It is important for South Korea to maintain discussion on potentially lifting the current tax exemption ceiling for duty free purchases in a bid to boost domestic consumption, a Lotte Duty Free source has suggested to TRBusiness.

While the Ministry of Economy and Finance legislated to increase the duty free departure limit from US$3,000 to US$5,000 in September, the tax exemption limit has remained the same at US$600 although it was previously gathered that a proposal recommended that to rise to US$800.

Sources have in the past flagged their scepticism to TRBusiness on the real-term impact on greater Korean wallet spends without an associated change to the tax exemption limit, which would require an amendment.

ARRIVALS PICK-UP COUNTERS IN JULY

In separate but related news, duty free pick-up counters are set to open at Korean airport arrivals halls from July according to a Korea Customs Service announcement corroborated by the Lotte Duty Free source.

As reported in December, the South Korea National Assembly had been eyeing a proposed revision to the existing customs regime to facilitate greater convenience for Korean duty free shoppers while reducing their inclinations to purchase abroad, prompting mixed reactions from travel retail operators.

At present, departure travellers can click and collect duty free purchases from designated pick-up counters, including at Incheon International Airport.

“KCS announced that pick up desks will open in July,” confirmed the Lotte Duty Free source. “According to the KCS, the introduction of pick-up desks is to boost domestic consumption. We also think that domestic (Korean) consumers will significantly benefit from it since they will not have to carry their purchases while traveling.”

The Government permitted the first arrivals duty free shops in South Korea at Incheon Airport last year, with SM Duty Free and Entas Duty Free opening units at Terminal’s 1 and 2, respectively. Arrivals duty free has recently been extended to other airports, including Gimpo International.

Those shopping at arrivals stores can avail themselves of a variety of merchandise including perfumes & cosmetics, liquor, fashion and electronics under a $600 allowance ceiling. Beginning February, retailers will also be permitted to sell tobacco products.