLHQFHV
Also, differentiated risk management services are provided for AEO
companies.

ZKLFKKDYHDGRSWHGWKH$(2V\VWHPZRXOGEHQH¿W$(2EXVLQHVVHVLQWHUPV
of expedited clearance, including through reduced inspection, among others.

Application for AEO Authorization
Ÿ Types of businesses eligible to apply for AEO authorization include export
FRPSDQLHV LPSRUW FRPSDQLHV FHUWL¿HG FXVWRPV EURNHUV ERQGHG DUHD
operators, bonded transportation companies, stevedores, forwarders, shipping
companies, and airlines.

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115

Ⅴ. Guide to Customs Audit and Investigation

Ÿ Furthermore, a Mutual Recognition Agreement (MRA) with other countries

Ⅴ. Guide to Customs Audit and Investigation

Stevedores

Airlines

Sealiners

Ware houses

Stevedors

Transportation

Ware houses

Customs broker

Forwarders
bondedCustomsbrokers

Transportation
Exporters

Importers

Ÿ To apply for AEO authorization, submit an application for the authorization
with relevant documents through the Korea Customs Service UNI-PASS.
* Required documents : ① A self-evaluation list on the current status of export and importmanagement to meet authorization standards ② A document which explains the current statusof export and import management and supporting documents for it ③ A copy of the businessregistration certificate ④ A copy of corporation registration ⑤ A document detailing the personal
data of the CEO and chief manager ⑥ Chief manager's certificate of education completion ⑦ Bestpractices relating to export and import management (If there are any)

Examination Procedures for AEO Authorization
Ÿ The Commissioner of the Korea Customs Service conducts documentary
checking based on the submitted documents. After on-site examination ofsafety management and others, whether to authorize the business as an AEO isdecided at the Korea Customs Service's authorization deliberation committee.

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A, AAAEO
Examination

Application
Submission

A, AA, AAA
Comprehensive
Audit
Level
Adjustment

Authorization

Applicant Business

Authorization
Examination Team

Main Customs
KCS Deliberation
Comprehensive Audit team Committee for Authorization•Implements a selfevaluation•Completes
documents detailingthe current status•Documentary
checking (within 2months)•On-site examination(within 2 months)•Processing period(6 months)•Inspection on the
spot•Provides an AM(account manager)•Decide on
authorization•Adjust theauthorization level

AEO Post Management and Comprehensive AuditŸ A business authorized as an AEO is required to implement post management
to maintain the AEO status, and the post management includes reporting all
kinds of changes that have taken place since authorization until the renewal
period, conducting self-evaluations periodically, preparing for renewal andcomprehensive audits, and other activities that should be done after the AEO

Ÿ$Q$FFRXQW0DQDJHU $0 LVDFXVWRPVRI¿FLDOLQFKDUJHRIVXSSRUWIRU$(2
companies who is designated as a partner to an internal AEO manager. A
FHUWDLQSHULRGRIH[SHULHQFHRUSURIHVVLRQDOTXDOL¿FDWLRQVLQDXGLWDUHDDQG
integrity are some of the qualities considered in deciding who will become
an AM.

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Ⅴ. Guide to Customs Audit and Investigation

authorization.

Ⅴ. Guide to Customs Audit and InvestigationŸPost management activities are as follows:Business Recognized as an AEO

1. Designate an employee as the AEO manager, and decide who will bein charge of export and import management in main divisions and at
the enterprise
2. Take at least 8 hours of training courses every other year at adesignated training institute (16 hours for the first training)

ReportChanges

1. Legal status change due to M & A, etc.
2. Change in the CEO, and executives and managers in charge ofexport and import
3. Change in location and expansion of the place of business4. Change and expansion of businessConduct selfEvaluations
Periodically

1. Conduct a self-evaluation of the current status of export and importmanagement relating to authorization standards once a year sinceauthorization and complete self-evaluation reports periodically
2. Conduct a self-evaluation every year in the month when the authorization
was granted, and submit the results to the KCS Commissioner by the 15
th of the following month
3. Entrust examination of the self-evaluation reports to non-profit
corporation, certified customs brokers, or bonded goods caretakers,
selected by the KCS Commissioner.

Comprehensive
Audit

AEO businesses that want to renew the AEO status should apply for acomprehensive audit at least 6 months before the expiry of the validity
term; and the KCS Commissioner would conduct the comprehensive audit.
audit methods: documentary checking and on-site audits
audit scope: authorization standards and the targets of clearance legality
verification

Designate an
Customs Official
as an AM

1. Periodically check whether the company follows the authorization
standards
2. Check whether the company realizes its plan for improving compliancewith the law
3. Amend or correct the declared details of the company through a selfcorrection audit, etc. and keep the results
4. Carry out other inspections, and management and consulting services
to enhance the company's compliance with the law

KCS

Designatean Employee
as the AEO
Manager

For More Information▶ Korea Customs Service, Audit Policy Division, 042-481-7784, 7628, and Korea AEO
Association, 02-701-3325

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06

Compliance Checking

OverviewŸ,QFXVWRPVDXGLWNH\DUHDVRIDXGLWDQGFOHDUDQFHUHTXLUHPHQWVDUHYHUL¿HG
Businesses themselves thus need to check requirements under the laws before
making import declarations. Laws to be Checked by Area

Laws to be Checked by Area
Areas

Laws
Customs Act
Act on Special Cases concerning the Drawback of Customs, etc. Levied on
Raw Materials for Export

