Applying for Individual Refunds on Exports Made Prior to the First Approval of Non-Application of Simplified Fixed Rate Refunds Released

Regarding your inquiry concerning the approval for the non-application of the simplified fixed rate refund, if this is your initial approval and you have no prior refund history, it is indeed possible to apply for an Individual Refund (excluding the fixed rate schedule) for goods where the export declaration was accepted prior to the approval date.

Legal Basis and Exceptions

This matter is clearly defined in the proviso of Article 14, Paragraph 7 of the Act on Special Cases Concerning the Refund of Customs Duties, etc. (hereinafter referred to as the 'Refund Act').

In principle, when an approval for the non-application of the simplified fixed rate refund is granted, the fixed rate schedule is excluded only for goods exported or traded under local letters of credit after the approval date. However, the law provides a specific exception.

According to this exception, if a company is receiving the non-application approval for the first time and has no record of receiving customs refunds (excluding refunds for 'Same State Exports' under Article 3, Paragraph 1, Item 2 of the Refund Act), they may choose not to apply the fixed rate schedule to goods exported prior to the approval date. Refunds for 'Same State Exports' are excluded from the history check because they relate to re-exporting imported goods without processing, which differs fundamentally from refunds based on manufacturing.

Eligibility for Retroactive Application

Therefore, based on your situation where you have received the non-application approval for the first time and possess no other refund history (aside from potential Same State Export refunds), you satisfy the conditions to apply for refunds via the Individual Refund method even for goods exported before the approval date.

This regulatory provision serves as a safeguard to prevent refund gaps or financial disadvantages for companies transitioning from the simplified fixed rate system to the individual refund system, or those adopting individual refunds for the first time.

Advantages of Individual Refunds and Documentation

The Individual Refund method involves calculating and claiming refunds based on the specific duties paid on raw materials used to manufacture each export item. While this method requires complex calculations and extensive documentation compared to the simplified fixed rate refund, it offers a distinct advantage: potentially higher refund amounts, especially when raw material duty rates or import prices are high. Maximizing refund amounts through this precision is a primary reason companies seek non-application of the simplified fixed rate.

To proceed with an Individual Refund application, particularly for retroactive claims, you must prepare and submit comprehensive documentation, including:

• Import Declaration Certificates for raw materials
• Bill of Materials (BOM) and Usage Calculation Statements
• Manufacturing Process Flowcharts
• Purchase and production ledgers

Given that applying for individual refunds on exports prior to the approval date involves retroactive application, the accuracy and completeness of your evidence are critical. We strongly recommend preparing these documents thoroughly, potentially with the assistance of a professional customs broker, to ensure accurate calculation and successful processing.