Freight from Vietnam to South Korea | Rates – Transit Times – Duties & Taxes

How to calculate duties & taxes when importing from Vietnam to South Korea?

Navigating the maze of duties and taxes when importing goods from Vietnam to South Korea may seem like a daunting task, but it can be simplified by understanding the crucial components involved in the calculation process. The primary factors to consider are the country of origin or where the goods were produced, the Harmonized System (HS) code related to your product, the customs value of your goods, and the applicable tariff rate. Additionally, you should be aware of any other taxes and fees that might apply to your specific products.

Getting started on this, the first piece of the puzzle is identifying the country where your goods were actually manufactured or produced. This factor plays an integral role in determining the amount of duties imposed on your imports. In these globalized times, 'Made in...' tags hold more than just manufacturing pride – they can critically influence your imports’ final landed cost.

Step 1 - Identify the Country of Origin

Taking the first step, yes, it is pinpointing the country of origin. This seemingly obvious action is pivotal for five primary reasons:

1. Trade Agreements: Vietnam and South Korea partake in several trade agreements, negotiated to establish reduced tariffs and improved access to each other's markets. A little homework on these can save you a lot.
2. Tariffs: Customs duties vary enormously based on the origin. Identify it right, and you're a step ahead in the calculation game.
3. Import Restrictions: Both countries enforce restrictions on certain types of goods. So, knowing the origin helps you steer clear of legal hiccups.
4. Customs Duties: Specific duties get levied based on where the goods originate.
5. Documentation: Country of origin affects the required documentation, leading to smoother customs clearance.

Seize the advantages of the Asian Trade Agreement (ATA) and the Vietnam-Korea Free Trade Agreement (VKFTA). Their strategic benefits could result in significant cost savings on duties. Watch out for the variety of import restrictions applicable, which can be anything from textile quotas to bans on certain materials.

Take this first step seriously - it could pave the way to a smoother, more cost-effective shipping experience.

Step 2 - Find the HS Code of your product

The Harmonized System Code, or HS Code, is a standardized system of names and numbers to classify traded products. Internationally recognized, these codes are used by customs authorities around the world to identify products for the application of duties and taxes. It's essentially the language of international commerce.

Acquiring this code is crucial and often, the simplest way to get it is by reaching out to your supplier. As they are already involved in international trade, they would be familiar with the relevant regulations and the correct HS code for the products.

If getting the HS code from your supplier is not an option, don't worry! We have a user-friendly process to help you find it:

Step 1: Use an online HS lookup tool. Feel free to use the Harmonized Tariff Schedule for this purpose.

Step 2: Insert the name of your product in the search bar of the HS lookup tool.

Step 3: The HS code can be found in the Heading/Subheading column of the search results.

Remember, accuracy is vital when identifying your HS code. A minor error could lead to your shipment being held up at customs, which could result in delays and potential fines. Make sure you choose the HS code that most accurately represents your goods.

To wrap up, here's an infographic showing you how to read an HS code. This will make your shipping process more efficient and hassle-free.

Step 3 - Calculate the Customs Value

When shipping goods from Vietnam to South Korea, calculating the Customs Value is a decisive phase. Don't confuse this with your shipment's market value. The Customs Value, in fact, is the CIF value: cost of goods + international shipping expenses + insurance fees, all converted into USD. Let’s say your product costs $1000, shipping charges are $200, and insurance costs $50. In that case, your Customs Value equals $1250. This one-two-three calculation helps determine the customs duties you'd need to pay in South Korea. Remember, a comprehensive understanding of the Customs Value is crucial to avoid unexpected costs or delays in the clearance process. Enjoy the journey of taking your business global, armed with the right knowledge!

Step 4 - Figure out the applicable Import Tariff

An import tariff, simply put, is a tax imposed by a country on a product imported from another country. For goods imported from Vietnam to South Korea, the tariff used is the Most Favoured-Nation (MFN) tariff, which is decided by the World Trade Organization.

To determine the applicable Import Tariff:
1. Recognize the HS code obtained previously.
2. Refer to South Korea’s Customs Service's tariff database or trusted international trade databases.

For instance, let's say you're importing coffee (HS code 0901.21) to South Korea from Vietnam. The tariff rate for this specific product is currently around 8%. Now suppose you have a Cost, Insurance and Freight (CIF) value of $10,000 USD for your coffee shipment. Your import duty would be 8% of $10,000, which equals $800 USD.

Remember, these figures might vary based on several factors including the sensitivity of the product, bilateral agreements, or seasonal factors. Always cross-check your figures for up-to-date rates.

