Deer velvet is prized in South Korea. Photo / Mark Mitchell
Deer velvet is prized in South Korea. Photo / Mark Mitchell
A decades-long source of frustration for the deer industry - South Korea's special excise tax (SET) on deer velvet - is about to be removed, Deer Industry New Zealand said.
The tax is applied to several "luxury" products, including dried and frozen deer velvet. For velvet, the excise tax is7 per cent, but when other taxes are added, the effective rate is 10.1 per cent.
Deer Industry NZ market manager Asia, Rhys Griffiths, said the tax was being eliminated in two stages. The first cut, which removed 30 per cent of the tax, took effect in late August. The second cut, which will take it to zero, depends on final approval of legislation before the South Korea National Assembly. Reports suggested it would take effect on January 1, next year, he said.
Griffiths said the changes were "hugely meaningful" for the NZ velvet industry over the longer term.
"Import duties and excise taxes are an unnecessary burden carried by producers and consumers for no real benefit," he said.
"Tariff reduction and removal of the SET would make New Zealand processors more competitive with their overseas counterparts, making it more attractive for Korean buyers to source their velvet directly from New Zealand."
He said the industry was getting a growing number of approaches from corporates, as well as suppliers to oriental medicine doctors, who want to source velvet directly from New Zealand.
In addition to the removal of the SET, legislation was being considered that would give effect to South Korea's free trade agreements (FTA) 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 would be reduced by 1.33 per cent a year.
The first (2015) cut of 1.33 per cent takes effect once the FTA becomes law. In New Zealand the legislation that will bring the FTA into effect has passed its third reading and Griffiths hoped the Korean Government would approve and implement the FTA this year. Jamie Gray
