17 Nov 2015

South Korea to remove deer velvet tax

7:46 am on 17 November 2015

The South Korean Government is planning to remove a special excise tax on deer velvet, says Deer Industry New Zealand.

Deer and Stags.

Deer and Stags. Photo: SUPPLIED

The tax has been a source of frustration for the deer industry for several decades and is applied to products including dried and frozen deer velvet.

For velvet the excise tax is 7 percent; however, when additional taxes are added to it, the effective rate is 10.1 percent.

Deer Industry New Zealand market manager for Asia Rhys Griffiths said reports suggested it would take effect on 1 January 2016 and would help consolidate exporters position.

"In addition to the removal of the special excise tax (SET) , legislation is being considered that will give effect to South Korea's free trade agreements with China, Vietnam and New Zealand," he said.

"Under the Korea-New Zealand FTA, the 20 per cent tariff on dried velvet imports from New Zealand will be reduced by 1.33 percent a year.

"The first (2015) cut of 1.33 percent will take effect once the FTA becomes law. In New Zealand the legislation that will bring the FTA into effect has passed its third reading and we are hopeful the Korean government will approve and implement the FTA this year.

"If this happens, it will be followed by the 2016 cut of 1.33 percent on I January 2016. Taken with the removal of 10.1 percent in SET-related taxes, this could mean a reduction of nearly 13 percent in taxes and duties on dried velvet exports to Korea during this season.

"There will be no change to the duty rate on frozen velvet, but removal of 10.1 percent in taxes is still significant. Import duties and excise taxes are an unnecessary burden carried by producers and consumers for no real benefit.

"Also, tariff reduction and removal of the SET will make NZ processors more competitive with their overseas counterparts, making it more attractive for Korean buyers to source their velvet directly from New Zealand."

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