How to Determine Customs Value for Import Declaration When Goods are Purchased Entirely with Points or Rewards Released

Principles of Customs Valuation and the Definition of Price Actually Paid or Payable

According to Article 30 of the Customs Act, the dutiable value of imported goods is, in principle, determined based on the Transaction Value. This is defined as the price actually paid or payable by the buyer for the goods when sold for export to Korea, adjusted by statutory additions (hereinafter referred to as 'Price Actually Paid or Payable'). This price refers to the total payment made or to be made by the buyer to or for the benefit of the seller, directly or indirectly, in exchange for the goods.

It is crucial to note that such payments do not necessarily have to take the form of cash or bank transfers. In customs administration, the actual price paid includes not only letters of credit and negotiable instruments but also all means of payment with economic value arising in modern e-commerce environments, such as points, rewards, and vouchers. Therefore, even if you used points accumulated from previous purchases to substitute the payment amount, this is considered a substantive payment for the goods and constitutes a taxable basis.

Calculating Dutiable Value When Using 100% Points and Practical Considerations

Even if you purchase items using 100% points so that the actual credit card charge or remittance amount is '0', the declared value for import customs clearance cannot be '0'. Points or rewards represent a claimable value granted by the seller, and using them is legally treated as settling the payment equivalent to that value. Consequently, you must declare the original price of the goods before the deduction of points as the dutiable value.

In practice, it is easy to confuse 'general discounts' with the 'use of points'. Please refer to the following distinctions regarding customs valuation:

• General Discount: If a price reduction applies unconditionally to all buyers (e.g., season sales), the discounted price may be recognized as the actual price paid.
• Use of Points and Rewards: Using points earned through specific personal activities (purchase history, event participation) is merely a choice of payment method. Since the intrinsic price of the goods has not been reduced, the amount before the point deduction must be declared.
• Free Gifts: For complimentary items provided without a separate purchase act, Customs recommends declaring the objective value (market transaction price) of the item.

Risks of False Declaration and the Importance of Accurate Reporting

If you declare the import value as significantly lower or as zero simply because there was no actual monetary transaction due to point usage, this risks being classified as Undervaluation. The Korea Customs Service may compare the transaction prices of similar goods or request payment data to verify the appropriateness of the declared value. If it is confirmed that point payment details were omitted, you may face collection of deficient taxes, imposition of penalty taxes, and potentially criminal punishment for violating the Customs Act.

Therefore, please verify the product value before point deduction indicated on the invoice or order history provided by the overseas direct purchase site. It is the safest and most compliant procedure to accurately convey these details to your Customs Broker or Express Carrier during import declaration, ensuring the original price is reported as the dutiable value. Even for small-quantity items, the principles of the Customs Act apply equally, so we strongly recommend sincere reporting to prevent future administrative disadvantages.