"Temporary 50% Reduction in Patent Fees" ... Duty-Free Industry Breathes a Sigh of Relief

[Image source=Yonhap News]

[Asia Economy Reporter Jo In-kyung] The government’s decision to reduce the license fees for the duty-free industry, which was hit hard by COVID-19, by 50% has been welcomed by the duty-free sector.

Lee Gap, Chairman of the Korea Duty Free Shop Association (CEO of Lotte Duty Free), said on the 22nd, "We are grateful to the National Assembly and the government for supporting the duty-free industry, which is experiencing an unprecedented crisis," adding, "Based on this license fee reduction support, the association will play a central role in overcoming the crisis so that the duty-free industry can quickly return to normal."

On the same day, the Ministry of Economy and Finance announced a legislative notice for the revision of the Customs Act Enforcement Rules, which includes a 50% reduction in license fees on sales from 2020 to 2021 for duty-free shops. This measure aims to reduce the fee burden on duty-free shops struggling due to COVID-19.

According to the existing rates, the license fees that the domestic duty-free industry had to bear last year are estimated to be around 50 billion KRW. With this license fee reduction, the industry can enjoy cost savings of approximately 20 to 25 billion KRW.

Duty-free license fees are imposed by the government to grant exclusive rights to duty-free operators to sell duty-free goods, in exchange for administrative and management costs, tax social returns, and other purposes. The fee rates are as follows: for annual sales per duty-free store up to 200 billion KRW, 0.1% of sales; for sales exceeding 200 billion KRW up to 1 trillion KRW, 200 million KRW plus 0.5% of sales; for sales exceeding 1 trillion KRW, 4.2 billion KRW plus 0.1% of sales.

Previously, considering the impact of COVID-19 on the duty-free industry, the government extended the payment deferral period for license fees last year and allowed installment payments.

An industry insider said, "With the duty-free industry suffering significant damage due to COVID-19, this license fee reduction will greatly help alleviate the immediate crisis."

Another insider said, "The license fee, which was about 0.05% of sales in the past, was increased up to 20 times to 0.1~1.0% by sales scale in 2017, placing a heavy burden on the industry," adding, "Compared to other countries, the excessive domestic license fees need to be improved to a reasonable level."

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