Tax-Alert: Shopping In Korea this Holiday Season Will be More Merrier!

(photo credit online)

Korea’s government has removed some items from the Individual Consumption Taxes list, making them exempt from what is often referred to as a ‘luxury tax’.

Perfume, cameras and deer antlers were removed from the list, but tax will still be imposed on purchases of Royal Jelly.

Authorities reported that the ruling party and opposition party have agreed on the revision of the Individual Consumption Tax Act.

The government announced that it would be eliminating the seven per cent tax that was imposed on deer antlers, Royal Jelly and perfume, when it revealed the revised bill in August.

However, during debate at the national assembly, Royal Jelly was excluded from the exempted items, and cameras, which used to face a 20 per cent tax, were added.

The bill proposed by governor Jung Eui-hwa suggested that cameras be excluded from the items facing individual consumption taxes. She explained that ‘owning a camera is no longer a symbol of wealth’, and instead it is seen as a matter of ‘consumer preference and choice’.

Though it was not included in the revised bill that both parties agreed to, the five per cent tax which was imposed on air conditioners, refrigerators, washers and TVs consuming more than the standard amount of electricity is expected to be abolished as the revised act is enforced.

(photo credit online)

The revision was undertaken to follow international trends, and recognize the changes that have occurred with the passing of time. It was concluded that the items exempt from taxes were no longer thought of as ‘luxury’ goods in the current society, in which personal income and standard of living are both higher than in the past.

With the abolishment of individual consumption taxes, the factory prices of deer antlers, cameras and perfume will be lowered. However, some have pointed out that it remains to be seen whether the revision of the bill will lead to lower consumer prices, like the prices of high-fashion brand bags.

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