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The World Customs Organization (WCO) categorized Samsung Electronics’ Galaxy Gear smartwatch as a mobile device, not a watch. As mobile devices are subject to zero taxes in most countries, the classificatio may save the company US$13 million (14.65 billion won).
The Ministry of Strategy and Finance and the Korea Customs Service announced on March 17 that the Galaxy Gear has been classified as a mobile device at the 55th WCO's Harmonized System Committee (HSC) meeting held in Belgium on March 16.
Until now, while South Korea, the U.S., and Japan had been claiming the Galaxy Gear should be categorized as a mobile device, India, Turkey, and Thailand had been insisting that it should be referred to as a watch, causing conflicts. According to the Information Technology Agreement of the World Trade Organization, most countries impose a customs tax of zero percent on a mobile device. However, India, Turkey, and Thailand impose a relatively high customs tax of 4 to 10 percent on watches.
In September last year, the Korean government introduced the item classification of the Galaxy Gear to the WCO, which decides classification for internationally controversial items, as an official agenda item. After the demonstration of products in member nations, the Galaxy Gear succeeded in being classified as a mobile device.