Vietnam to abolish VAT waiver for low-value imports amid e-commerce boom

Vietnam will scrap an existing regulation that exempts low-value imported goods from value-added tax (VAT) and import taxes, starting February 18.

The move, outlined in Decision 01 issued by Deputy Prime Minister Ho Duc Phoc on Friday, comes amid a surge in e-commerce activity.

The regulation, first introduced in 2010, exempts imported goods valued at less than VND1 million ($39.3) and shipped through express delivery services from VAT and import taxes.

The Ministry of Finance, commenting on the policy change, noted that countries such as the UK, Australia, Thailand, and Singapore have already abolished similar VAT waivers for low-value goods.

The ministry emphasized that the current exemption is outdated in the context of rapidly expanding e-commerce and that the change would promote fairness and encourage the consumption of locally produced goods.

In recent years, Vietnamese consumers have largely purchased small-value goods delivered via express delivery directly through local and cross-border e-commerce platforms.

According to Metric, an e-commerce data provider, goods priced below VND200,000 ($7.87) accounted for more than half of total sales in Vietnam’s e-commerce market during the first nine months of 2024. On average, Vietnamese consumers spend $1 billion on online shopping each month.

It is estimated that four to five million small-value orders are shipped daily from China to Vietnam via e-commerce platforms.

Last year, the total value of goods imported via express delivery services reached VND27.7 trillion ($1.08 billion). The Ministry of Finance estimates that eliminating the tax exemption will increase annual VAT revenue by approximately VND 2.7 trillion ($106.2 million).

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).