VCCI proposes not to exempt goods imported via e-commerce

The Vietnam Chamber of Commerce and Industry (VCCI) has proposed the government implement a comprehensive import tax policy that eliminates exemptions or reductions for goods imported through e-commerce channels.

Under current regulations, from February 18, imported goods valued under VND1 million ($39) delivered via express services are no longer exempt from import duties and value-added tax (VAT).

However, in a draft decree on customs management for exported and imported goods currently open for public comment, the Ministry of Finance has proposed reinstating import tax exemptions for small-value e-commerce orders (VND1 million or $39, or less).

In response, the VCCI has recommended against such exemptions, arguing that a uniform tax policy should apply to all imported goods, regardless of the transaction method. The organization contends that reinstating exemptions would perpetuate an uneven playing field, disadvantaging domestically produced goods.

According to VCCI, e-commerce orders are typically of low individual value, meaning the majority of them would fall below the VND1 million threshold - effectively making most imported e-commerce items tax-exempt.

For example, in 2024, over 324 million imported products were sold through Shopee alone, generating VND14.2 trillion ($547.9 million) in revenue. The average value per item was just VND43,682 ($1.69)

“This means that under the VND1 million ($40) threshold, most e-commerce imports would not be subject to import tax,” VCCI stated.

The chamber emphasized that domestic companies are still required to pay import duties on raw materials used for local manufacturing. In contrast, finished foreign goods sold online would remain tax-free - creating a competitive imbalance that favors imported products.

VCCI acknowledged that creating a robust tax framework for e-commerce imports poses logistical challenges.

Unlike traditional imports, which typically come in bulk with clearly classified items, e-commerce shipments often include many small, diverse orders with different product categories and HS (Harmonized System) codes. This makes it difficult to apply traditional classification and tax systems without causing delays, order cancellations, or losses for sellers and platforms.

The current exemption for items valued below VND1 million ($39) was initially based on cost-efficiency: the expense of collecting taxes on low-value goods can often exceed the revenue generated from those taxes.

To address this, VCCI suggests learning from international practices that simplify tax collection for e-commerce. One proposed solution is to consolidate HS codes into broader "commodity baskets" based on product categories or usage, with each basket assigned a specific tax rate.

For example, Basket 1 might include clothing, footwear, textiles, and bedding, while Basket 2 could cover electronics such as computers, phones, and headphones.

This method, VCCI argues, would make it easier for businesses to classify items without the need for detailed product-specific HS codes. Canada has successfully used a similar system since 2012, reducing 5,400 HS codes into just three commodity groups.

According to data from the Metric data platform, in the first nine months of 2024, products priced under VND200,000 ($7,72) accounted for over half of e-commerce sales in Vietnam. Vietnamese consumers spent approximately VND900 billion ($34.7 million) on online shopping each month. It was estimated that four to five million low-value packages were shipped daily from China to Vietnam via e-commerce platforms.

Vietnam's retail e-commerce market was estimated to top $25 billion in 2024, up 20% year-on-year, according to the Ministry of Industry and Trade. Tax revenue from e-commerce activities surged 20% year-on-year to VND116 trillion ($4.56 billion).