A Study on the Case Analysis of Additional Tax Disputes Related to Free Trade Agreements: The Importer Has a Justifiable Reason

Purpose – This study proposes strategies that companies can adopt by analyzing dispute cases involving additional taxes due to the denial of free trade agreement (FTA) tariff benefits, focusing on the types and implications of justifiable reasons for exemption from additional taxes. Design/Methodology – This study analyzes a dispute related to exemptions from additional tax, detailing the Tax Tribunal’s judgment, key issues and arguments, and the implications of the ruling. Based on this analysis, it also suggests legal improvements and practical countermeasures for companies. Findings – Importers often assume that a product is exempt from additional tax if the Certificate of Origin is valid, even when the product does not meet the origin criteria; however, this assumption is incorrect. As the FTA Special Customs Act includes provisions for exemptions in cases with justifiable reasons, companies must thoroughly understand these regulations and prepare appropriate responses. This study clarifies these provisions and offers guidance for companies to develop proactive strategies. Originality/value – Although Korea has signed the highest number of FTAs globally and maintains a preferential tariff utilization rate exceeding 80%, many companies are still subject to additional taxes due to the denial of agreement-based tariff benefits. This study is valuable because it presents concrete countermeasures based on justifiable reasons for exemption, helping companies reduce their tax burdens.