Measures include extended payment deadlines, installment options for firms importing raw materials
The government has launched customs tax relief for small and medium-sized enterprises struggling with high exchange rates and for importers hit by surging raw material costs.
The Korea Customs Service said Wednesday it is expanding eligibility for customs tax support — including extended payment deadlines — to cover SMEs affected by the high won-dollar rate and importers hurt by sharp rises in raw material prices.
The won-dollar rate has risen more than 110 won from late last year, increasing the burden on companies that rely on imported raw materials. Related ministries jointly announced an emergency support plan for SMEs facing business difficulties due to high exchange rates at a meeting of the Emergency Economic Headquarters and the Economic Ministers' Meeting on Friday, July 3.
The measures are designed to ease the tax payment burden on companies heavily exposed to exchange rate fluctuations because of their high dependence on imported materials, helping them sustain operations.
Eligible companies are SMEs whose imports of raw and subsidiary materials account for at least 20 percent of their revenue. Upon application, they can receive tailored customs tax support, including a payment deadline extension of up to one year, installment payments in up to six tranches, expedited refunds on export drawbacks, and a suspension of delinquency proceedings.
The Korea Customs Service has also been providing tax relief to companies directly or indirectly affected by the war in the Middle East since early in the crisis, starting March 6. For oil refiners, petrochemical firms and others facing supply instability in raw materials such as naphtha, the agency approved unsecured payment deadline extensions totaling 2.78 trillion won ($1.82 billion) as of July 3, easing companies' cash flow burdens. It also reduced customs costs by 28.9 billion won by excluding increases in freight and insurance charges from taxable prices under a freight surcharge exemption scheme. Support under both measures is ongoing.
The Korea Customs Service has also operated an annual SME customs tax support program since 2008, targeting small businesses sensitive to shifts in the domestic and global economic environment. As of the end of June, the program had provided tax support to 1,357 SMEs, supplying 593.3 billion won in liquidity.
The agency plans to continue providing timely tax relief to companies facing temporary business crises caused by changes in the trade environment or natural disasters, actively helping them secure liquidity.
"This emergency customs tax support measure is differentiated from existing export-focused policies in that it targets small and medium-sized import companies struggling with a prolonged period of high exchange rates," said Oh Hyeon-jin, head of the Korea Customs Service's tax base review division. "Since high exchange rates are an external variable that companies cannot manage on their own, we will ease the approval requirements for tax support so that businesses in need can receive assistance in a timely manner."
kwonhl@heraldcorp.com
