South Korea’s import sectors have driven economic growth and international trade. In 2021, the country was ranked tenth in the world in terms of GDP and nine in total imports. The Korean government recognizes the potential and importance of facilitating these processes and has implemented measures to support foreign and domestic companies engaging in import and export activities. Individuals can better understand these areas by delving deeper into the two categories and exploring how the government supports and streamlines each process.
Import Process: Getting Started
The import process involves multiple stages, including sourcing suppliers, customs clearance, and distribution. Before engaging in imports, individuals and businesses must register with the Korea Customs Service (KCS) by submitting the necessary documents and information through the KCS website or contacting a KCS office. Once registered, importers are assigned a unique Importer Customs Code (ICC) for import-related transactions.
Before importing, individuals should familiarize themselves with import regulations and requirements for the specific goods they intend to import. Different products may have specific licensing, certification, or labeling requirements. Conducting thorough research on these regulations, alongside identifying prohibited or restricted ideas, ensures goods comply with relevant laws.
Various customs brokerage services and government organizations assist with the import process and can help streamline the processes. Some other steps to prepare for are customs inspections and arranging transportation and logistics for transporting goods to South Korea. Staying on top of the process and regularly monitoring any changes and updates helps to keep importers informed and facilitate a smooth transition.
Import Documentation, Procedures, and Customs Clearance
While South Korea provides tariff reductions depending on the import destination, importers must first determine the customs value of their imported goods. This value includes the cost of the goods, insurance, and freight charges. The customs value is crucial for calculating import duties and taxes and must align with the World Trade Organization’s Agreement on Customs Valuation and KCS guidelines.
Depending on the items, their use, and other unique circumstances, simplified tax rates and exclusions may apply. Additionally, the government offers refunds of import duties paid on imported goods re-exported or used as inputs in producing export goods.
To ensure compliance with customs regulations, any goods imported into South Korea must be declared to the Head of Customs. The declaration is accepted if it adheres to the Customs Act and other relevant regulations. Goods are classified using the harmonized system code and must be supported by the required documents for declaration through the KCS’s online-based clearance system, known as UNIPASS.
The UNIPASS system helps to streamline and expedite the import process by enabling importers to submit declarations and necessary documents online, reducing paperwork and processing time. The essential documents all individuals must possess include the import declaration form, invoices, packing list, bill of lading or airway bill, and a certificate of inspection, among others.
Import Regulations and Inspections
Importers should know specific import licensing requirements and regulations for certain goods. Some products may require import licenses or certifications to ensure safety, health, and environmental regulations compliance. Intellectual property, hazardous materials, or cultural heritage may have specific rules or restrictions. Importers should familiarize themselves with these regulations and obtain permits before importing goods into South Korea.
After importing, KCS may conduct physical inspections or examinations of imported goods to verify information, detect prohibited or restricted items, or enforce specific regulations. These inspections ensure compliance with customs regulations, protect public health and safety, and prevent the entry of prohibited items. Through their risk management systems, Korea prioritizes inspections based on risk assessment, improving efficiency in customs clearance procedures and ensuring a more targeted inspection approach.
Import Duties, Restrictions, and Acceptances
Following the customs clearance, the Head of Customs will accept import declarations without errors after inspection. If there are issues with the documentation, corrections may be requested, or an individual may have their customs clearance suspended. Custom problems can arise if the declaration needs more information or documents, poses public health threats, or violates legal regulations.
If the declarations are accepted, importers must make necessary customs duties and tax payments. Businesses with a high rate of law compliance may receive benefits, such as the option of post-clearance tax payments, which allow for more efficient cash flow management.
Once accepted, a certificate of import declaration is issued and protected by various measures to prevent counterfeiting or falsification. Goods will then be released for transportation once an important declaration is confirmed. Important goods, such as raw materials for production, can be released before the acceptance of import declarations if they are urgently required.
Post-clearance, importers must maintain records of transactions, invoices, payment receipts, and declarations. They must also comply with basic requirements such as obtaining permits, certifications, or licenses. These records and compliance measures help ensure the import process’s transparency, accountability, and regulatory adherence.
Challenges and Government Support
While the South Korean government attempts to streamline and remove barriers for those trying to import, there are still several challenges ahead. Some challenges include their specific import regulations and requirements that can be complex and time-consuming to navigate. There are also cultural and language barriers for foreigners who must work with government authorities, suppliers, or customs officials and understand Korean business etiquette. Other issues that may arise may be the customs clearance process or customs duties, taxes, and fees. To alleviate the competitiveness and difficulties in these processes, South Korea offers several programs and incentives to support importers.
One example is the establishment of Free Trade Zones (FTZs) with various countries and regions. These zones serve as locations where goods can be shipped, handled, manufactured, and exported without the involvement of customs agencies. FTZs provide tariff reductions and exemptions for participating countries and help to boost imports and exports in the market. South Korea has FTZ agreements with over twenty participating countries, creating favorable trading conditions and opening new trading opportunities. Some notable Free Trade Agreements (FTAs) include the Korea-US FTA, Korea-EU FTA, and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
investmentIn addition to FTZs, the country has also established special economic zones (SEZs) to attract foreign investment and promote economic development. SEZs
The government promotes trade and support through organizations like the Korea Trade-Investment Promotion Agency (KOTRA). KOTRA provides comprehensive services to facilitate trade and help connect importers with potential suppliers, establish business networks, and promote trade growth.
South Korea’s import process is vital to the country’s economic growth and international trade. The government has implemented measures to support importers and assist them in facilitating import activities. By understanding import regulations and requirements, individuals can be prepared for crucial steps and ensure efficiency. South Korea’s commitment to promoting these processes makes it a prominent player in international commerce.
... BLT & Partners has the most extensive business network in Korea and a team of top-notch professionals, including IP attorneys, lawyers, financial experts, marketers, and more. If you’re looking to enter the Korean market, we have everything you need to succeed. Contact us today to learn more about how we can help you achieve your goals in Korea.