Ministry of Finance proposes to impose VAT on small value imported orders

The Ministry of Finance has proposed to remove the regulation on value-added tax (VAT) exemption for small-value imported goods sold via express delivery, in order to avoid tax losses, ensure fairness with domestically produced goods and international practices.

Every day there are about 5 million small value orders imported into Vietnam.

The Ministry of Finance is seeking comments on the draft Decision of the Prime Minister to abolish Decision No. 78/2010/QD-TTg on the value of imported goods sent via express delivery services that are exempt from tax.

The Ministry of Finance said that during the period when Decision No. 78/2010/QD-TTg was issued, the customs declaration system was purely manual, so the tax exemption policy in this Decision contributed to reducing administrative procedures and helping to speed up customs clearance time, reducing the number of goods subject to tax declaration.

However, this policy is no longer suitable because e-commerce in the world as well as in Vietnam has been growing very rapidly over the years. Every day, about 4-5 million small-value orders are shipped from China to Vietnam via e-commerce platforms.

Regarding customs procedures, the automated customs management system at ports, warehouses and yards (VASSCM) continues to be effectively implemented, contributing to simplifying procedures for removing goods from warehouses, yards and ports, reducing contact between customs agencies and businesses, reducing travel time for people, and overcoming congestion at ports, warehouses and yards. Thanks to the increased application of information technology and the application of modern customs management methods, up to now, over 99% of customs procedures have been carried out electronically through the Automatic Customs Clearance System (VNACCS/VCIS).

According to the Ministry of Finance, the development and completion of the above-mentioned electronic customs declaration system has helped to clear goods quickly and facilitate the management of daily goods declarations in large quantities without interrupting commercial activities. Customs declarants also do not need to go to customs offices to declare online, thereby reducing the number of declarants because the procedures are carried out through agents and shipping companies, so the management and collection of taxes on imported goods sent via express delivery services are carried out more centrally and quickly than before.

In addition, some opinions say that for the same type of goods, domestically produced goods still have to pay VAT, so the exemption of VAT for imported goods via express delivery services with small value has invisibly created a price difference leading to unfair competition with domestically produced goods of the same type (due to having to pay VAT), thereby affecting the production and consumption of domestic goods...

The Ministry of Finance said that in the past, many countries in the world also had policies to exempt import tax and VAT on small-value goods via express delivery. However, up to now, many countries have been and are eliminating this policy.

For example, EU countries have abolished VAT exemptions for shipments of €22 or less. The United Kingdom (England, Scotland and Wales) has also abolished VAT exemptions for imports with a total value of £135 or less from 1 January 2021.

In Singapore, from January 1, 2023, the VAT exemption for low-value goods, especially in the e-commerce sector, will also be abolished. To ensure fair trade practices, from May 1, 2024, Thailand will also collect VAT on all imported goods, regardless of value. In addition, at the seminars, experts from the Trade Facilitation Project (TFP) also recommended that Vietnam consider abolishing the regulation of not having to pay VAT for low-value imported goods.

The Ministry of Finance believes that based on the above legal and practical basis, in order to ensure the consistency of tax policies and international practices for imported goods sent via express delivery services with small value, in accordance with the Party and State's policies and orientations on covering all revenue sources and expanding the revenue base. At the same time, to ensure adequate tax collection, fairness with domestic production, and encourage consumption of domestically produced goods, the Ministry of Finance submits to the Prime Minister a Decision to abolish Decision No. 78/2010/QD-TTg without waiting for the progress of promulgating the Decree on E-commerce.

Accordingly, from the effective date of the Decision to abolish Decision No. 78/2010/QD-TTg, the VAT exemption policy for small-value goods via express delivery will not be applied to be consistent with the Law on Value Added Tax. However, the import tax exemption policy for small-value goods will still be implemented as currently prescribed in the Law on Export Tax and Import Tax and the Decree detailing a number of articles and measures to implement this Law.

Source: https://thoibaonganhang.vn/bo-tai-chinh-de-xuat-danh-thue-vat-voi-don-hang-gia-tri-nho-nhap-khau-158367.html