By Choi Kyong-ae
Small firms will be exempt from customs inspection after the government decided to simplify customs procedures to support their businesses, the Korea Customs Service (KCS) said Thursday.
“We basically won’t undertake tariff investigations into small companies which have posted less than 3 billion won ($2.89 million) in total trading volume for the past two years,” Jeong Seung-hwan, director of the Audit Policy Division at the KCS, said in a press briefing.
“Companies which import less than 30 billion won a year are also exempt from tariff investigations.”
But there is a condition for the exemption. The companies need to remain free from suspicions of making any attempt to evade tariffs, the KCS director said.
Currently, 95 percent of 150,000 Korean importers and exporters fall into this category. That means small businesses are also a growth driver of the national economy together with large conglomerates such as Samsung Group and Hyundai Motor Group.
The move is in line with President Park Geun-hye’s pledge to lift obstacles blocking SMEs from prospering alongside their bigger rivals, according to the KCS.
When it comes to a tariff investigation into SMEs, the KCS will basically make it a rule to send a company a questionnaire without visiting it, the director said.
“If we find no other option but to visit a company for an investigation, we will halve the examination period to 10 days from the current 20 days,” Jeong said. “We will make sure that there will be no overlapping investigations by several government agencies.”
As SMEs account for 99 percent of the country’s overall companies, the KCS said it will offer customized services to help them grow into major players. According to market research firm CEO Score, Samsung and Hyundai made up 35 percent of the country’s gross domestic product growth in 2012.
“We will simplify the documentation process in which SMEs get their tax returns from the authorities. And companies which temporarily suffer a lack of capital to pay tariffs will be allowed to delay their duties payment by up to 12 months,” the official said.
The KCS also plans to ease regulations on consumers’ direct buying of most products worth less than $100, except for foods and pharmaceuticals, from overseas starting in July.
Currently, only six items, such as apparel and shoes, are exempt from tariffs when the buyers report their purchases to the government.
To give customers more options, the KCS said it will also ease regulations on grey importers and the number of grey-import items.
In grey imports, also known as “parallel imports” here, companies such as SK Networks import and sell products outside of the traditional supply chains at prices cheaper than the products available locally but without warranties. Grey importers have their own businesses.
All of the products traded by grey importers are perfectly legal but there are no official warranties for the products.
It plans to increase the number of grey importers to 230 by 2015 from 122 as of February, and that of items to 350 from 236 during the same period.