The Shilla Duty Free store at Jeju International Airport.

The South Korean Government is considering lifting the duty free purchase threshold at departures shops and the tax exemption cap.

A decision by the Ministry of Economy and Finance is expected later this month according to local media reports (including the usually reliable Korea Herald) subsequently verified by TRBusiness, in what would be a significant fillip for the country’s duty free industry.

Under current rules, customers can purchase goods up to a $3,000 limit at duty free departures and $600 on arrival, while the current tax exemption limit is set at $600, having lifted from $400 in 2014.

PRESSURE TO UP THRESHOLD

If approved, the move would undoubtedly be greeted favourably by South Korean duty free retailers such as Lotte Duty Free and The Shilla Duty Free.

“The government is planning to increase the limits but we’re not sure by how much,” a Korean duty free source told TRBusiness.

“Absolutely [it is a good move]. Looking at Japan, China, Australia and the US, they are all higher limits for duty free so it’s good news. The industry has always claimed the limit should be raised.”

A source further added: “It’s been a long-time discussion; if you compare the (South Korea) limits they are not very high compared to other countries. [The retailers] will be very happy and will welcome this ‘normalisation’ as it will improve the environment.”

A decision on a possible purchase limit and tax exemption limit raise is expected later this month.

Asked whether the consideration to raise the departure duty free purchase limit and tax exemption limit is a possible reaction to stiffening downtown shop competition, notably in Seoul, the source added: “Downtown has been a bias in the last three to five years. This gives balance.”

South Korea’s unveiling of its first duty free arrivals shops at Incheon International Airport operated by Entas Duty Free and SM Duty Free last week is understood to have prompted renewed debate on the current tax exemption and purchase limit.

TRBusiness aims to bring you more reaction to this story as it develops…