Deputy Prime Minister Ho Duc Phoc on Friday signed a decision to eliminate another decision to exempt the value-added tax (VAT) and import duty on products each valued below VND1 million (US$39.3) imported via express delivery services.

The new decision will take effect on February 18, 2025.

In other words, any import valued under VND1 million will be subject to VAT and import duties from February 18.

This new policy aims to create a level playing field between imported and locally-produced goods.

Since 2010, low-value imports have been exempt from import taxes and VAT, while domestic businesses producing similar products have continued to bear these taxes.

This disparity has placed significant pressure on local enterprises, particularly small- and medium-sized firms.

The tax waiver elimination will support domestic producers to improve their competitiveness and encourage the consumption of locally-produced goods.

On November 30, 2010, the then-prime minister issued Decision 78, exempting VAT and import duties on goods valued below VND1 million imported through express delivery services.

The decision was meant to streamline administrative procedures and reduce the volume of goods requiring tax declarations.

However, with the rapid growth of e-commerce in Vietnam and globally, this policy has become outdated and is no longer suitable for the current economic landscape.

Approximately four to five million low-value orders are sent from China to Vietnam via e-commerce platforms per day, according to data from Vietnam Posts and Telecommunications Group.

That means Vietnam has failed to collect the VAT and import tax on an estimated $45-63 million daily imports.

A report by e-commerce market research platform Metric showed that consumers in Vietnam spent nearly VND25.3 trillion ($1 billion) shopping on five major platforms, including Shopee, TikTok Shop, Lazada, Tiki, and Sendo, in the third quarter of 2024.

The figure reached nearly $10 billion in January-September last year with more than 1.4 million products sold.

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