Key Areas of Audit

Foreign Exchange Transactions Act
Foreign Trade Act
Act on Special Cases of the Customs Act for the Implemetation of Free Trade
Agreement
Quality Control and Safety Management of Industrial Products Act

Ⅴ. Guide to Customs Audit and Investigation

Electrical Appliances Safety Control Act
Cosmetics Act
Wildlife Protection and Management Act
Clearance
Requirements

Food Sanitation Act
Toxic Chemicals Control Act
Wastes Control Act
Control of Livestock and Fish Feed Act
Clean Air Conservation Act
Other laws

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Ⅴ. Guide to Customs Audit and Investigation

Patterns Liable to Commit an Error Frequently
Ÿ Minor errors have been caught continuously in customs Audits; and many ofthem have been found frequently and repeatedly.
Ÿ For example, errors in fuel surcharges or commissions are some of theexamples of simple customs duty issues that can easily be prevented witha little care on the part of importers or partners (e.g. customs brokers andcarriers).
- To avoid declaration errors in advance and make correct customs
declarations, importers need to establish internal work manuals, and build
FORVH FRPPXQLFDWLRQ QHWZRUNV DPRQJ FOHDUDQFH ¿QDQFLDO DIIDLUV DQGpurchase divisions, and with partner businesses (e.g. customs brokers),
sharing information on duty payments with them.

/HJLWLPDF\WREH9HUL¿HGLQ&OHDUDQFH
Ÿ When detecting any violation, the head of the customs would impose
DGGLWLRQDOGXWLHV¿QHVIRUQHJOLJHQFHRULPSRVHDSHQDOW\VXUFKDUJHRULVVXH
a notice of disposition, request charge, or notify other related institutions of
the violation caught.
- In clearance, there have been frequent violations not just in goods subject
WR FXVWRPV YHUL¿FDWLRQ RI FOHDUDQFH UHTXLUHPHQWV DQG H[SRUWLPSRUW
requirements) but also goods subject to export or import approval under
the consolidated public notice made by the Minister of Trade, Industry and(QHUJ\ QRW VXEMHFW WR FXVWRPV YHUL¿FDWLRQ RI FOHDUDQFH UHTXLUHPHQWV  VR
please thoroughly check whether the export and import goods constitute oneof the above-mentioned goods.
Ÿ Clearance requirements are covered by a total of 57 laws: 7 in health andfood sanitation; 16 in social safety; 10 in environmental conservation; 13 in
DJULFXOWXUDO¿VKHU\DQGOLYHVWRFN¿HOGVDQGRWKHUODZV120

For Foreigners Guide to Customs Declarations

57 Laws Stipulating Clearance Requirements by Subject
Clearance
Requirements

Social safety (16), health and food sanitation (7), environmental conservation (10),agricultural, fishery and livestock protection (13), and others (11)- Social Safety (16)

1. Control OF Firearms, Swords, Explosives, etc. Act, 2. Nuclear Safety Act, 3. Defense Acquisition
Program Act, 4. Occupational Safety and Health Act 5. Weights and Measures Act, 6. HighPressure Gas Safety Control Act, 7. Petroleum and Petroleum Substitute Fuel Business Act/ Urban
Gas Business Act, 8. Safety Control and Business of Liquefied Petroleum Gas Act, 9. Electrical
Appliances Safety Control Act, 10. Quality Control and Safety Management of Industrial Products
Act, 11. Act on the Control of the Manufacture, Export and Import, etc. of Specific Chemicals andChemical Agents for the Prohibition of Chemical and Biological Weapons, 12. Act on the Controlof Narcotics, etc., 13. Framework Act on Telecommunications, 14. Radio Waves Act, 15. Foreign
Exchange Transactions Act, 16. Protection of Communications Secrets Act- Health and Food Sanitation (7)1. Quarantine Act, 2. Food Sanitation Act, 3. Pharmaceutical Affairs Act, 4. Cosmetics Act, 5.
Functional Health Foods Act, 6. Safety, Management, etc. of Human Tissue Act, 7. Medical
Devices Act- Environmental Conservation (10)- Agricultural, Fishery and Livestock Protection (13)
1. Act on the Prevention of Contagious Animal Diseases, 2. Agricultural Products Quality Control
Act, 3. Argochemicals Control Act, 4. Fertilizer Control Act, 5. Control of Livestock and Fish Feed
Act, 6. Plant Protection Act, 7. Grain Management Act, 8. Ginseng Industry Act, 9. Seed Industry
Act, 10. Processing of Livestock Products Act, 11. Livestock Industry Act, 12. Aquatic Life Disease
Control Act, 13. Fisheries Act

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Ⅴ. Guide to Customs Audit and Investigation

1. Motor Vehicle Management Act, 2. Act on the Control, etc. of Manufacture of Specific
Substances for the Protection of the Ozone Layer, 3. Clean Air Conservation Act, 4. Drinking
Water Management Act, 5. Noise and Vibration Control Act, 6. Toxic Chemicals Control Act, 7.
Wildlife Protection and Management Act, 8. Act on the Promotion of Saving and Recycling ofResources, 9. Act on the Control of Transboundary Movements of Hazardous Wastes and Their
Disposal, 10. Wastes Control Act

Ⅴ. Guide to Customs Audit and Investigation- Others (11)
1. Cultural Heritage Protection Act, 2. Promotion of the Motion Pictures and Video Products Act, 3.
Publishing Industry Promotion Act, 4. Game Industry Promotion Act, 5. Music Industry Promotion
Act, 6. Tobacco Business Act, 7. Inter-Korean Exchange and Cooperation Act, 8. Local Tax Act,
9. Construction Machinery Management Act, 10. Liquor Tax Act, 11. Technology Development
Promotion Act

