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4.78. As per Korea's notifications to the WTO in 2020, sand and gravel-related items, endangered species, waste, and persistent organic pollutants remain subject to non-automatic licensing to protect natural resources and human, animal, and plant life and health. [109]

[109] Exports of sand and gravel items require approval by the Korean Aggregate Association. Only sand and gravel that are a by product of raw ore processing are approved for export. The authorities indicate that no export quotas for these items were operated during the review period.

4.81. As Korea is a member of all four major international export control systems (...). They include [111]

[111] Export laws and regulations include (...) Chemicals Control Act; (...) Plant Protection Act; and Wildlife Protection and Management Act. (...).

4.90. Total national tax revenue as a share of GDP rose and remains relatively low (15.3% in 2019, Table 1.1). (...) Income (since 2015) and corporation (since 2018) taxes became the main sources of tax receipts, followed by the VAT, which remains the main indirect tax component, followed by the transportation-energy-environment tax. (...).

4.91. Korea's relatively complex indirect tax structure remains unchanged. (...) There is also a transportation (energy environment) tax, education tax, and special tax on rural development. Exports are generally exempt from indirect taxes. Exports are zero-rated for VAT.

4.93. The individual consumption (special excise) tax continues to apply to a wide range of goods. Rates vary from 5% on cars of more than 1,000 cc and motorcycles with engine displacement in excess of 125 cc to 20% (...) Hybrid (from 2009 to 2021) and electric cars (from 2012 to 2022) remain exempt from the individual consumption tax (up to KRW 1 million and KRW 3 million, respectively). Individual consumption taxes in form of specific rates also apply, in principle, to cigarettes, petroleum products other than gasoline, and diesel oil that are subject to a transportation (energy environment) tax (see below) until end-2021. [126] (...). To mitigate the negative impact of the pandemic, the individual consumption tax on motor vehicles was cut by 70% from March to June 2020 without further extension; nevertheless, a 3.5% flexible rate (up to KRW 1 million) has applied from July 2020 to June 2021.

[126] As at 2020, the rates stood at kerosene KRW 90 per litre (KRW 63 per litre effective from 1 July 2014); heavy fuel oil KRW 17 per litre; propane gas KRW 20 per kg for domestic and commercial use (KRW 14 per kg effective from 1 July 2014); (...) and KRW 8.4 per kg (for integrated energy suppliers, new and renewable energy suppliers, and persons setting up electric installations for private use); bituminous coal for electric power generation (effective from February 2018) (...).

4.94. The transportation-energy-environment tax law was last amended on 1 January 2019. Under this fourth three-year extension of its sunset clause, the transportation-energy-environment tax continues to be levied on gasoline (KRW 475 per litre) and diesel oil (KRW 340 per litre) until end 2021 (instead of the individual consumption tax); its rates remain unchanged. As of 2021, the flexible transportation-energy-environment tax framework set on 21 May 2009 continued to apply to gasoline and diesel oil within a 30% range of the statutory tax rates, i.e. KRW 529 per litre and KRW 375 per litre, respectively. Conditional exemptions under the individual consumption tax apply to gasoline and diesel for certain use.

4.99. Korea imposes environmental waste charges on certain items that contain harmful substances and are difficult to recycle (Act on Promotion of Saving and Recycling of Resources). The charge is intended to ensure that manufacturers bear the cost of processing waste. It applies equally to imports and domestic goods. [131]

[131] At the time of the previous Review, the charges were set at e.g. KRW 24.9 per plastic container of insecticide or KRW 30.7 if the container exceeds 500 ml; and KRW 75 or KRW 150 per kg of the plastic or synthetic resin used for domestic goods.

4.103. Korea continued to support production and trade-related activities through numerous tax and non-tax incentives (...). During the review period, Korea notified some activity-specific support programmes to the WTO Committee on Subsidies and Countervailing Measures. Its latest notification, in June 2019, covered the period 2017-18 and indicated that there were 24 subsidy schemes, virtually all of which were also notified in 2017. There were four new schemes (i.e. (...), New Hydrogen Fuel Cell Vehicle Distribution, and Development of Core Technology in Industrial Fields), (...). Grants, concessional loans, and one tariff reduction continue to be used to assist a range of agricultural, forestry, fishing, coal mining, energy, environmental technology R&D, and environmental protection activities. No expiry date was indicated for the notified schemes except for measures relating to vessel decommissioning (until 2023), tariff reduction on aircraft parts (until 2025 for non-SMEs), and development of core technology in industrial fields (until 2019).

4.108. Several tax credits continue to apply to, inter alia, investment in technology, human resources development, and the R&D expenses for new growth industries/engines and basic technologies (extended until 31 December 2021), as well as for job creation. (...) Investment in facilities for the purpose of environmental conservation continues to receive a 3% (5% in the case of middle-market enterprises and 10% for SMEs) tax credit (extended until 31 December 2021), which may be carried forward five years if unused. (...).

4.113. State-owned financial institutions retain a major role in assisting Korea's industrial development. State intervention dominates the large venture capital market, which benefits mainly SMEs. Since 2005, the government-backed Korea Fund of Funds has invested in limited partnership funds (LPFs) and contributed to the formation of the private venture investment market. As of February 2021, its assets amounted to USD 6.4 billion (KRW 7.0 trillion) (KRW 2.23 trillion in 2015, KRW 1.36 trillion in 2011), were mostly financed by government funds, and had been invested in several areas (SMEs, cultural industries, (...) and environmental industries). (...).