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[Korea's Priority Order of Tariff Rate Application]
■ Outline
ㅇTariff rate is comparatively determined depending on ① items, ② trading partners, and ③application priority according to type of tariffs. Accordingly, you should not make a hasty conclusion that a specific item has a specific percentage of tariff rate.
ㅇAny country adopts the Notification Principle with respect to the adoption of tariff rate and payment of tax. Therefore, a taxpayer may pay customs duty based on high tariff rate even though such person may be eligible for paying tax by applying low tariff rate for his/her own interests(for example, taxpayers may choose the application of basic tariff rate by giving up the benefits of conventional tariff only for the sake of avoiding hassles of obtaining certificate of origin, etc.).
ㅇOne tariff rate is generally fixed by a HS code, but same HS code doesn't always have the same tariff rate(often, one HS code has more than two tariff rates by kind of items.).
ㅇGenerally, multiple tariff rates are applicable to specific goods, but only one tariff rate is determined finally. The final tariff rate is determined by comprehensively taking into account application priority by laws and regulations, international agreements, trading partners, and the compliance of export/import requirements.
■ Korea's Priority Order of Tariff Rate Application
Korea has no export duty, but only import duty.
Import duty(ad valorem duty) is determined by multiplying dutiable value by tariff rate, and dutiable value of goods imported to Korea is based on CIF price.
For tariff rate which is applicable to specific countries, such tariff rate may be applied only when import from such countries has been made.
In case where multiple tariff rates compete for specific goods, the priority order of application is as below(several complicated steps shall be went through to compute actual tariff amount including processes of conversion into local currency, of treatment of a fraction, and of considering specific duty, etc.).
☉ Priority 1
ㅇ Anti-dumping tariff, retaliatory tariff, countervailing tariff, etc.
⇒ Applied on a preferential basis
ㅇ Legal base : Article 50 of the Customs Act
☉ Priority 2
ㅇ FTA Tariffs : Chile, Singapore, EFTA, ASEAN, India, EU, Peru, United States
⇒ applied preferentially only if lower than priority 3, 4, 5, 6, and 7
ㅇ Legal base : Article 5 of Act on Special Cases concerning the Customs Act for the Enforcement of the Free Trade Agreement(Special Act on FTA)
☉ Priority 3
ㅇ WTO general bound tariff, TNDC(Trade Negotiation among Developing Countries), Asia-Pacific Trade Agreement(APTA), Global System of Trade Preferences among Developing Countries(GSTP), international cooperation tariff in accordance with tariff negotiation with specific countries, beneficial tariff
⇒applied preferentially only if lower than priority 4, 5, 6, and 7
ㅇ WTO general bound tariff
⇒ applied preferentially than priority 6 and 7
Applied preferentially only if lower than priority 4 and 5
ㅇ Bound tariff of Bangkok Agreement
⇒ applied preferentially than priority 6 and 7
Applied preferentially only if lower than priority 4 and 5
ㅇ Legal base : Article 50 of the Customs Act
☉ Priority 4
ㅇ Adjustment duties, seasonal tariff
⇒ applied preferentially than priority 5, 6 and 7
ㅇ Quota tariff
⇒ applied preferentially only if lower than priority 5.
Applied preferentially than priority 6 and 7
ㅇ Legal base : Article 50 of the Customs Act
☉ Priority 5
ㅇ Generalized System of Preferences(GSP)
⇒applied preferentially than priority 6 and 7
ㅇ Legal base : Article 76 of the Customs Act
☉ Priority 6
ㅇ Provisional tariff
⇒ applied preferentially than priority 7
ㅇ Legal base : Article 50 of the Customs Act
☉ Priority 7
ㅇ General tariff
⇒ applied in the most subordinated order
ㅇ Legal base : Article 50 of the Customs Act
■ Other Notes
ㅇThis TCS program provides information, supposing that taxpayers will generally choose the lowest tariff rates.
ㅇThis TCS program provides information, supposing that more than two tariff rates may be applied simultaneously, and if such tariff rates are the same, a taxpayer has tendency to choose a tariff rate which helps him/her to avoid hassles of business concerned(for example, if both FTA conventional tariff and basic tariff are 0%, a basic tariff which doesn't require certificate of origin may be recommended as final applied tariff under this program.).
ㅇThis TCS system suggests lower tariff rate and tariff amount in principle if tariff rate varies according to whether specific conditions are complied with or not, supposing that general taxpayers wish to have lower tariff rate be applied by meeting the conditions required as possible as they can.
However, considering that taxpayers may fail to comply with the conditions required, applied tariff and its amount applicable to such circumstance is also available under the TCS program(for example, for FTA tariffs, preferential tariffs for the Least Developed Country, etc. the effects of non-compliance of certificate of origin(C/O) are provided, and if failing to obtain quota for quota tariffs, the effects of failing to obtain quota.).
ㅇThis TCS program provides automated system for application priority of tariff rates, selection of final tariff rate, calculation of tariff amount, etc. by precisely analyzing laws and regulations of countries concerned. However, it doesn't contain some tariffs such as retaliatory tariff, anti-dumping tariff, and countervailing tariff, temporarily applicable to specific countries and enterprises.
ㅇThis TCS system provides charts relating to kind of tariff rates and their tariff amounts, and tariff rate finally selected and its tariff amount(click competitive tariff button!).
