Know the reimport taxes before choosing an overseas repairer
This calculator is based on Korean rules for 2026: the Customs Act, its Enforcement Decree and Rule, and the Value-Added Tax Act as checked on 2026-10-24.
It is a Korea-specific planning estimate, not a customs assessment or an approved exemption.
When equipment from a foreign manufacturer breaks down, owners often receive two quotes at once: one from the manufacturer’s overseas repair center and one from a domestic repair shop.
The overseas quote may look cheaper, but customs duty and import VAT apply when the equipment comes back, together with round-trip freight and insurance, broker fees and the loss from days without the equipment.
On the other hand, if the reimport relief conditions are met at export, tax applies only to the value added by the repair rather than the whole equipment, and overseas repair can become the better choice.
The calculator separates the Customs Act Article 99 reimport exemption from the Article 101 reduction for goods processed or repaired abroad and estimates the reimport taxes for one item.
It then compares the total overseas cost with the domestic quote on the same basis and shows the breakeven overseas repair quote below which overseas repair wins.
Even before the conditions are verified, it shows both the relief-applied and relief-denied scenarios, so you can see in numbers what skipping the export declaration would cost.
Who this is for
- Small business owners sending medical, measuring, audio, broadcast or production equipment to a foreign manufacturer for repair
- Managers comparing a domestic repair shop because they do not know how much duty an overseas repair will trigger
- Anyone preparing a customs broker consultation on the difference between the reimport exemption and the repair reduction
- Importers receiving warranty repair at the foreign seller’s expense for a defect within one year of purchase
Article 99 exemption versus Article 101 repair reduction
Both cover goods that left Korea and come back, but the outcome depends on what happened abroad.
Goods not manufactured, processed, repaired or used abroad fall under the Article 99 exemption; goods exported for repair and returned after repair fall under the Article 101 reduction.
Comparison of Customs Act Article 99 exemption and Article 101 repair reduction| Item | Article 99 reimport exemption | Article 101 repair reduction |
|---|
| Scope | Goods not manufactured, processed, repaired or used abroad | Goods exported for processing or repair |
| Effect | Duty exemption | Reduction of export declaration value × duty rate |
| Time limit | Reimport within two years from export acceptance | No separate statutory limit; warranty proviso limited to one year after import |
| Past duty exemption | Previously exempted goods are excluded | Not excluded (proviso to paragraph 2, item 1) |
| Drawback or re-export-condition sale | Excluded | Excluded |
| Identity standard | Export or return declaration certificate, or equivalent | Same 10-digit HS code, or identity confirmed by serial number |
Article 99 also excludes reimports by anyone other than the party entitled to drawback.
The exception applies when the reimporter submits to Customs evidence that the entitled party has waived the drawback right.
Equipment sent for repair but returned unrepaired because repair was impossible belongs under Article 99; if parts were replaced or a repair fee was paid, use Article 101.
Customs value and the overseas repair duty formula
Customs value = export declaration value + repair cost + overseas parts + round-trip freight and insurance + other dutiable costs
Duty payable = customs value × duty rate − export declaration value × duty rate
Customs guidance states that processing or repair fees, materials bought locally, outbound and return freight and insurance, materials supplied free of charge, and the pay and travel costs of staff dispatched abroad are included in the reimport value and are not exempt.
The duty that remains is therefore usually the duty rate applied to the value added by the repair plus logistics.
- Foreign-currency quotes are converted at the customs exchange rate set by the Commissioner of the Korea Customs Service, the average base rate of the week before the week of the import declaration (Customs Act Article 18).
Enter the rate you have confirmed; amounts below KRW 1 are dropped.
- Enter the duty rate that will actually apply, such as the basic or a preferential agreement rate, together with the HS classification.
- Tax amounts drop fractions below KRW 10 under Article 47 of the National Treasury Management Act.
- If your broker has confirmed a customs value, enter it as the confirmed customs value to replace the automatic estimate.
Import VAT is exempt only in proportion to the duty reduction
VAT Act Article 27(12) exempts goods reimported after export whose duty is reduced or exempted, but when duty is only reduced the VAT exemption is limited to the same proportion.
The VAT base for imported goods is the customs value plus customs duty and other listed taxes (Article 29(2)).
Exemption ratio
Exemption ratio = duty reduction ÷ duty before relief.
Gross VAT = (customs value + duty payable) × 10%, and the estimated VAT payable is gross VAT minus the exempt proportion.
If the unchanged-goods exemption is granted, the ratio is 100%.
When no VAT exemption applies
VAT Decree Article 54 limits the scope to goods a business sent abroad without transferring the right to use or consume them.
