Samsung Electronics Co.’s Galaxy Gear smartwatch will be classified as a mobile device, not a watch, by the World Customs Organization, South Korea’s customs authorities said Tuesday, a move that is anticipated to give the tech giant tax benefits in shipping the product overseas.
The decision was made at the WCO’s Harmonized System Committee meeting held in Belgium earlier this week, which was attended by South Korea’s Ministry of Strategy and Finance and the Korea Customs Service.
While South Korea, the United States and Japan had been claiming the Galaxy Gear should be classified as a mobile device, a handful of other countries, such as India, Turkey and Thailand, had been insisting that it should be referred to as a watch and a customs tax of 4-10 percent should be imposed on it.
The proposal will be ready for implementation if there are no further objections from member countries through the end of May.
Although such decisions by HSC are not legally binding, the 179 members of the WCO usually acknowledge them as effective.
Industry watchers said Samsung may save $13 million annually from reduced customs costs from the latest classification, as mobile devices are subject to zero tax in most countries under the Information Technology Agreement of the World Trade Organization.
“Following the decision, it is likely that other smartwatches similar to the Galaxy Gear will also be classified as mobile devices and win customs benefits,” a finance ministry official said. (Yonhap)