Key Errors found in Examinations Which Deserve more Attention
Ÿ Not declaring production assists expenses- This is a customs error commonly found in imported goods produced inoverseas factories through Original Equipment Manufacturing (OEM) or
by consignment production method. One of the examples would be failingto include in the import declaration other goods supplied, or value paid,
separately from the direct payment made for the imported goods.
Ÿ Not declaring royalty and license fees
- If any rights to trademark, technology, etc. are embodied in the imported
goods, the royalties for them should be added to the customs value of theimported goods, and failing to do so would be an example of errors.
Ÿ,QÀXHQFHRIFRQGLWLRQVRUFRQVLGHUDWLRQV- When any conditions or considerations, including from a relationship in a
WUDQVDFWLRQRWKHUWKDQWKHLPSRUWWUDQVDFWLRQFRQFHUQHGKDYHLQÀXHQFHGWKH
SULFHRIWKHLPSRUWHGJRRGVWKHLPSRUWHUVKRXOGDGMXVWWKHLQÀXHQFHRULW
would constitute an error.
Ÿ Limited use or disposition of imported goods- One example would be limiting the use or disposition of the imported goods
under the contract between the importer and exporter, enabling the goods tobe imported at a lower price compared to goods which can be freely disposedof with no conditions attached.

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Ÿ Declaring a lower value due to a special relationship'HFODULQJDORZHUYDOXHWKDQWKHQRUPDOYDOXHEHFDXVHRIWKHLQÀXHQFHRID
special relationship between the buyer (importer) and seller (exporter) on theimport value would be an example.
Ÿ Declaring a lower value for goods imported for free$VJRRGVLPSRUWHGIUHHRIFKDUJHGRQRWKDYHWKHYDOXHDFWXDOO\SDLGRU
WREHSDLGIRUXQGHUWKH&XVWRPV$FWWKHYDOXHRIVXFKJRRGVVKRXOGEH
declared based on the transaction values of the identical goods and similar
goods. Declaring any arbitrary value instead would constitute an error.
Ÿ0DNLQJDIDOVHGHFODUDWLRQGXHWRHUURUVLQFRPPRGLW\FODVVL¿FDWLRQ- Importers are required to classify the goods accurately in accordance with thetariff nomenclature. Failing to do so may lead to declaration of the value at alower duty rate, which would constitute an error.
Ÿ Getting an inappropriate drawback- When an importer gets a drawback under the Act on Special Cases concerning theRefund (Act on Special Cases concerning the Drawback of Customs, etc. Levied
RQ5DZ0DWHULDOVIRU([SRUW DQGWKHDPRXQWVRIWKHGUDZEDFNLVPRUHWKDQKH
she deserves, or the way of getting a drawback is fraudulent, this would be an error.

- In case that an example shall meet requirements for permission, approval,
UHFRPPHQGDWLRQ RU FHUWL¿FDWLRQ WKDW VKRXOG EH IXO¿OOHG GXULQJ FOHDUDQFH
when goods are exported or imported.
Ÿ Violating country of origin description rules- It is required to mark the country of origin correctly on imported goods
subject to country of origin description. Failing to mark the country of origin
or marking it in a wrong way would be an error in this case.

For More Information▶ Korea Customs Service, Planning and Audit Division, 042-481-7893

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Ⅴ. Guide to Customs Audit and Investigation

Ÿ Failing to meet clearance requirements

Ⅴ. Guide to Customs Audit and Investigation

07

Customs Penalties

Imposition-Payment Notice and Forced Collection
Ÿ A notice of tax payment by customs will be issued when a customs audit, etc.
¿QGVGH¿FLHQF\LQWKHYDOXHGHFODUHGDQGSDLGE\LPSRUWHUVŸ In case of duty delinquency, the delinquency disposition under the National
Tax Collection Act will apply mutatis mutandis, and the delinquent duties
will be subject to forced collection.

Customs Penalties
Ÿ Any violation found with the Customs Act, Act on Special Cases concerning
the Drawback of Customs, etc. Levied on Raw Materials for Export, Foreign
Trade Act, Foreign Exchange Transactions Act, and other relevant laws will
be subject to a notice or request for prosecution.

Punishment Regulations Under Key Customs Laws:
Major Customs
Offences

Details of Violation

Punishment

Export/import
Prohibited
Goods

Exporting or improting prohibited items - No longer than 10 years in prison or no morefor export or import (e.g. obscene
than KRW 20 million in finesmaterials, and counterfeit money and - Confiscation of prohibited goods /enforcement
bonds)
penalty for prohibited goods

Smuggling in- No longer than 5 years in prison or fines nomore than the higher amount between 10 times
Failing to make an import declaration
more than the customs value and the production
or importing goods different from ones
cost of the goods
declared- Confiscation of goods smuggled in / enforcement
penalty for goods smuggled in

Smugglingout- No longer than 3 years in prison or fines no
Failing to make an export (return)more than the production cost of the goods
declaration or exporting goods different- Confiscation of goods smuggled out/
from the ones declared
enforcement penalty for goods smuggled out

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For Foreigners Guide to Customs Declarations

Major Customs
Offence
Customs Duty
EvasionIllegal
Exemption
IllegalDrawback

Details of Violation
Making a false declaration of thecustoms value or customs duty rate, or
importing without making a declarationof the customs value or customs duty
rate
Getting duty exemption illegally or
evading duty payment for the goods
mitigated and exempt from customs
dutiesGetting a drawback illegally

Punishment
No longer than 3 years in prison or fines no morethan the higher amount between 5 times morethan the evaded amounts and the production costof the goods
No longer than 3 years in prison or fines no morethan 5 times the mitigated and exempted (evaded)
duty amounts
No longer than 3 years in prison or fines no morethan 5 times the drawbacked duty amounts

Illegal Export/
Import(Illegal import) No longer than 3 years in prison orfines no more than KRW 30 million
Failing to meet import requirements, or(Illegal export) No longer than 1 year in prison or
meeting them illegally, and then partiallyfines no more than KRW 20 million
importing finished goods prohibited(Partial import) No longer than 3 years in prison
from export/import, or import, as partsor fines no more than the production cost of thegoods

Acquisition ofContraband
Goods, Etc.

