South Korea is mulling to set an annual maximum on duty exemptions on cross-border goods purchases from 2022.

The Ministry of Economy and Finance has embarked on the study on the suggestion from the customs office arguing for the need to create an annual ceiling on tax exemptions on unaccompanied purchases of goods from overseas.

“There is a reasonable ground on the need to set limit on duty exemptions on overseas direct purchases to aid domestic demand,” a ministry official said. A change cannot be immediately implemented as it would increase tax burden, he added.

The Korea Customers Service will draw up an outline after study on overseas purchase by mailing and shipping. From December, all consumer purchases from overseas must be registered with individual customs code, making it easier for the customs office to stock data on cross-border online shopping. The office will be able to set the reasonable ceiling after the study of a year-long pattern

Currently duty fees and value added taxes are exempted on each shipping item of $150 or under or $200 or under in the case of purchase from the United States. Since there is no limit on cumulative purchases, one can save taxes for multiple shopping of items each under $150.

According to Democratic Party Rep. Park Hong-keun based on the customs data, top 20 buyers of 11,342 shipping goods as of August this year, nearly 80 percent were exempted from duties.

China sets 26,000 yuan ($3,865) annual quota on duty-free allowances for cross-border ecommerce purchases. European Union also levies VAT on every overseas consumer shipping purchases.

By Chun Gyung-woon and Lee Eun-joo

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]