Enjoy Affordable Travel to South Korea! Detailed Introduction to the Tax Refund Application Procedure

• This article is for reference only as it is merely a translated version of the Japanese article below.
  お得に韓国旅行！「タックスリファンド」申請手順を詳しくご紹介！ (Japanese version)

Many enjoy the pleasure of duty-free shopping during international trips. In fact, there are several types of tax exemption systems available.

The “tax refund” introduced here, although requiring the purchaser to apply, is a highly beneficial system that allows buying goods approximately 10% cheaper depending on the country.

This article will cover the following topics:

• Overview of the tax refund system
• Conditions for using the tax refund system
• Methods to apply for a tax refund and refund locations

Key points to consider when purchasing products and the process until the tax is refunded If you are planning an overseas trip, this information will be very useful.

Types of Duty-Free

The term “duty-free” encompasses mainly two types: Duty-Free and Tax-Free.

Duty Free

In duty-free shopping, taxes such as consumption tax, liquor tax, and tobacco tax are exempted when purchasing goods. Duty-free shops are located at international airports, ports, and certain border areas, primarily targeting foreign tourists.

The products sold include alcohol, tobacco, perfumes, cosmetics, and branded goods, among others.

Tax Refund

The tax refund system exempts value-added tax (similar to consumption tax in Japan).

Value-added tax, a common concept worldwide, stipulates that non-residents of a country are not required to pay this tax when purchasing goods above a certain amount.

The tax refund system is primarily designed for foreign tourists, who can apply for a refund of the unnecessary taxes paid before leaving the country.

Stores eligible for a tax refund are called “post-duty-free shops” and display the “Tax Refund” or “Tax Free” logos.

Which countries offer tax refunds?

Like Japan, which has many duty-free shops aimed at attracting foreign tourists, several countries globally use duty-free schemes as a PR strategy for travelers.

Key countries include:

Europe: France, Italy, Germany, Spain, the United Kingdom, Switzerland

Asia: Japan, South Korea, China, Thailand, Singapore, Malaysia

Middle East: United Arab Emirates (UAE)

Oceania: Australia, New Zealand

North America: Canada (specific regions)

The details of the tax refund system (eligible products, minimum purchase amount, refund procedures, etc.) vary by country and region. It is recommended to check the latest information from the customs or official tourism website of the country you plan to visit before traveling.

Particularly active in offering tax refunds are South Korea and EU countries, which are popular destinations for Japanese tourists. The next section will provide a detailed explanation of South Korea’s tax refund system.

South Korea’s Tax Refund System

South Korea’s duty-free system is categorized into three types:

• Duty Free
• Tax Refund
• Immediate Tax Refund

Duty Free

In South Korea, duty-free shops with the “Duty Free” logo allow you to purchase goods at prices excluding the following taxes:

• Customs duties
• Value-added tax (VAT)
• Individual consumption tax
• Tobacco consumption tax
• Liquor tax

Duty-free shops are located at international airports and ports, and within the city (in major department stores).

Always ensure that the store displays the “Duty Free” logo before making a purchase.

Here are some of South Korea’s representative duty-free shops, known for their extensive product range and guaranteed quality, allowing for worry-free shopping.

When purchasing, you must present your passport and a boarding or ferry ticket. Be mindful of the tax-free purchase limits set for when you leave the country.

Tax Refund

The tax refund system allows for the reimbursement of paid value-added tax and personal consumption tax on purchases, provided an application is made before leaving the country.

Typically, the refund process is managed by tax refund service providers, and the amount refunded is net of any fees charged by these agents.

In South Korea, major agents include Global Blue, GLOBAL TAX FREE, Easy Tax Refund, CubeRefund, and eTAX FREE, each offering different refund rates. The average rate of refund ranges from 4% to 7%.

Details on eligibility for tax refunds and the refund procedures will be provided later.

Immediate Tax Refund

The immediate refund system allows for an on-the-spot tax refund at participating post-duty-free shops when making a purchase. By presenting a passport at the point of sale, goods can be bought at a tax-exclusive price.

The main beneficiaries are foreigners staying in South Korea for less than six months. To receive a refund, a single purchase must be between 15,000 KRW and 1,000,000 KRW, with the total purchase amount during the stay not exceeding 5,000,000 KRW.

Conditions for Using South Korea’s Tax Refund

The conditions for using the tax refund in South Korea are summarized below, applicable to most Japanese tourists.

Note: Expenses on dining, transportation, and consumables used within South Korea are not eligible for tax refunds.

Explaining the Procedure for Applying for a Tax Refund in South Korea

This section explains the procedure for applying for tax refunds in Korea.

Preparation and Necessary Items for Tax Refund Application in South Korea

The items required for a tax refund application are as follows:

• Purchased goods (must be unopened or unused)
• Original receipt of the purchased items
• Tax refund receipt issued by the store
• Original passport
• Credit card (needed for refund applications within the city)

Tax Refund Procedure in South Korea

The general process for a tax refund is outlined below:

1. Shop at a post-duty-free store and receive a tax refund receipt.
2. Apply for a tax refund at an airport or city “Tax Automatic Refund Machine (KIOSK)” or at a refund counter.
3. Receive a refund either in cash or credited back to a credit card or similar.

Shopping and Obtaining a Tax Refund Receipt at a Post-Duty-Free Store

First, ensure the store where you are shopping is a member of the “Tax Refund” service, providing post-duty-free services. Check for the “Tax Free” or “Tax Refund” logos at the store.

If such logos from tax refund service providers are visible, tax refund services can be availed.