If the right passed through sale or exchange, or a non-business individual imports the goods, the calculator applies no exemption.
For 0% duty items there is no reduction from which to derive a ratio, so full VAT is shown conservatively.
General VAT taxpayers deduct VAT on goods imported for their business as input tax (Article 38(1)(2)).
The calculator therefore includes a general taxpayer’s domestic and import VAT in cash outlay but excludes it from economic cost.
Simplified taxpayers, VAT-exempt businesses and individuals carry VAT as cost; the 0.5% credit on the consideration for simplified taxpayers is not applied, which keeps the estimate conservative.
Warranty repair within one year of import gets a wider reduction
The proviso to Enforcement Decree Article 119(2) covers goods exported for repair at the foreign seller’s expense because a defect or failure occurred during the contractual warranty period.
That warranty period is limited to one year after import clearance.
Reduction base under the warranty proviso
- The export declaration value of the exported goods
- Freight and insurance of the exported goods to the port of unloading
- Freight and insurance of the repaired goods from the port of shipment to the Korean port of import
- An amount equivalent to the cost of processing or repair
Because the duty rate applies to the sum of all four, repair and round-trip freight are also reduced and almost no duty remains.
If the defect was found more than one year after import clearance, or the seller does not bear the cost, the calculator falls back to the ordinary reduction based on the export declaration value.
Conditions you must not miss at the export stage
Declare the planned reimport
Enforcement Rule Article 57(1) requires anyone seeking the reduction to declare, when filing the export declaration, that the goods will be reimported after overseas processing or repair.
A plain courier shipment can skip this step, so tell your forwarder and broker first that the export is for repair.
10-digit HS code and serial number
Enforcement Rule Article 56(2) requires the same 10-digit HS code at export and at import.
If Customs can confirm from the serial number or product characteristics that the goods were exported from Korea, the reduction can still apply despite a different code, so keep photos of the nameplate and serial number.
Repair statement
The relief application attaches a document issued by the repairer.
It must show the original item’s name, specification, quantity and value, the parts added or replaced, the costs incurred, the repair details, and the amount of relief sought with its basis.
When to apply
Under Enforcement Decree Article 112, the relief application is filed before import clearance.
If that was not possible, you may apply within 15 days from import clearance only while the goods have not left the bonded area.
No reduction applies if duty drawback was received for the equipment, or if bonded-processing or overdue-storage goods were bought on re-export conditions.
Relief obtained by improper means can be punished, so declare the repair details and prices exactly as documented.
How to use the calculator
- Choose the reimport route (paid repair, warranty repair or unchanged return), the importer’s VAT status and the quote currency.
- Enter the export declaration value from the export certificate and the duty rate confirmed by your broker.
Add a confirmed customs value if you have one.
- Enter the overseas repair cost and parts in foreign currency, then the exchange rate, round-trip freight and insurance and local costs in KRW, and the downtime days for overseas repair.
- Enter the domestic repair quote excluding VAT, call-out and transport costs, domestic downtime days and the daily loss.
- Set each relief condition and date to its verified status, then review the decision, the two-scenario table, the breakeven quote and the evidence list.
Save the review sheet and bring it to your broker.
The daily loss should include the contribution margin lost while the equipment is unavailable and any rental of replacement equipment.
Use revenue minus variable costs rather than total revenue.
In businesses with long downtime, the downtime loss often changes the answer more than the taxes do.
Illustrative example: overseas versus domestic repair
Assume equipment with an export declaration value of KRW 30,000,000 repaired for USD 4,000 plus USD 1,000 of parts at KRW 1,400 per dollar, KRW 600,000 each way for freight and insurance, an 8% duty rate, KRW 300,000 of local costs and 21 days of overseas downtime.
The domestic quote is KRW 12,000,000 plus KRW 200,000 call-out, 10 days of downtime, a daily loss of KRW 150,000 and a general VAT taxpayer.
Illustrative example with relief applied and relief denied| Item | Relief applied | Relief denied |
|---|
| Customs value | KRW 38,200,000 | KRW 38,200,000 |
| Duty before relief / relief | KRW 3,056,000 / 2,400,000 | KRW 3,056,000 / 0 |
| Duty payable | KRW 656,000 | KRW 3,056,000 |
| Import VAT (exemption ratio 78.53%) | KRW 834,080 | KRW 4,125,600 |
| Overseas economic cost | KRW 12,306,000 | KRW 14,706,000 |
| Domestic economic cost | KRW 13,700,000 | KRW 13,700,000 |
With relief, overseas repair saves KRW 1,394,000; if the export declaration is missed and relief is denied, domestic repair becomes cheaper by KRW 1,006,000.
