Customs Valuation Methods and Depreciation Standards for Used Goods under South Korean Customs Law Released

General Principles of Customs Valuation

Under Article 30 of the Customs Act, the customs value of imported goods is fundamentally based on the "transaction value"—the price actually paid or payable for the goods when sold for export to Korea. This value is finalized by adjusting for statutory additions, such as international freight and insurance. This method is the primary evaluation standard for new products, provided that the price can be calculated based on objective and quantifiable data.

The Challenge of Valuing Used Goods

Unlike new products, used goods often lack a clear transaction price or involve private transactions where price verification is difficult. Furthermore, since the value fluctuates significantly based on the usage period and condition, determining a fair customs value based solely on the declared price can be problematic. In such instances, if the transaction value is deemed unreliable under Article 30, Paragraphs 3 and 4, the customs value is determined by sequentially applying alternative valuation methods prescribed in Articles 31 through 35 of the Customs Act.

Special Regulations and Evaluation Criteria for Used Goods

Specific provisions for the valuation of used goods are outlined in Article 7-5 of the Enforcement Rule of the Customs Act and Article 41 of the Public Notice on the Operation of Customs Valuation. These regulations provide methods to reflect the unique characteristics of used items, particularly when a standard transaction price is unavailable or significantly low. Key criteria include:

• Appraised value determined by a professional appraisal institution.
• Market price of used goods in domestic or international markets.
• New product price adjusted for depreciation.

Depreciation is a critical factor in this process, accounting for value reduction based on the elapsed years, intensity of use, and overall wear and tear.

Evidence Required for Depreciation Assessment

When calculating customs value through depreciation, providing objective evidence is essential. The customs authorities consider the following factors to determine if the declared value is reasonable:

• Manufacturing date and first date of use.
• Expected lifespan and actual usage hours (or mileage).
• Maintenance and repair records.

Supporting documents such as manufacturer-issued certificates of year, maintenance logs, appraisal reports from certified professionals, and market price data from overseas used markets significantly influence the customs authorities' assessment. Submitting comprehensive documentation ensures transparency and facilitates a smoother clearance process.

Special Considerations and Conclusion

Valuing used goods requires a multi-faceted approach to accurately reflect their true market value. Special considerations apply to rare items or artwork where general depreciation rules do not apply, and professional appraisals become paramount. In cases where similar transaction cases are rare, the customs authorities may review production costs or comparable item prices to derive a reasonable value.

In conclusion, because valuation methods vary depending on the nature of the goods and market conditions, it is vital to prepare thorough evidence. For complex or high-value used imports, consulting with an experienced Customs Broker is highly recommended to ensure legal compliance and optimal valuation strategies.