Acquiring,transferring,
carrying, - No longer than 3 years in prison or fines nokeeping, helping to find or assessing
more than the production cost of the goods
contraband goods (or illegally exported/ - Confiscation of contraband goods/ enforcement
imported goods)
penalty for contraband goods

Ⅴ. Guide to Customs Audit and Investigation

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Ⅴ. Guide to Customs Audit and Investigation

Penalties for NegligenceŸ Article 277 of the Customs Act provides for penalties for negligence to ensurecompliance with export and import declaration obligations. Penalties fornegligence imposed on violations are stipulated in the Foreign Trade Act, theForeign Exchange Transactions Act and other laws as well as the Customs
Act.
Ÿ Penalties for negligence are imposed on non-compliance with customs
administration purposes, including failure to meet declaration obligations,so they are different from customs punishment imposed on direct violation
against customs purposes.

Additional Duties and Additional Dues
Ÿ Additional duties refer to the duties collected in addition to the computed
customs duty in case of failure to meet any obligation prescribed in the
Customs Act (Article 42, etc.).
Ÿ Additional dues include the insincere additional amounts collected in addition
to the duties to be paid where the duty payer fails to pay the duties by the duedate, and the arrear additional amounts collected in proportion to time that has
passed since the due date if the duty payer still has not paid the duties after thedue date as prescribed in Article 41 of the Customs Act.

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For Foreigners Guide to Customs Declarations

08

Non-Issuing of VAT Receipt for Tax Deduction

Issuing Cases
Ÿ In accordance with the Customs Act, an amended VAT receipt is issued when
DQ LPSRUWHU PDNHV DQ DPHQGHG LPSRUW GHFODUDWLRQ KLPVHOIKHUVHOI HWF 
EHIRUH WKH KHDG RI WKH FXVWRPV GHWHUPLQHV RU UHFWL¿HV WKH WD[ EDVH RU WKHcustoms duty, regardless of whether the causes are attributable to the importer.
* Where the importer makes a final value declaration (Article 28② of the Customs Act) after aprovisional value declaration; in case of self-correction (Article 38-2①② of the Customs Act),
amended dedaration (Article 38-3① of the Customs Act) or a request for rectification (Article38-3②③ of the Customs Act); in case of rectification following adjustment of the customs valueof imported goods (Article 38-4① of the Customs Act); in case of a drawback (Article 46 of the
Customs Act), or recovery of an excessive refund of customs duties (Article 47 of the Customs Act);and in case of a refund of customs duties for goods, etc. different from contract terms (Article 106of the Customs Act)

Non-issuing Cases:Ÿ An VAT receipt bill will not be issued when the head of a customs determines
RUUHFWL¿HVWKHWD[EDVHRUWKHFXVWRPVGXW\DIWHUDFXVWRPVSRVWDXGLWHWF
GHWHUPLQHG RU UHFWL¿HG DQG WKHQ PDNHV DQ DPHQGHG GHFODUDWLRQ DIWHU WKHfollowing:① Notice of a customs post audit or an investigation into customs offences;②,QFKRDWLRQRIRQVLWHH[DPLQDWLRQRIFXVWRPVRI¿FLDOVWRJDWKHUWD[GDWD
or handle civil affairs, etc.; or③ The cases as listed above

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127

Ⅴ. Guide to Customs Audit and Investigationor when the importer anticipates that the tax base or customs duty will be

Ⅴ. Guide to Customs Audit and Investigation

Ÿ Even in ① or ②, an amended VAT receipt may be issued if the importer's
simple mistake has been found to be the cause of the case, or the importer
SURYHVWKDWWKHFDXVHLVQRWDWWULEXWDEOHWRKLPKHU)RUPRUHLQIRUPDWLRQFor More Information▶ Korea Customs Service, Audit Policy Division, 042-481-7862

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For Foreigners Guide to Customs Declarations

09

Suspension of Customs Audit andInvestigations for Job-Creating Businesses

Customs Post Audit can be Suspended for Businesses Working
hard to Create Jobs.
Ÿ This programme has been implemented as a customs support measure to
EXVLQHVVHVVLQFHWRUHÀHFWWKHRYHUDOOHFRQRPLFGLI¿FXOWLHV

Requirements for Suspension of Customs Post Audit:
Among corporations with no more than USD 100 million in import volume and at least 70
percent in the proportion of export (export to sales ratio) in manufacturing in 2014, thosethat have increased, or has a plan to increase, employment of full-time workers (Article
2(2) of the Circular on the Restriction of Special Taxation Act) by 4 to 10 percent in 2015
compared to the previous year and have submitted a "job creation plan" to the Korea
Customs Service.
* Employment of a young worker (aged 15 to 29), older worker (aged 60 or older), or adisabled worker is equivalent to employment of 1.5 persons in calculating the numberof full-time workers.

