The Ministry of Finance is seeking opinions on the draft Decree detailing a number of articles and measures to implement the Law on Export Tax and Import Tax, which proposes to reduce the tax exemption rate for small value goods.
According to the proposal, goods with a total customs value of 100,000 VND or less or with a total amount of export and import tax payable of 10,000 VND or less for one export and import are exempt from export and import tax. The provisions of this Article do not apply to goods that are gifts, gifts, and goods purchased and traded by border residents.
Cross-border e-commerce develops, imports of small value goods increase
According to the Customs Department, the adjustment is proposed in the context of rapidly developing cross-border e-commerce, the number of low-value imported shipments is increasing. The policy of tax exemption for small value goods is intended to reduce management costs and facilitate trade, but also reveals limitations such as creating a competitive advantage for imported goods compared to domestically produced goods and the risk of dividing orders to enjoy tax incentives.
Talking to Lao Dong Newspaper, Mr. Le Van Tuan - Director of Keytas Tax Accounting Co., Ltd. - said that the proposal to narrow the tax exemption threshold is necessary and suitable for the current situation.
According to Mr. Tuan, it is estimated that there are more than 5 million small value orders from China to Vietnam every day through e-commerce platforms. The import tax exemption policy for small value goods helps people easily access cross-border goods, but at the same time creates competitive pressure with domestically produced goods.
Narrowing the threshold of import tax exemption for small value goods is not only to protect revenue sources, but also to create a level playing field between domestically produced and imported goods," Mr. Tuan said.
Domestic goods can increase competitiveness
Analyzing the impact on domestic goods, Mr. Tuan cited information from the Ministry of Finance that the average preferential import tax rate is currently about 11.8%. According to him, the import price of goods is expected to increase by an average of about 11.8% compared to the present.
When the purchase price of imported goods is higher, consumers will have to consider more between imported goods and domestically sold goods. This, according to Mr. Tuan, will increase the competitiveness of domestic goods.
This is a policy to create a more equal business environment for domestic goods, contributing to supporting domestic producers and businesses in the face of the pressure of cheap goods flooding into Vietnam," Mr. Tuan said.
Changing consumer behavior
Conversely, reducing the tax exemption threshold will directly affect a part of consumers who regularly buy small value goods from abroad.
According to Mr. Tuan, when goods previously subject to tax exemption no longer meet the conditions according to the new threshold, import costs will increase and may affect the purchase decision.
Import prices will increase more than before, forcing consumers to adjust their behavior. They are no longer benefiting from the tax exemption policy as before," Mr. Tuan said.
However, according to the expert, this impact needs to be viewed in relation to the tax obligations of other entities in the market.
He analyzed that goods with value higher than the prescribed threshold when imported must fully fulfill tax obligations at the import stage. Domestic businesses must also fulfill tax obligations according to current regulations. Meanwhile, the import tax exemption policy for small value goods creates differences in tax obligations between groups of goods and businesses.
Narrowing the threshold of import tax exemption for goods of small value is simply returning fairness to both buyers and sellers. Buyers cannot benefit from inequality, or take advantage of tax exemption policies to divide the import value and increase inequality," Mr. Tuan said.
According to him, the change in costs may also cause consumers to reconsider choosing between domestic and imported goods.
Consumers need to look at the aspect of fairness in tax policy to adjust their consumption behavior. They are forced to consider more carefully when choosing to buy an item domestically, or continue to buy an item imported from abroad," Mr. Tuan said.