Note: This tariff is simply an example and may differ from the actual rate. Please ensure the correctness of tariffs before proceeding with your operation.

Step 5 - Consider other Import Duties and Taxes

Moving on from the standard tariff rate, let's get down to the nitty-gritty of other import duties and taxes. Depending on the product's nature and its country of origin, South Korea might impose additional fiscal charges.

Excise duty, for instance, is valid on some particular goods, like luxury items or those that have environmental impacts. Antidumping taxes enter the scene if a product is offered at incredibly low prices, disrupting the local market.

The real head-turner here is the Value Added Tax (VAT). In South Korea, the standard VAT rate is around 10%. So, if your cargo is worth $5,000, you'll owe customs around $500 in VAT - this is a simplified formula and the actual value may vary.

But let's imagine you're importing a Vietnamese coffee brand. If Vietnam happens to be under a specialized trade agreement, you may enjoy lower rates. But the existence of 'Dumping' taxes may mean an additional financial burden if it's seen as affecting local competitors.

Remember, these are rough figures and real-world examples to bring you closer to the realities of the import process. Rates will fluctuate, and specific circumstances can greatly affect costs. Making accurate estimates is a crucial step in successful import planning.

Step 6 - Calculate the Customs Duties

Calculating customs duties might seem complex at first, but let's demystify it together. Essentially, there are three potential charges: Customs Duties, VAT, and Anti-Dumping Taxes, with the addition of Excise Duty in certain cases.

Suppose you're importing shoes from Vietnam valued at $5,000. Imagine, there are no taxes or VAT, so your total expense is only the customs duty, say 10%, which makes it $500.

For an example where VAT is applied, let's consider machinery valued at $10,000 with a customs duty of 8% and VAT at 10%. Your customs duty would be $800, and the VAT, calculated on the sum of the customs value and the customs duty ($10,000 + $800 = $10,800), resulting in a tax of $1,080. Your total expense becomes $11,880.

For a more complex scenario, let’s imagine you’re importing wine costing $20,000. Wine attracts customs duty of 5% ($1,000), VAT of 10% on $21,000 ($2,100), an anti-dumping tax of 4% on $23,100 ($924), and Excise Duty of 15% on $24,024 ($3,603.60), resulting in total expenses of $27,627.60.

Don't get overwhelmed! At FNM Vietnam, we handle these intricate calculations and stages of customs clearance for you. You'll never be unfairly charged, and we can even offer you a free quote within 24 hours. Let us navigate these complexities for you.

Bill of Lading

The Bill of Lading, a critical piece in your shipping puzzle, underscores the ownership shift of your goods. Imagine it as the baton in a relay race, signifying your goods have been handed off for shipment from Vietnam to South Korea. In an era of cloud-based convenience, you can opt for an 'electronic' or 'telex' release. It's faster, easier to manage, and reduces the chance of losing or misplacing the document. For air cargos, think AWB or Air Waybill - it's the sky-version of the Bill of Lading. Let's get practical: make these documents impeccable to ensure your goods fly through customs and reach their destination without hitches. Know thy terms, embrace electronic options, and your shipping journey will glide smoother than a well-oiled machine.

Packing List

Your Packing List – it's more than a casual inventory, it's a must-have document when shipping between Vietnam and South Korea. Picture this: you're shipping a stack of smartphone parts from Hanoi to Seoul. Your Packing List acts as a detailed inventory, mentioning every tiny detail from components like circuits to bolts. Accuracy here is king - any discrepancy could invite unwelcome shipment delays and even penalties. Whether you choose air or sea, the shipping line won't blink twice asking for it. They use this list for safety checks and transport planning, while customs officials in both countries use it to verify the declared cargo. So, your care in preparing an exact Packing List paves the way for a smooth transportation journey.

Commercial Invoice

When shipping goods from Vietnam to South Korea, you'll find the Commercial Invoice indispensable. It's more than just a bill; it's a document that customs officers use to assess the value of your goods for duty calculation. This crucial paper should detail key information like the seller and buyer's names, descriptions of the goods, quantity, and price. Sounds simple? Not quite. To breeze through customs, ensure that your information aligns across all documents, cutting down on potential issues like consignment delays. Say you've listed an item as 'ceramic vase' here, it should also appear as 'ceramic vase' in your Packing List and Bill of Lading. An inconsistency as minor as 'ceramics vase' could trigger a red flag. Clever alignment across your documents eases your customs experience, enhancing your trade relations between Vietnam and South Korea.