What is a duty free shop?
Authorized duty free shop (Bonded store)
- Authorized duty free shops (bonded stores)("Duty Free Shop") sell goods under the condition that goods soldtherein are shipped overseas or used by a person eligible for duty exemption (「Customs Act」 Article 196(1)).
Designated duty free shop
- A designated duty-free shop, which is a shopwhere duty-free goods are sold, is run by Jeju FreeInternational City Development Center and JejuProvince Development Co. for the purpose of raising funds necessary fordeveloping an international free city and is designated and announced by thedirector of a customhouse with jurisdiction over JejuSpecial Self-governing Province (Article 170.(1).4.A of the Special Act of theEstablishment of Jeju Special Self-governing Provinceand the Development of Free International City and Article 27.(1) of theEnforcement Decree of the Special Act of the Establishment of Jeju Special Self-governing Province and the Development ofFree International City).
Taxes exempted
Duty free shop
- Customs duties
· As taxes ofgoods at duty free shops are withheld, taxes should be paid when purchasedgoods of which value or quantity exceeds an allowed limit are taken into theRepublic of Korea. However, customs duties on goods purchased within an allowedvalue or quantity are exempted in consideration of economic and social policyaspects (「Customs Act」 Article 96 (1) 1).
- Value added tax
· Personaleffects, separately delivered baggage, and mailed parcels of travelers who areexempt from customs duties, or goods which are subject to simplified tariffrates in accordance with the Customs Act Article 81 (1) are exempt from valueadded taxaspects (「Value Added Tax Act」 Article 27, 8).
- Individual consumption tax
· Individualconsumption tax is not levied on goods subject to simplified tariff rates inaccordance with the Customs Act (「Individual Consumption Tax Act」 Article 2, 2).
- Liquor tax
· Alcoholicbeverages that are hand-carried by travelers and exempt from customs duties areexempt from liquor tax as well (「Liquor Tax Act」 Article 20 (2) 4).
- Tobacco consumption tax
· Less than acertain number of cigarettes brought by a person entering the Republic of Koreaare exempt from tobacco consumption tax (「Local Tax Act」 Article 54 (2) and 「Enforcement Decree of the Local Tax Act」 Article 64(2)).
Designated duty free shop
- Designated duty-free shop is a place that sells duty-free goods on thecondition that travelers from Jeju SpecialSelf-Governing Province carry them out to other areas other than Jeju Special Self-Governing Province. [Article 177 (1) ofthe 「Special Act for Establishment of Jeju SpecialSelf-Governing Province and Creation of Free International City」, Article 4 of 「SpecialRegulations on Duty-Free Shops for Tourists in JejuSpecial Self-Governing Province」 Notification」 Article 2 subparagraph 2].
Application of exchange rates
Application of exchange rates
- All duty free shops in the Republic of Koreaapply the same exchange rates, and the basic exchange rates or arbitrage ratesin accordance with the Foreign Exchange Transactions Act of the previous day ofthe point of sales (indicating the day of final notification) is applied (「Notification onOperation of Bonded Store」 Article 5 (4)).