Korea Trade Review (무역학회지)

Korea Trade Research Association (한국무역학회)
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A Legal Review on the Warranty Charges Clauses of the WTO Customs Valuation Agreement and the Korean Customs Act

관세평가협정과 관세법상 하자보증비용에 관한 연구

  • Jin-Kyu Kim (Department of International Trade, Chosun University)
  • Received : 2022.10.04
  • Accepted : 2022.10.30
  • Published : 2022.10.30
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Abstract

Recently, Korean customs authorities have attempted to impose customs duties on the warranty charges paid by Korean subsidiaries ("the taxpayers") of multinational corporations to their overseas headquarters, or their affiliates, as indirect payment of the price actually paid or payable for imported goods and services, and the taxpayers' complaints have been steadily increasing. The key issue of Korean Supreme Court decision, 2018Du56619, revolves around opposing interpretations of the Korea Customs Act and the WTO's Customs Valuation Agreement in determining who is responsible for paying duties levied on warranty charges. The Supreme Court's ruling was consistent with its previous interpretations of the WTO agreement on customs valuations. The Supreme Court ruled in favor of the plaintiff, a Korean subsidiary, stating that the overseas corporate headquarters' payments of warranty charges to Korean dealers are made on behalf of the Korean subsidiary, which is ultimately responsible for covering warranty charges. Thus, the Korean subsidiary's settlement of the warranty charges to their Korean dealers through the overseas headquarters is effectively the same as a direct payment to the dealers. Therefore, the Korean subsidiary performed warranty services on its liability and account. As such, the court ruled that warranty charges should not include tariffs on the indirect payment for warranty services in such cases. This paper presents the comparative legal implications for the warranty charge clauses in the WTO agreement and the Korean Customs Act and analyzes the Supreme Court's decisions.

Keywords

Acknowledgement

This study was supported by research fund from Chosun University(2022-208815-01), 2022.

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