As the government begins to impose an additional charge of luxury taxes on high-end handbags effective on January 1 this year, the prices of major handbag brands are expected to rise accordingly, in some cases as much as 1 million won more. (image:Guwashi999@flickr)
SEOUL, Korea, Jan 06 (Korea Bizwire) –As the government begins to impose an additional charge of luxury taxes on high-end handbags effective on January 1 this year, the prices of major handbag brands such as Chanel, Ferragamo, Prada, and Yves Saint Laurent are expected to rise accordingly, in some cases as much as 1 million won more.
According to retail industry sources on January 3, imported bags whose price reported at the customs is in excess of 2 million won or those domestically made ones whose factory price over and above 2 million won will be subject to the extra taxes.
The 20-percent special consumption tax will be assessed on the amount beyond 2 million won, with another 30 percent on the consumption tax as a tax used for schools. For example, if an imported handbag’s price is 2.5 million won, the tax bill would be 160,000 won.
The National Tax Service figures that most upscale handbags imported at prices around 2 million won are sold at 3.5 million or 4 million won, which are certainly subject to the new tax. Meanwhile, retailers said the newly introduced taxation would not affect them for a while as all handbag items being sold now were shipped before the end of 2013.
It will take effect by this March when new items for the spring and summer seasons are shipped. Naturally shoppers in major department stores and upscale shops in Gangnam and elsewhere are rushing to buy high-priced handbags before the new taxes bite.
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