South Korean Government Eliminates Import Tariffs on Display Equipment and Others

To recover exports that are struggling, South Korean Government has greatly reduced import ../tariffs_that_are_levied_on_display_equipment__semiconductor_rsquo.css;s subsidiary material, and others and increased number of objects that fall under this plan.

Businesses can increase competitive edge in prices of finished products that will be exported by importing materials and equipment at low price.
Although it adjusted import tariffs of naphtha from 0% to 0.5%, it adjusted balance by reducing quota tariffs of crude oil for manufacturing purpose down to 0.5%.

South Korean Government has decided on ‘2016 Flexible Tariffs Management Plan’ after discussing with related government departments at Cabinet Meeting on the 29th.
It has decided to increase number of products that are applicable to ‘quota tariffs’, which applies lower tariffs than normal tariff rate, from 10 to 51. South Korean import ../businesses_are_estimating_that_they_can_save__403_million__471.7_billion_KRW.css) per year with reduced tariffs. Compared to last year’s saving at $321 million (375.4 billion KRW), they are saving 25.7% more.
It eliminated import tariffs on major equipment and raw materials that are necessary to manufacture displays, semiconductors and secondary batteries that are South Korea’s major products that are exported. Starting from New Year, tariffs on display’s equipment called ‘laminator’, semiconductor’s subsidiary materials called ‘blank mask’ and ‘quartz glass substrate’, and secondary battery’s raw materials called ‘cobalt oxide’ and ‘artificial graphite’ will be 0%. Related industries are expecting for competitive edge in production cost because competitive edge in exports can increase due to reduced tariffs since most of them are products that come from different countries.

“Tax revenue benefit of $42.8 million (50 billion KRW) is expected due to reduced tariffs on 5 products including laminators that are newly included.” said a person from Korea Display Industry Association.
0.5% of tariffs will be levied on imported naphtha that oil and petrochemical industries have focused on. Petrochemical industries import 55% of total naphtha from different countries. However South Korean Government adjusted balance by lowering quota tariffs on crude oil to manufacture naphtha from 1% to 0.5% considering competitive edge for oil industries. Although there were proposals that wanted to increase tariffs on imported naphtha to 1%, it restricted adjustment range to accommodate industries’ opinions. All of opinions from oil industries that produce naphtha with crude oil and petrochemical industries that use naphtha as raw materials were reflected.
2% of quota tariffs, which are 1% lower than normal tariff rate, will be applied on crude oil for producing LPG and LNG. South Korean Government considered facts that they are used for heating for middle and low classes and fuel for taxis. It also has applied quota tariffs on raw materials that small businesses such as fiber, leather, dye and others that often use and grains for feeding animals.

“Oil industries were not happy with tariffs being levied only on crude oil for producing naphtha, and there were worries that petrochemical industries’ competitive edge would be destroyed due to adjustment of tariffs on importe../d_naphtha._rdquo.css; said a person from petrochemical industry. “Oil and petrochemical industries will both be satisfied with 0.5% tax rate.”
“0.5% of adjustment tariffs were applied on naphtha to balance tariff rate between crude oil for production and importe../d_products._rdquo.css; said a person from Ministry of Strategy and Finance. “It is estimated that South Korean Government will collect $15.9 million (18.6 billion KRW) in tax revenue due to increased tariffs on naphtha.”

‘4th National Environment Comprehensive Plan (2016~2035)’, which holds directions for South Korea’s national environment policies for next 20 years, was decided at this Cabinet Meeting.

Staff Reporter Choi, Ho | [email protected] & Staff Reporter Yu, Sunil | [email protected]