"Korea Customs Service Implements Special Measure to Ease Middle East Logistics Cost Burden"

The government will implement a “special measure for import freight charges” to ease the pressure of rising shipping costs for key imports such as crude oil. The main point is to reduce the burden on import companies by excluding the additional freight costs incurred from using alternative routes around the Strait of Hormuz from the taxable value.

Oil tanker passing through the Strait of Hormuz. Photo by Yonhap News Agency

According to the Korea Customs Service on May 8, as passage through the Strait of Hormuz has been restricted due to the Middle East war, there has been an increase in cases where essential goods for the national economy, including crude oil, are being imported into Korea via alternative routes. The core issue lies in the double burden that arises when using these alternative routes. Importers face increased shipping costs from detours, and on top of that, must also reflect the resulting cost increase in the taxable value (including customs duties), resulting in a double burden.

The special measure for import freight charges is being implemented in response to the increased burden of international logistics costs, with the aim of mitigating the negative impact of the Middle East war on importers. The key is that, when using alternative routes or substitute flights from the Middle East other than the Strait of Hormuz, the increased freight charges are not directly reflected in the taxable value; only the standard freight charges that applied before the onset of the Middle East war are used as the taxable value.

To this end, the Korea Customs Service has amended the supplementary provisions of the Enforcement Decree of the Customs Act, applying the special measure retroactively to import declarations filed on or after March 1.

The scope of support also includes ships that became stranded and isolated due to the outbreak of the Middle East war, unable to exit the Strait of Hormuz. The special measure for import freight charges covers not only general freight charges and demurrage but also various transportation-related costs, including the significantly increased transport insurance premiums after the outbreak of the war.

Importers can provisionally declare the actual freight charges paid (including the additional costs), and then have the standard freight charges applied at the time of final declaration. Even if the import declaration was completed based on the higher freight charges, importers can apply for a tax refund to receive the difference back.

Further details regarding the special measure for import freight charges can be found on the Korea Customs Service website.

Lee Myunggu, Commissioner of the Korea Customs Service, stated, “I hope that the implementation of the special measure for import freight charges will provide much-needed relief to importers who have suffered significant losses due to the Middle East war, and will also help stabilize domestic prices. The Korea Customs Service will continue to identify and implement practical policy tools to help the nation overcome such crises.”

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