Cracking Down on Tax Evaders May Tighten 'Double Regulation' on Overseas Direct Purchases

Customs Commissioner Considers Purchase Limits to Crack Down on 'Illegal Resellers' at National Assembly Audit
Brokerage Firms Claim Individual Tracking Possible via Personal Customs Clearance Codes
Setting Limits May Excessively Infringe on Freedom

[Asia Economy Reporter Cha Min-young] Recently, Customs Commissioner Noh Seok-hwan announced plans to strengthen regulations on overseas direct purchases (direct buying) by domestic consumers, causing a stir in the industry. Commissioner Noh's response was that an annual purchase limit per person would be set to catch some illegal resellers (professional scalpers), but the industry has criticized this as double regulation and unrealistic.

On the 21st, a Customs Office official stated, "The Customs Commissioner's remarks were made during the National Assembly audit, and there is no established policy to set an annual cumulative overseas direct purchase transaction limit per individual." He added, "However, various measures are being considered to catch illegal tax evaders." Although nothing has been decided yet, since the Customs Office views that tax evasion is openly occurring through resale and secondhand sales after direct purchases, it is expected that more active regulations on overseas direct purchases will be enforced in the future. Currently, the Customs Office applies a simplified clearance system for express delivery items such as overseas direct purchases to improve customs work efficiency. This system allows overseas direct purchase items under $150 per order (compared to $200 in the U.S.) for personal use to pass through customs with only documentation. Buyers can skip import declaration and receive tax exemption. Recently, some resellers have been caught abusing this system to commit tax evasion crimes. There are also limitations in tracking secondhand transactions due to customs capacity constraints.

The Customs Office will first strongly enforce the mandatory entry of the Personal Customs Clearance Code for individuals making overseas direct purchases starting this December. Although the amendment and enforcement of the "Notice on Customs Clearance Procedures for Express Delivery Items" in June last year mandated the entry of the Personal Customs Clearance Code for express delivery items including overseas direct purchases, it was not strictly followed. The Customs Office claims that omissions occurred due to industry resistance. Currently, about 80% of all online overseas direct purchase transactions include the Personal Customs Clearance Code. The Customs Office plans to increase this to 100% by next year.

Along with this, there is a high possibility that a policy to set an annual overseas direct purchase limit per person, as mentioned by Commissioner Noh during the National Assembly audit, will be pursued. On the 14th, Park Hong-geun, a member of the Democratic Party, argued during the audit that the Customs Office should review the annual cumulative transaction amount per person for overseas direct purchases, establish an "appropriate" standard, and revoke tax exemption benefits for those exceeding it. Regarding this, Customs Commissioner Noh Seok-hwan responded, "We will actively pursue this."

However, overseas direct purchase intermediaries are opposing the simultaneous enforcement of mandatory entry of the Personal Customs Clearance Code and setting an overall tax exemption limit, calling it double regulation. They argue that 100% mandatory entry of the Personal Customs Clearance Code allows individual recognition of buyers, enabling identification of resellers, and that unnecessarily strengthening regulations only causes inconvenience to consumers. Setting an appropriate tax exemption limit is also criticized for excessively infringing on individual freedom.

There are also cautious concerns that this could be perceived by trading partner countries as a domestic protectionist policy. If regulations are strengthened, domestic overseas direct purchase amounts will inevitably decrease, while partner countries have no such related regulations. The Customs Office dismisses this as an unfounded worry, but the industry expresses concern that the Customs Commissioner's remarks will not be easily ignored. An industry official said, "Even with the current system, tax evaders can be sufficiently identified, but expanding the scope of regulation to the entire population with the intent to block it at the source will dampen consumer sentiment."

This content was produced with the assistance of AI translation services.