Sep 18, 2023 NEWSLETTERKorea Customs and Trade Update (September 2023) UPDATES Key Changes in Customs Administration for the Second Half of 2023
OPINION Review of the Tax Tribunal Decision Case (Tax Tribunal 2016-0112): Whether excessive refunds were received due to improper calculation of the yield ratio after producing and exporting precious metal products Company A, a firm in nonferrous metal industry, has imported Anode Slime which is a residue from copper refining process, re-exported precious metal extracted from it, and claimed for tax refund for the re-exported precious metal. After some time, customs office made assessment on the excessively refunded duty, claiming that there was inconsistency on the method applied by the company and duty was refunded excessively as a result. Company A filed an appeal against such disposition of the customs office. The tax tribunal has judged the case in two perspectives: whether an excessive refund was claimed with improper calculation and whether there was a retroactive taxation in breach of the principle of good faith. First, given that the exported goods are not joint products, the tax tribunal judged that Company A did not claim the refund based on a proper calculation of the yield ratio. The tax tribunal advised that the company should use ‘fiscal year unit yield ratio calculation method’ and adjust the differences considering the characteristics of the Anode Slime to calculate an accurate duty refund amount. Second, regarding the principle of good faith, Company A claimed that the customs office breached the principle of good faith as the customs office did not make any comment on the calculation method before. However, the tax tribunal judged that the claim cannot be accepted considering the fault of the company reporting the yield ratio calculation as if it were using the fiscal year unit yield ratio method, contrary to the facts. When there are two or more items produced using imported raw materials for export, the yield ratio calculation as well as duty refund amount differs whether an item is perceived as a joint product or as a by-product. This case is an important example showing that companies must apply a correct yield ratio calculation method, and calculate the duty refund amount accordingly for a compliant duty refund process.
AMENDMENTS - Notice on the Handling Duty Refund for Export Raw Materials (partial amendment) - Notice on the Operation of Import Clearance for Household Goods (partial amendment) - Notice on the Management of Ship’s Stores (partial amendment) - Regulations On Special Cases Concerning Value-added Taxes And Individual Consumption Taxes For Foreign Tourists (draft planned) - Enforcement Decree Of The Value-added Tax Act (draft planned) - Notice on the Operation of Customs Valuation (partial amendment) - Enforcement Decree Of The Individual Consumption Tax Act (draft planned) - Special Act On Imported Food Safety Control (partial amendment) - Enforcement Rule Of The Special Act On Imported Food Safety Control (partial amendment)Notice on Changed Classification of Import/Export goods (partial amendment)
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