The utilization of the excellent shipper certification system, aimed at supporting domestic shipping companies, has shown extremely low performance. The shipping industry argues that to ensure effectiveness, the application criteria must be relaxed. The excellent shipper certification system, introduced in 2020, offers benefits that allow domestic shippers to deduct part of their expenses from corporate tax when using domestic shipping companies for import and export activities.
According to the shipping industry on the 18th, the tax deduction benefit received by shippers through the excellent shipper certification system last year amounted to approximately 700 million won, a 71% decrease compared to the previous year. Shippers can deduct 1% of the expenses incurred from expenditures to domestic overseas shipping operators and 3% of the increased expenditures compared to the previous year.
After the introduction of the system, the deduction amount increased from 700 million won in 2021 to 3.6 billion won in 2022 but decreased to 2.4 billion won in 2023. Last year's import and export cargo volume reached 17.68 million TEU (one TEU is one 20-foot container), a 2.6% increase compared to the previous year, recording an all-time high. However, the amount that domestic shippers received in deductions decreased significantly compared to the previous year.
The shipping industry points out that to support domestic shipping companies and enhance the effectiveness of policies, the criteria for deductions need to be relaxed. The current deduction criteria require that the expenses shippers incur with domestic shipping companies must be more than 40% of the total maritime transport expenses, and that ratio must increase each year.
The ratio of domestic shippers using domestic shipping companies for import and export activities, known as the domestic shipping company acquisition rate, has decreased from 30% in 2020 to 26% last year. The acquisition rates for domestic shipping companies in Japan and Taiwan are around 60%.
The industry is demanding a reduction in the expenditure ratio requirements for national shipping companies and the removal of conditions that require an annual increase. They are also requesting that routes not served by national shipping companies be excluded from the requirement calculations and that the criteria for obligations be changed from expenses to cargo volume.
Kim In-hyun, head of the Maritime Law Research Center at Korea University, said, "The current system lacks incentives and has high entry barriers. It needs to be relaxed."