Abolishing regulations on tax exemption for small-value imported goods must comply with international practices

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International trade activities have changed a lot, many countries have abolished regulations on VAT exemption for small-value imported shipments. Photo: H.Anh

According to the Ministry of Finance, to simplify customs procedures and implement international commitments, in 2010, the Ministry of Finance submitted to the Prime Minister a draft Decision on the tax-exempt quota for imported goods sent via express delivery services (Decision No. 78/2010/QD-TTg).

Accordingly, "a tax-exempt quota of VND 1 million (equivalent to about USD 50) was applied to suit reality".

However, recently, international trade activities have changed a lot. Many countries and regions have abolished the VAT exemption regulations for small-value imported goods.

Specifically, EU countries have abolished the VAT exemption regulations for shipments of 22 euros or less.

Along with that, the United Kingdom (England, Scotland and Wales) also abolished the VAT exemption regulations for imported goods with a total value of 135 pounds or less from January 1, 2021.

In Singapore, from January 1, 2023, the VAT exemption for low-value goods, especially in the e-commerce sector, has been also abolished.

With the e-commerce development, the volume of imported small-value goods ​​is increasing. Photo: H.Anh

To ensure fair trade practices, from May 1, 2024, Thailand has also collected VAT on all imported goods, regardless of value.

In addition, at seminars, experts from the Trade Facilitation Project (TFP) also recommended that Vietnam consider abolishing the regulations of VAT exemption on low-value imported goods.

In this trend, the Ministry of Finance has submitted to the Government a draft Decree on customs management of exported and imported goods traded via e-commerce, in which it proposes to abolish the VAT exemption for imported goods sent via express delivery services with a value of less than VND1 million.

This content has been consulted with organizations and individuals according to regulations, has been appraised by the Ministry of Justice and reported to the Government and the Prime Minister.

However, according to the Ministry of Finance, the issuance and implementation of the Decree on customs management of exported and imported goods traded via e-commerce needs to be carried out synchronously with the completion of the IT infrastructure system, so it needs more time for preparation.

To comply with the new requirements and basing on the recommendations of a number of agencies in the process of developing the draft Law on VAT (amended), the Ministry of Finance is coordinating with relevant units to urgently make an application to submit to the competent authority to issue legal documents to abolish Decision No. 78/2010/QD-TTg in accordance with the order and procedures.

Regarding this issue, in the discussion session on October 29, 2024 on the draft Law on Value Added Tax (amended), many National Assembly deputies agreed with non-tax exemption for small –value goods imported through e-commerce platforms.

According to the deputy Hoang Minh Hieu (Nghe An delegation), with the development of e-commerce, imported small-value goods is increasing, so for each order, the value may be small but the total volume of goods imported in this form accounts for a fairly large volume.

Therefore, if tax exemption is applied, it will lead to missing a fairly large amount of tax, not to mention the situation of "splitting" orders to avoid tax.

At the discussion session, explaining this issue, the Deputy Prime Minister and Minister of Finance said that the Government will abolish Decision 78/2010/QD-TTg and include in the draft Law on Value Added Tax (amended) the regulation that all goods with small value must pay tax.