Landed cost starts from CIF
Korean customs duty is assessed not on the goods alone but on their value delivered to the border. FOB plus freight plus insurance gives the CIF value, which is converted to won at the customs exchange rate before the duty rate is applied.
VAT is then charged on the duty-inclusive figure, so ten percent falls on CIF plus duty and tax stacks on top of tax. Total landed cost is the CIF value in won plus both the duty and the VAT.
The customs exchange rate is published weekly by the Korea Customs Service rather than taken from the daily market. It can differ from the rate you actually paid, and because tax follows the published rate, costing requires keeping the two apart.
Items that fall out of the costing
Duty rates vary by product. The HS code decides everything from zero to several tens of percent, and goods from a free trade agreement partner qualify for a preferential rate once a certificate of origin is in place. Costing at the general rate overstates what you will pay.
Domestic logistics arrive after clearance: the customs broker's fee, transport from the port or airport to the warehouse, storage, and inspection charges if the shipment is pulled. Pricing from CIF and tax alone leaves a thinner margin than expected.
A registered business recovers import VAT as input tax. For them VAT is working capital rather than cost, and building it into the selling price inflates it unnecessarily. Personal imports have no such recovery, so there it genuinely is cost.
The personal import threshold
Goods imported by an individual for personal use clear free of duty and VAT up to 150 US dollars, and up to 200 dollars when shipped from the United States. The threshold applies to the goods value, with freight counted or not depending on the shipping arrangement.
Crossing the threshold taxes the whole amount, not the excess. An item at 155 dollars is assessed on all 155, not on 5, so splitting an order near the limit can be the cheaper route.
From FOB to landed cost
Duty is charged on the customs value including freight and insurance to the Korean port (Customs Act, Art. 30), and import VAT at 10% on that value plus duty (Value-Added Tax Act, Art. 29). Figures from this calculator with freight at 10% and insurance at 1% of FOB, 8% duty and 1,350 won to the dollar.
| FOB (USD) | Customs value | Duty | VAT | Landed cost |
|---|---|---|---|---|
| 1,000 | 1,498,500 | 119,880 | 161,838 | 1,780,218 |
| 5,000 | 7,492,500 | 599,400 | 809,190 | 8,901,090 |
| 10,000 | 14,985,000 | 1,198,800 | 1,618,380 | 17,802,180 |
| 50,000 | 74,925,000 | 5,994,000 | 8,091,900 | 89,010,900 |