How to Declare Customs Value for Overseas Purchases Fully Paid with Points or Rewards (Zero Actual Payment) Released

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

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

It is important to note that this payment does not necessarily have to be in conventional monetary forms like cash or bank transfers. In customs administration, the 'Price Actually Paid' includes Letters of Credit (L/C) and negotiable instruments, as well as points, rewards, and vouchers that hold economic value in modern e-commerce. Therefore, even if you use points to offset the entire payment amount, this is legally regarded as a payment for the goods and must be included in the taxable value.

Valuation Methods for 100% Point Usage and Practical Precautions

Even if your actual credit card charge or remittance amount is '0' because you used 100% points, the declared price for customs clearance cannot be '0'. Points and rewards are a form of contractual value previously granted to you by the seller. Using these points to purchase goods is treated the same as paying that specific value in cash. Therefore, when filing an import declaration, the customs value must be calculated based on the original price of the item before the point deduction.

In practice, it is easy to confuse 'General Discounts' with 'Point Usage.' Please refer to the following criteria:

• General Discounts: For price reductions or seasonal sales applied to all buyers without specific conditions, the discounted price can be considered the 'Price Actually Paid.'
• Use of Points and Rewards: Paying with points earned through individual activities (purchase history, event participation, etc.) is merely a choice of payment method. Since the intrinsic price of the item has not decreased, you must declare the pre-deduction amount.
• Free Gifts: Even for promotional items provided without a separate purchase, customs authorities recommend declaring the objective value (standard transaction price) of the goods.

Consequences of False Declaration and the Importance of Accurate Reporting

Declaring a significantly lower value or a zero value because no actual payment was made due to point usage may be classified as Undervaluation. The Korea Customs Service (KCS) may compare transaction prices of similar goods or request proof of payment to verify the accuracy of the declaration. If it is discovered that point-based payments were omitted, the importer will face collection of the unpaid tax, additional penalty taxes, and potentially criminal penalties for violating the Customs Act.

Therefore, we advise you to check the item value before point deduction as indicated on the invoice or order summary provided by the overseas shopping site. To ensure a safe and legal import process, provide this information to your customs broker or express courier so that the original price can be declared. Even for small quantities, the principles of the Customs Act apply equally, so we strongly recommend faithful reporting to prevent any future administrative disadvantages.