SEOUL: South Korea will revoke a tax break for purchases of certain imported luxury goods, after the measure did not have the intended effect.
South Korea levies an excise duty on purchases of expensive luxury items. In August this year, the Government decided to raise the threshold above which the excise duty is levied for seven imported luxury goods, from KRW2m to KRW5m (USD4,400). The measure, intended to encourage retailers to cut prices, was due to run until December 31, 2015.
However, the measure had no impact on sales of watches, cameras, handbags, furniture, and carpets. Therefore, the tax concession for these items will be revoked. The increased threshold will be retained for purchases of jewelry and furs.
Temporary cuts to individual consumption tax rates, also introduced in August, for automobiles and luxury consumer electronics will also remain, as demand has increased.