Proposal to remove tax exemption for small-value imported goods: What does the Ministry of Finance say?

The Ministry of Finance is submitting to the Government a draft Decree, which proposes to abolish VAT exemption for imported goods valued at less than 1 million VND.

The Ministry of Finance informed the press about a number of issues of public and social concern. In particular, this agency expressed its views on the proposal to remove the tax exemption for imported goods valued at less than 1 million VND sold through the trading floor. e-commerce

According to the Ministry of Finance, previously, this agency reported to the Prime Minister to regulate the exemption of import tax and value added tax through express delivery services based on the International Convention on Harmonization and Simplification of Customs Procedures (Kyoto Convention) that Vietnam has signed: "National law must prescribe a minimum value and/or minimum amount of customs duties and other taxes below which no customs duties and other taxes are collected".

The actual context of Vietnam at that time also required appropriate policies to simplify customs procedures for imported goods to facilitate trade development, including goods sent via express delivery with low value but large quantity.

In the above-mentioned Document No. 127/TTr-BTC, the Ministry of Finance submitted to the Prime Minister for promulgation a Decision regulating the quota of imported goods sent via express delivery services that are exempt from import tax and value added tax; not applicable to special consumption tax because the goods subject to special consumption tax are goods that are not encouraged to be imported (such as cigarettes, alcohol, beer, etc.).

Regarding the value of imported goods via express delivery services that are exempt from tax, through consulting the experience of some countries in the Asia-Pacific region, the average tax-free value of countries in the Asia-Pacific region at the time of drafting Decision No. 78/2010/QD-TTg was about 130 USD.

According to statistics, the value of imported goods sent via express delivery service to Vietnam at that time was not very large, most of them were worth about 1 million VND (accounting for 60% to 70% of the total quantity of imported express delivery goods).

Accordingly, in order to simplify customs procedures and implement international commitments, the Ministry of Finance submitted to the Prime Minister in Document No. 127/TTr-BTC: "apply a tax exemption limit of 1 million VND (equivalent to about 50 USD) to suit reality".

Đề xuất bỏ quy định miễn thuế hàng nhập khẩu giá trị nhỏ: Bộ Tài chính nói gì? - Ảnh 1. — Illustration photo.

However, recently, international trade activities have also changed a lot, EU countries have abolished the VAT exemption for shipments of 22 euros or less. The United Kingdom (England, Scotland and Wales) also abolished the VAT exemption for imported goods with a total value of 135 pounds or less from 01/01/2021.

Similarly, Singapore will also abolish the VAT exemption for low-value goods, especially in the e-commerce sector, from January 1, 2023. To ensure fair trade practices, Thailand will also collect VAT on all imported goods, regardless of value, from May 1, 2024.

In addition, at the seminars, experts from the Trade Facilitation Project (TFP) also recommended that Vietnam consider removing the regulation of not having to pay value-added tax 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 transacted via e-commerce, in which it has proposed to abolish the exemption of value-added tax for imported goods sent via express delivery services with a value of less than 1 million VND (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, 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 information technology infrastructure system, so more time is needed for preparation.

Accordingly, to comply with new requirements and on the basis of recommendations from a number of agencies during the project development process Law on Value Added Tax (amended), the Ministry of Finance is coordinating with relevant units to urgently prepare documents to submit to competent authorities to issue legal documents to abolish Decision No. 78/2010/QD-TTg in accordance with the order and procedures prescribed in the Law on Promulgation of Legal Documents without waiting for the progress of the project to develop the above Decree, ensuring compliance with international practices in the context of cross-border e-commerce activities tending to develop more and more.

At the same time, continue to promote the implementation of solutions to prevent and combat trade fraud and tax evasion for imported goods in general and imported goods of small value in particular.

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