画像引用：韓国観光公社「VISITKOREA」

When paying, present your passport and mention that you wish to use the tax refund service. You will receive a tax refund receipt marked “Tax Refund,” which is essential for applying for the refund. Ensure you obtain this receipt.

Applying for a Tax Refund at an Airport or City KIOSK (Tax Automatic Refund Machine) or Refund Counter

Apply for the tax refund before leaving the country. The application methods within the city and at the airport are explained below.

Method of Applying at City KIOSK or Refund Counter (For refunds up to 75,000 KRW)

1. Go to a city KIOSK or refund counter.

Bring your passport, tax refund receipt, the original receipt, and a credit card to a KIOSK or refund counter located throughout the city.

Note: KIOSK machines support Japanese.

2. Cash Refund or Card Registration

Choose between a cash refund or a credit card refund. For cash refunds, you will receive the refund in Korean Won on the spot.

When receiving a cash refund in the city, a provisional settlement is made on your credit card for the total amount of the refund and any fees. This provisional settlement is canceled once it is confirmed that the purchased goods have been taken out of the country.

However, if you forget to process at the airport, the provisionally settled amount will be actually deducted, so be cautious. Ensure you follow the next steps 3 and 4.

3. Customs Export Confirmation at the Airport

At the time of departure, present your passport, the purchased items (must be unopened and unused), the original receipt, and the tax refund receipt at the customs inside the airport to receive an export confirmation stamp.

Note: If the refund amount is less than 75,000 KRW, no customs procedure is required.

4. Receiving Departure Approval at the Refund Counter on the Boarding Floor

Present your passport at the refund counter on the boarding floor to receive departure authentication.

5. Cancellation of Credit Provisional Settlement & Refund to Account

If you chose a refund to your credit card account, the refund will be processed within three days of the departure date.

Applying at Airport/Port Terminal

At the airport, you can process the refund at a tax refund counter or through a KIOSK terminal.

This guide introduces the general refund procedure using Incheon Airport as an example.

1. Check in at the airline counter and obtain your boarding pass.

During check-in, keep the purchased items intended for a tax refund, along with the original receipt and the tax refund receipt, on your person and do not check them in.

If the refund amount exceeds 75,000 KRW, the items must be presented at customs for the refund to be processed. Do not pack these items in your suitcase; carry them with you.

Note: If you prefer to check your items into the cargo hold rather than carry them as hand luggage, inform the check-in counter staff that the items are eligible for tax-free procedures.

The staff will tag the eligible items and return them to you, and after customs verification, you can check the baggage at the large baggage counter next to customs.

2. At the kiosk terminal in the departure lobby, scan your passport and read the barcode on all tax refund receipts for the eligible purchased items.

If there are items that require customs inspection, they will be indicated as “Subject to Customs Inspection.” Present your passport, the unopened and unused purchased items, the original receipt, and the tax refund receipt at the customs declaration desk to receive an export confirmation stamp.

3. After completing security checks and departure procedures, receive cash at the refund counter or kiosk terminal on the boarding floor.

At the Refund Counter:

Present the tax refund receipt at the counter to receive cash (in Korean Won).

Note: If you arrive outside of business hours or if there isn’t enough time before your flight’s departure, fill out the refund application form with required details such as your credit card number and submit the necessary documents, including the tax refund receipt, into a dedicated postbox (refund box).

If the application is approved, the refund will be credited to the used credit card within one to two months.

At the Kiosk Terminal:

When the passport is scanned at a kiosk terminal on the boarding floor, the registered refund amount will be cash-backed in Korean Won at the departure lobby’s kiosk terminal. If the refund amount is substantial or if cash receipt is not desired, the refund can also be received via credit card.

Tax Refund Locations in South Korea

Here are the main locations for tax refunds in South Korea.

Incheon International Airport

Counters

Terminal 1: Near Gate 28 in the Duty-Free Area on the 3rd floor

Terminal 2: Near Check-In Counters D&E in the General Area on the 3rd floor

Terminal 2: Near Gate 253 in the Duty-Free Area on the 3rd floor

Kiosk Terminals

Terminal 1: Next to the Central Pharmacy in the Boarding Area on the 3rd floor

Terminal 1: Near Gate 28 in the Duty-Free Area on the 3rd floor

Terminal 2: Near Gates 250 and 253 in the Duty-Free Area on the 3rd floor

Gimpo International Airport

Near GETE1 on the 2nd floor

Kiosk Terminals

Right side of GETE1 on the 2nd floor

Refund Counters in the City

When applying at city counters, it is necessary to follow the procedures specific to each agency, so check each company’s website for locations.

KIOSK machines are installed in numerous locations within the city, such as train stations and department stores, making them very convenient for applying right after shopping.

Tax Refund Q&A in South Korea

What if I forget to apply for a tax refund? “Post-return procedure”

Even if you forget to apply for a refund, as long as you have obtained a refund check with a stamp proving the export of goods at customs, you can still apply by mail after returning to Japan.

The application method is detailed in the receipts and pamphlets received, so if you didn’t have time to apply before your flight, you can apply by mail.

When will the tax refund be returned?

Refunds to a credit card generally take between one to three months. There is some variation depending on the refund service provider, so it is advisable to contact the agent for specifics.

Summary

Though it requires some effort, the tax refund system is highly beneficial. Be sure to take advantage of it when traveling abroad!

To make the most of your shopping during overseas travel, choosing the right credit card is also crucial!

For those planning an overseas trip, this article is also recommended:

“Top 7 Credit Cards for Overseas Travel | Comparison of Fees and Rewards.”