Import Volume in 2014

Less than USD 10
MillionUSD 10 million
to 50 million

USD 50 million to
100 million

Employment Growth Rate

4% or higher

5% or higher

10% or higher

Korea Customs Service

Ⅴ. Guide to Customs Audit and Investigation※ Employment growth rate required for suspension of customs post audit

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Ⅴ. Guide to Customs Audit and Investigation

Customs Post Audit will be Suspended for a Year from the Date ofApproval for the Suspension.
Ÿ Establishment and submission of a job creation plan to the Korea Customs
Service webpageŸ1RWL¿FDWLRQRIDSSURYDODIWHUFRQ¿UPDWLRQRIWKHUHTXLUHPHQWV
Ÿ Suspension of customs post Audit for one year from the date of approval

For More Information▶ Korea Customs Service, Corporation Audit Division, 042-481-7973

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For Foreigners Guide to Customs Declarations

10

Duty Payers' Rights

Prohibition on abuse of the Authority to Conduct Customs Audit(Article 111(1) of the Customs Act)Ÿ Customs Audit should be carried out to the minimum extent necessary torealize fair and reasonable taxation and ensure legality in clearance.
ĺ,W LV QRW DOORZHG WR DEXVH WKH DXWKRULW\ WR FRQGXFW WKH DXGLW IRU RWKHU
purposes.

Rights to Reject Duplicate Customs Audit (Article 111(2) of the
Customs Act)Ÿ Duplicate customs audit into one transaction that had already audited isprohibited, except in the following cases:① Where there exists explicit evidence corroborating a suspicion of a duty
evasion, etc.;② Where it is necessary to audit a trading partner of a person who has been
audited;disposition rendered as an objection, any request for evaluation or
DGMXGLFDWLRQ¿OHGXQGHUWKLV$FWLVGHHPHGUHDVRQDEOHRU④ Where overall audit is conducted against persons who have been on suspicionof duty evasion, and other cases prescribed by Presidential Decrees.

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131

Ⅴ. Guide to Customs Audit and Investigation③ Where an audit is conducted based on a decision to take a necessary

Ⅴ. Guide to Customs Audit and Investigation

Rights to get help from Customs Brokers, etc. (Article 112 of the
Customs Act)
Ÿ7KRVHXQGHUFXVWRPVDXGLWPD\KDYHODZ\HUVFHUWL¿HGFXVWRPVEURNHUVRU
persons with customs expertise participate in the audit or give opinions.

Assumption of Duty Payers' Good Faith (Article 113 of the Customs
Act)Ÿ&XVWRPVRI¿FLDOVVKRXOGDVVXPHWKDWGXW\SD\HUVZRXOGEHDFWLQJLQJRRG
faith and submit a declaration completed with sincerity, except in cases where
WKHGXW\SD\HUKDVIDLOHGWRIXO¿OOKLVKHUREOLJDWLRQLQFOXGLQJWKHREOLJDWLRQ
to make declarations, or where there is explicit evidence for duty evasion.

Rights to get a Prior Notice (Article 114 of the Customs Act)Ÿ Prior to a customs audit, a notice with details on the audit areas and reasonsshould be sent to the duty payer (including mandator) subject to the audit 7
days before the start of the audit.
 ([FHSWLRQV① In case of an investigation into a criminal violation; or② Where a prior notice may lead to destruction of evidence, etc., making it
GLI¿FXOWWRDFKLHYHWKHLQYHVWLJDWLRQJRDOVRights to get informed of the Audit Results (Article 115 of the
Customs Act)
Ÿ After the completion of the customs audit, the audit results should be issued
in writing to the duty payer, except in cases where the duty payer's businesshas shut down, etc.

132

For Foreigners Guide to Customs Declarations

&RQ¿GHQWLDOLW\ RI Customs audit Information (Article 116 of the
Customs Act)
Ÿ&XVWRPVRI¿FLDOVDUHSURKLELWHGIURPSURYLGLQJRUOHDNLQJPDWHULDOVVXEPLWWHG
by duty payers or obtained while doing their job, and from using them forother purposes than audit intended.

Rights to get Customs information (Article 117 of the Customs Act)Ÿ When duty payers request information they need to exercise their rights,
FXVWRPV RI¿FLDOV VKRXOG LPPHGLDWHO\ SURYLGH VXFK LQIRUPDWLRQ DQG RWKHU
related information deemed necessary for the duty payers as well.

❖ Recent Revisions to Customs LawsŸ([WHQVLRQRIWKHSHULRGIRUGXW\SD\HUVWRUHTXHVWUHFWL¿FDWLRQ $UWLFOHV
and 38-4 of the Customs Act):\HDUVĺ\HDUVIURPWKHGDWHRIGXW\SD\PHQW
Ÿ Extension of the extinction period of the authority to collect large amounts of- 5 years regardless the volume of the amounts of customs duties to be
FROOHFWHGĺ\HDUVIRU.5:PLOOLRQRUPRUHDQG\HDUVIRUOHVVthan KRW 500 million in the amounts of customs duties to be collectedŸ Change in the grounds for calculation of the additional duty interest rate on
GH¿FLHQWGXW\DPRXQWV $UWLFOHRIWKH&XVWRPV$FW 7LPH GHSRVLW LQWHUHVW UDWH  DQQXDOO\  ĺ RYHUGXH ORDQ 
annually)

Korea Customs Service

133

Ⅴ. Guide to Customs Audit and Investigation

customs duties (Article 22 of the Customs Act):

