Exporting to South Korea

Read more about exporting to south Korea below

South Korea is a growing export market. In 2014, it was the 13th largest economy by Gross Domestic Product (GDP), and it has a GDP per capita that is three times the size of China’s and almost equal to Japan’s. South Korea is currently the third largest market in Asia/Oceania for the UK and the 13th largest worldwide.

Fact File

  • Population: 50.22 million
  • Capital City: Seoul
  • Languages: Korean
  • Currency: South Korean Won
  • Area: 100,210 sq. km

Why Trade With South Korea?

The EU-Korea Free Trade Agreement (FTA) means that the South Korean market is estimated to be worth over £500 million to UK businesses each year. It also grants easy access to the market for UK businesses. This figure is increasing annually, meaning that South Korea is a high growth market for UK exports.

South Korea is known for being business friendly and the country is hoping to become one of the top 10 business friendly economies in the world. As such, it offers tax support, cash grants and site location support, as well as other incentives.

On top of all this, 7% of tariff barriers between Korea and the EU will be eliminated within 3 years and EUR 1.6 billion of duties for EU exporters will be abolished annually to ease trade between the two countries.

The top exports to South Korea in 2014 (excluding oil) were:

  1. Nuclear reactors, boilers, machinery, parts.
  2. Road vehicles.
  3. Optical, measuring, precision, medical and surgical instruments.
  4. Electrical machinery, sound recorders, television image.
  5. Pharma products.
  6. Pearls, Semi-Precious stones and precious metals.
  7. Beverages and spirits.
  8. Iron and steel.

What Are the Challenges?

You have to be an approved exporter before you can make shipments to South Korea, but you can apply for approved status here.

At present, South Korea has a ‘direct transport rule’ in place. UK companies do not fully benefit from this as shipments tend to go via Hong Kong or Singapore. However, there is a push for this rule to be amended.

Tax and Customs

Laws in South Korea change frequently and rapidly. Due to this, before you seek arrangements it’s best to contact the UKTI team over in South Korea as they will be able to give tax and legal advice.

When you’re sending shipments to South Korea, country of origin labelling is required for all commercial shipments. In addition, at the time of customs clearance, Korean language labels must be shown. These can be attached locally.

South Korea’s VAT rate is 10%, although some cultural items such as newspapers and magazines may be exempt from this. Some items are also zero taxed, including:

  • The export of goods
  • The supply of services outside Korea
  • The supply of international transportation services by vessel or aircraft
  • The supply of certain goods or services paid in foreign exchange

South Korea’s company tax rates are currently:

  • 10% on the first KRW 200 million
  • 20% for the tax base between KRW 200 million and 20 billion
  • 22% for the excess

In addition to this, in South Korea, there are 2 ways a duty amount can be determined:

  • Declaration and payment
  • Notice of assessment

You can get more information about this from the Korean Customs Service.

Providing the Correct Documentation

If your company has no record of trade law violations, then it doesn’t need customs inspection unless it is importing ‘high risk items’ to South Korea.

If you’re making an import declaration, there’s also no need to visit the customs house as you can do it online via the Electronic Data Interchange which is monitored by the Korean Customs Service.

Import declarations can also be filed at the customs house before a vessel enters a port. If this is accepted, then the goods don’t have to be stored in a bonded area.

When exporting, you can also file an export notice online via Korean Customs, and all commodities can be freely exported unless they are included on the negative list.

For more information on customs regulations, visit the Korea Customs Service website.