The KRW 2,400,000 gap between the scenarios is 8% duty on the KRW 30,000,000 export declaration value.
With relief, the breakeven overseas repair plus parts quote is KRW 8,290,749, and the KRW 7,000,000 overseas quote is below it, so overseas repair wins.
Reading the result and next steps
Relief criteria met and overseas cheaper
Before export, declare the repair purpose and planned reimport, and collect serial-number photos, the repair quote and round-trip transport documents.
At import, file the relief application with the repairer’s statement before import clearance.
Depends on relief confirmation
This means the answer flips if any unverified condition is not accepted.
Ask your broker to confirm the 10-digit HS code, identity evidence and any drawback history first, and keep the domestic quote open until relief is confirmed.
Domestic cheaper or quote above breakeven
If the overseas quote is above the breakeven, or domestic repair wins even at a zero overseas quote, taxes, logistics and downtime have cancelled out the overseas advantage.
Ask the manufacturer about an authorized domestic service center, on-site repair or loan equipment to reduce downtime.
Frequently asked questions
Why is duty charged when the equipment was only repaired abroad?
A repaired item is declared as an import when it comes back to Korea.
Because the repair added value, it falls under the Article 101 reduction rather than the Article 99 exemption for unchanged goods.
Only the duty on the export declaration value is reduced; duty on repair, overseas parts and round-trip freight and insurance remains.
Is the relief based on what I paid for the equipment?
No.
Customs Act Enforcement Decree Article 119(2) sets the reduction as the export declaration value of the repaired goods multiplied by the duty rate.
If the export declaration shows a low value, the reduction is small even for expensive equipment, so confirm the value with a customs broker before export.
I just shipped it by courier. Can I still claim relief later?
Enforcement Rule Article 57 requires you to declare at export that the goods will be reimported after overseas repair.
Without an export declaration you must prove the export and identity with other evidence, which may be difficult.
Customs decides; the calculator therefore always shows the relief-denied scenario as well.
What if the manufacturer swaps my unit for a new one?
The reduction standard requires the same 10-digit HS code at export and reimport, or proof by serial number or product characteristics that the goods were exported from Korea.
A replacement unit with a different serial number may be treated as a new import rather than a repair, so check the exchange terms in advance.
Is import VAT exempt as well?
VAT Act Article 27(12) exempts VAT only in proportion to the duty reduction.
VAT Decree Article 54 limits the scope to goods a business sent abroad without transferring the right to use or consume them.
General VAT taxpayers recover import VAT as input tax, so it behaves like temporary cash outlay rather than cost.
Is there no tax at all when the duty rate is 0%?
Duty is zero, but with nothing to reduce there is no basis for deriving the VAT exemption ratio.
The calculator conservatively shows full VAT and flags the item for verification.
Confirm the actual treatment with your broker and Customs.
Is there a deadline for bringing the equipment back?
The Article 99 exemption for unchanged goods requires reimport within two years from export declaration acceptance.
The Article 101 repair reduction has no separate statutory reimport deadline, but the warranty proviso is limited to defects within one year of import clearance.
The relief application must be filed before import clearance.
Can I submit the calculator result to Customs?
The review sheet is for choosing a repairer and preparing for consultation.
Customs assessments and the customs value, duty rate and classification confirmed by your broker prevail.
Confirm the figures with your broker and file the relief application with the export certificate, repair statement and transport documents.
Scope and cautions
- Only one item’s overseas repair is compared with a domestic quote.
Large-scale outward processing that exports raw materials and imports products (Article 101(1)(1)) and origin or FTA determinations are excluded.
- Other internal taxes such as individual consumption or education tax, the 0.5% simplified-taxpayer credit and its cap, and corporate tax or depreciation effects are not calculated.
- The customs exchange rate, duty rate and classification are not looked up automatically, so recheck them at declaration.
- Repair success and the chance of another failure are not predicted, and the result is not an approved exemption.
- Amounts and dates are calculated in your browser only and are never sent to a server or stored.
Check the official sources and choose your repairer
Official sources were checked on 2026-10-24.
The Customs Act MST290673 (effective 2026-10-02), its Enforcement Decree MST283621, its Enforcement Rule MST288525 (effective 2026-07-31), the VAT Act MST276117 (effective 2026-01-02) and the VAT Enforcement Decree MST283641 were verified through the Korea Ministry of Government Legislation OPEN API.
Following the 2026 government reorganization, the delegation wording now refers to an Ordinance of the Ministry of Finance and Economy; recheck rates and conditions whenever the law changes.
Before export, use the calculator above to check the total cost with and without relief.
If the answer differs, confirm identity, duty rate and customs value with a broker before choosing the repairer.
Start the overseas repair review