Ⅴ. Guide to Customs Audit and Investigation

Expanded Exemption of Additional Duties on Deficient Duty Amounts[Article 39-3 of the Decree of the Customs Act])
Before Revision

After Revision

1. Amended declaration before theacceptance of the import declaration

Additional duties + interest<No change>

2. Duty payment after a provisional value
declaration

Additional duties + interest<No change>

2-2. Amended declaration of duty amounts
payable after the determination of theadvance customs value ruling

Additional duties

3. Errors in exemption
exemption rate

Additional duties

targetor<No change><No change>

3-2. Amended declaration within 1 year
and 6 months from the end of
the self-correction period (except
for cases where the duty payer
anticipated that there would berectification)<Newly established>

4. Goods for the government

Additional duties + interest

4-2. Delayed decision of pre-taxation
deliberation<Newly established>

50% of the interest during
the delayed period

5. When the duty payer has a justifiablereason for deficient amounts of duties

Additional duties + interest<No change>*Additional duty: 10% of the deficiency

134

For Foreigners Guide to Customs Declarations- Within 6 months: 20% ofadditional duties- Within 1 year and 6
months: 10% of additional
duties<No change>

Ⅵ
Guide to Appeal and
Dispute Settlement

Overview 01
Request for Review over Audit 02
Result Prior to Tax Notitication
Procedures of Appeal and 03
Dispute Settlement

01

Overview

Remedies in customs DisputeŸ Remedies in customs dispute are divided into ex ante remedies and ex post
remedies, and here is how they work:
Overview of Customs Dispute Settlement Process

Customs Dispute Settlement

Ex AnteRemedies

Pre-Taxation Deliberation(Main Customs Heads, KCS Commissioner)

Appeal(Customs Head)

Examination request
Administrative
Adjudication

Ex postRemedies(KCS Commissioner)

Adjudication request(Tax Tribunal Chairman)

Remedy by
Tribunal Judgment

Examination request(Board of Audit andInspection Chairman)

Judicial
Litigation
Remedy by
Customs Official

Administrative
Litigation
Civil
Litigation

137

ⅥGuide to Appeal and Dispute Settlement

Korea Customs Service

Ⅵ. Guide to Appeal and Dispute Settlement

Procedures of Objection to an Administrative Disposition:
Pre-Taxation Deliberation

138

Ex Post Remedy

CommonFeatures• Start by request• Ex officio trial examination; nemo iudex sine actore; and verbot der reformatio in peius• Adversary system; committee deliberation; and the results with binding effects on theoffice in charge of the disposition

Differences• Ex ante administrative procedures• ex post administrative procedures• Suspension of execution (except in cases • non-suspension of execution
where the end of the limitation period has
arrived)• objection allowed not to the deliberation
results itself but to the disposition basedon the deliberation results

For Foreigners Guide to Customs Declarations

02

Request for Review over Audit Result
3ULRUWR7D[1RWL¿FDWLRQ

You will get written Notice before Taxation.
Ÿ The head of the customs should notify the duty payer in writing before imposingGH¿FLHQWGXWLHVEXWWKHUHDUHFDVHVZKHUHWKHKHDGRIWKHFXVWRPVPD\VNLSWKH
QRWL¿FDWLRQVXFKDVZKHQWKHOLPLWDWLRQSHULRGFRPHVWRDQHQGZLWKLQPRQWKVRequirements to Request for Pre-Taxation DeliberationŸ 5HTXHVWSHULRG $SSO\IRUSUHWD[DWLRQGHOLEHUDWLRQZLWKLQGD\VIURPWKH
GDWHRQZKLFK\RXUHFHLYHSUHWD[DWLRQQRWLFH
Ÿ (Requesting agency) In principle, a pre-taxation deliberation request should
EHPDGHWRWKHKHDGRIDPDLQFXVWRPVEXWWKHUHTXHVWFDQEHPDGHWRWKH
Commissioner of thH.RUHD&XVWRPV6HUYLFHLQH[FHSWLRQDOFDVHV※ Duty payers may appoint a lawyer or customs broker as their representative.

Effects of a Pre-Taxation Deliberation Application
Ÿ7KHKHDGRIWKHFXVWRPVZRXOGKDYHWRSRVWSRQHUHFWL¿FDWLRQDQGQRWL¿FDWLRQXQWLOWKHLQVWLWXWLRQLQFKDUJHRI¿QDOGHWHUPLQDWLRQPDNHVDGHFLVLRQEXWWKH
SRVWSRQHPHQWPD\QRWFRQWLQXHLIWKHOLPLWDWLRQSHULRGHQGVŸ The head of the customs or the Commissioner of the Korea Customs Service
VKRXOGGHFLGHZKDWWRGRZLWKWKHUHTXHVWZLWKLQGD\VIURPWKHGDWHRIWKH
UHTXHVWWKURXJKGHOLEHUDWLRQDWWKH&XVWRPV$SSHDO&RPPLWWHH

Effects of the Decision on a Pre-taxation Deliberation Request▲ The claimant may not raise an objection to taxation disposition based on thedecision made on the pre-taxatioQGHOLEHUDWLRQUHTXHVW

Korea Customs Service

139

ⅥGuide to Appeal and Dispute Settlement

Ÿ The decision made on an request for pre-taxation deliberation has binding
HIIHFWVMXVWOLNHWKHGHFLVLRQRQDQDSSHDORUDQH[DPLQDWLRQUHTXHVW138

