New tax law might affect luxury brands sales in korea this year

Despite the recession and higher luxury goods price than other region of world, Korea is still a good place for fashion houses – luxury goods sales have been up about 12 per cent each year since 2006.
But now many people are wondering if luxury good sales in korea would be affected by additional charge of luxury taxes(20-percent special consumption tax) by government effective on January 1 this year on high-end goods such as handbags, the prices of major luxury brands such as Chanel, Ferragamo, Prada, Louis vuitton and Yves Saint Laurent are expected to rise accordingly.

According to retail industry sources on January 3, imported bags whose price reported at the customs is in excess of 2 million won($1800) or those domestically made ones whose factory price over and above 2 million won will be subject to the extra taxes.

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.

Official at Chanel store in Seoul said on the 13th, "more inquiries calls have been pouring in about additional charge of luxury taxes and many shoppers are rushing to buy high-priced handbags before the new taxes bite, there is no guidance from head office regarding raising price yet but it is highly likely that the price at our shop will go up a lot soon,"