50% Reduction in Duty-Free Shop License Fees Affected by COVID-19... Effective Next Month

Scheduled for implementation in March after legislative notice

[Asia Economy Reporter Jang Sehee] The government has decided to reduce the patent fees for duty-free shops by 50% for the sales of 2021 and 2022 to support the duty-free industry, which has been struggling due to a sharp decline in sales caused by COVID-19.

On the 22nd, the Ministry of Economy and Finance announced a revision to the "Enforcement Rules of the Customs Act" containing this measure. The main point is to reduce the patent fees for sales in 2020 and 2021 by 50% compared to the current rate. This is a follow-up measure after the amendment of the Customs Act last December, which allowed for a reduction in patent fees when bonded sales outlets suffer significant damage due to disasters under the "Disaster Basic Act."

Under the current system, large corporations must pay 0.1% of sales for annual sales up to 200 billion KRW, 0.5% for sales exceeding 200 billion KRW but up to 1 trillion KRW, and 0.1% for sales exceeding 1 trillion KRW by March 31 of the following year. Small and medium-sized enterprises must pay 0.01% of their sales.

A Ministry of Economy and Finance official stated, "We expect that the reduction in patent fees will help alleviate the crisis in the duty-free industry." According to the Ministry, the combined sales of the top five companies from the first to third quarters of last year amounted to 6.3 trillion KRW, a 44.2% decrease compared to the same period the previous year.

Patent fees are costs imposed by the government to grant exclusive rights to duty-free operators, intended to cover administrative and management expenses and to socially return the reduced taxes.

Last year, the government implemented support measures such as reducing airport rental fees, allowing domestic sales of inventory, and permitting duty-free shopping for passengers on non-landing sightseeing flights. Meanwhile, this revision to the enforcement rules is expected to be promulgated and enforced around March after legislative notice and review by the Ministry of Government Legislation.

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