For Foreigners Guide to Customs Declarations

Ⅵ. Guide to Appeal and Dispute Settlement

03

3URFHGXUHVRI$SSHDODQG'LVSXWH
Settlement

Ÿ When disagreeing with the customs administrative disposition of the customs,
GXW\SD\HUVFDQVHFXUHWKHLUULJKWVWKURXJKFXVWRPVDGPLQLVWUDWLYHUHPHGLHV
③ 90 days

Examination
Request(KCSCommissioner)

Administrative
Disposition② 90 days

Appeal(Head of the Customs
house)⑥ 90 days

Adjudication
requestOnly when the duty
payer wants(Tax Tribunal
Chairman)④ 90 days

Administrative
litigation(Administrative
court)

Examination request⑤ 90 days(Chairman of theBoard of Audit
and Inspection)

Optional, choose 1

Ÿ The period and institution for request by type of remedies are as follows:
Request
PeriodInstitution

Decision
PeriodNote① Pre-taxation
Deliberation

30 days

Heads of main Customs/
KCS Commissioner

30 days(KCS Commissioner)
KRW 500 million or more

② Appeal

90 days

Heads of Customs

30 daysIf the Duty Payer wants③ Examination Request

90 days

KCS Commissioner

90 days④ Examination Request
to the Board of Audit
and Inspection

90 days

Chairman of the Board
of Audit and Inspection

3 months⑤ Adjudication Request

90 days

Chairman of the Tax
Tribunal

90 days⑥ Administrative
Litigation

90 days

Administrative Court-

Remedy Type140

For Foreigners Guide to Customs Declarations

Optional/
Choose 1

3-Tiered Judicial
SystemⅦ
6HOI&KHFNLQJDQG&XVWRPV&RXQVHOOLQJ

Self-Checking List 01
Customs Counselling Services for Traders 02

01

6HOI&KHFNLQJ/LVW&KHFN \RXUVHOI E\ VWDJH HJ SURGXFWLRQ FRQWUDFW SXUFKDVH WUDQVSRUWDWLRQFOHDUDQFHDQGVDOH IRUULVNPDQDJHPHQW* Customs risk : "○" - there is a risk of customs errors; "x" - there is no risk of customs errors; and"n" - not related to customs duties

Stage

Production

Contract
Purchase

Item

Customs
Risk○

Profits and general expenses○

Production assists expenses(Goods and services)○

Export subsidiesnCommissions and brokerage fees
(Purchase commissions not included)○

Abnormal advertisement costs,
and business management services○

Debt repayment○

Costs of obligatory overseas training undersales conditions○

Separate indirect payment○

General commercial transaction price discountx

Advance payments not made○Royalties and licence fees○

Risk
Management

Imposition ofcountervailing
duties

Pre-Examinationof customs value(APR/ACVA)

Korea Customs Service

143

ⅦSelf-Checking and Customs Counselling

Production costs of the producer

Other
Risks

Ⅶ. Self-Checking and Customs Counselling

Customs
Risk

Other
Risks

Risk
Management

Illegal issuance of a certificate of origin○

Supplementarycollection

Compliance withregulations

Separately paid box and packing charges(Including labor costs and materials expenses)○

Country of origin description (False, misleading,damaged and modified or negative descriptions,or non-descriptions)nFreight (Including for carriage within the exporting
country and international carriage)○

Correct
declaration

Insurance premiums○

Correct
declaration

Export clearance costs○

Correct
declaration○

Correct
declaration

Stage
Contract
purchase

PackagingTransport
ation

Item

Costs incurred until the completion of preparation
for loading the ship
Arrivaland Cargo
Handling Costs incurred after the completion of loading
the ship

Administrative
sanction, andpunishment

Compliance withregulations

x

Clearance fees

x

Taxes and public utilities' charges in theimporting countryxerrors in tariff classification○

Advanceclassificationruling○

APR and ACVA,
and sharing
the company's
internal taxation
information

Illegal exemption of customs duties○

Checking
exemption andmitigation
requirements

Application of additional value or methods
2 through 6 for customs value determination○

Correct
declaration

Clearance Undervalued declaration

144

Correct
declaration

For Foreigners Guide to Customs Declarations

StageClearance

Item

Customs
Risk

Other
Risks

- Not considering the fact that import goods are
not sold for export to Korea (goods imported
for free, goods imported on consignment,
goods sold under the exporter's responsibility,
goods imported by a branch, etc., goods onlease, and goods whose destruction cost isborne by the shipper)○- Not considering the influence of conditions
and circumstances (e.g. the value determined
under the condition that other goods bepurchased, the value determined based on
the price of the seller's other goods, condition
that goods that have already been used be
returned, condition that part of finished goods
be given after supply of half-finished goods,
compensation trade, and compensation deal,etc.) on the price○- Not considering the influence of limited disposal
and use (E.g. for ads, exhibitions, education,or selling or leasing only to a particular person)on the price○- Not considering the influence of a special
relationship on the price○

Customs value audit before the acceptance of
the import declaration○

Withholding ofclearance

Failure to meet requirements for importing goods
subject to customs verificationnWithholding ofclearance

Risk
Management

ACVA

Correct
declaration

AEO
n

Goods
inspection

Protection of intellectual property rightsnWithholding ofclearance

ParallelimportKorea Customs Service

145

ⅦSelf-Checking and Customs Counselling

Selection of items to be controlled
and stricter import clearance inspection

Ⅶ. Self-Checking and Customs Counselling

Stage

Item

Failure to recover debt; capital movement in
the disguise of trade; failure to report a setoff(between the creditor and the debtor); failure
to report payment and receipt by a person
Foreign other than the party concerned (repayment in
Exchange a different currency, and payment and receipt
by a third party); failure to report payment andreceipt which do not involve a foreign exchangebank; flight of domestic properties abroad; andmoney laundering

Duty
Payment

Domestic
Carriage

Installation

Domestic
Sale

Other
Risks

Risk
ManagementnAdministrative
sanction, andpunishment

Report to theforeign exchange
authorities

Unfairly enjoying the FTA preferential tariff○

Certificate oforiginFailure to declare freight, insurance premiums,
commissions, production assists expenses, orbox and packing expenses○

Correct
declaration

Declaration of the deficient amounts and revisionof the value○

Interest for theperiodWithin 6 months

Amended declaration of the duty amounts not
paid○

Additional
dutiesCorrect
declaration

Claim for rectification○

Overpayment

Within 2 years

Freight after importationx

Insurance premiumsx

Costs of installation, repair, maintenance, etc.
incurred after importationx

General commissions (goods on consignment)xProfits and general expenses (purchased goods)x

Post-import benefits (subsequent proceeds)○

Provisional value
declarationnSupplementarycollection of the Compliance with
mitigated and post management
exempted duty
requirements
amounts

Post management of goods mitigated andexempted from duties

146

Customs
Risk

For Foreigners Guide to Customs Declarations

StageCustoms
Post
Audit

RemedyExportItem

Customs
Risk

Other
Risks

Failure to meet export/import requirements andcomply with the procedures- Violations of 57 laws on health and foodsanitation, social safety, environmental
protection, agricultural, fishery and livestock
protection, etc. (including violation of importrequirements for goods subject to customs
verification of clearance requirements)n

Checking importrequirements foreach HS code

Failure to declare the customs value, etc.

○

APR and ACVA

Control of country of origin description violations,comprehensive audit, foreign exchange
investigations, and customs crime investigationsn

Dissatisfaction at customs dispositions andadministrative dispositionsn

Unfair or excessive drawback○

Foreign customs' request for country of origin
investigations or verificationnHigh customs inspection rates and delayed
clearance process in the importing countrynAdministrative
sanction, andpunishment

Risk
Management

Compliance withregulations

Remedies

Administrative
sanction, andpunishment

Loss of export
customers
loss of export
customers

Checking errors,
including in
calculation of theyield ratio
Approved
exporter

147

ⅦSelf-Checking and Customs Counselling

Korea Customs Service

AEO

Ⅶ. Self-Checking and Customs Counselling

02&XVWRPV&RXQVHOOLQJ6HUYLFHVIRU7UDGHUVGet Customs Counselling Services from the Customs Customer
Service Center.
Ÿ The Customs Customer Service Center provides a "one-call, total service"
LQDOOFXVWRPVDGPLQLVWUDWLRQ¿HOGV HJH[SRUWDQGLPSRUWFOHDUDQFH)7$
FRPPRGLW\ FODVVL¿FDWLRQ YDOXDWLRQ DQG H[HPSWLRQ H[SUHVV FDUJR DQGSDVVHQJHUSHUVRQDOHIIHFWVFOHDUDQFHERQGHGFDUJRDQGGUDZEDFN 

If you want Telephone Counselling Services,Ÿ Call 125 without an area code wherever you are in Korea (overseas : 82-2 Ÿ6LQFH'HFHPEHUWKHVPXJJOLQJUHSRUWFHQWHUKDVEHHQLQWHJUDWHGLQWR
WKH .RUHD &XVWRPV 6HUYLFH  FDOO FHQWHU H[WHQVLRQ  IRU VPXJJOLQJUHSRUWDQGH[WHQVLRQIRUFXVWRPVFRXQVHOOLQJ
Ÿ7KH VHUYLFH LV SURYLGHG IURP  $0 WR  30 RQ ZHHNGD\V FORVHG RQ
KROLGD\VDQG6DWXUGD\VDQG6XQGD\V $WQLJKWPDNHDUHVHUYDWLRQWKURXJKDQDXWRPDWLFUHVSRQVHV\VWHPDQG\RXFDQJHWWKH¿UVWFRXQVHOOLQJVHUYLFHVWKHQH[WGD\

If you want Online Counselling Services,Ÿ*R WR WKH &XVWRPV &XVWRPHU 6HUYLFH &HQWHU ZHESDJH KWWSFDOOFXVWRPVJRNU DQGSRVW\RXUTXHVWLRQRQWKHRQOLQHFRXQVHOOLQJVHFWLRQŸ6HDUFK4 $DQG)$4RIWKHRQOLQHFRXQVHOOLQJVHFWLRQRIWKHZHESDJHIRU
VLPLODUFRXQVHOOLQJFDVHV148

For Foreigners Guide to Customs Declarations

If you want face-to-face counselling services,Ÿ0DNHDUHVHUYDWLRQRYHUWKHSKRQH  DQGWKHQYLVLWWKH&XVWRPHU
6HUYLFH&HQWHUWRJHWFRXQVHOOLQJVHUYLFHVLQSHUVRQŸ$GGUHVV  5RRP  %XLOGLQJ  *RYHUQPHQW &RPSOH[*ZDFKHRQ 
Gwanmun-ro, Gwacheon-si, Gyeonggi-do

149

ⅦSelf-Checking and Customs Counselling

Korea Customs Service

Guide to Customs Declarations
발행일 2015년 9월발행인 김낙회 관세청장발행처 관세청 심사정책국
대전광역시 서구 청사로 189
TEL : (042)481-7973 FAX : (042)481-7989
편 집 이찬기 심사정책국장변동욱 법인심사과장한용우 사무관, 김 준인 쇄 (주)협동문고
TEL : (02)545-6188<비매품>