On October 29, continuing the 8th Session, the National Assembly discussed in the hall a number of contents with different opinions of the draft revised Law on Value Added Tax (VAT).
Explaining at the end of the discussion session, Deputy Prime Minister of the Government and Minister of Finance Ho Duc Phoc said that the exemption of VAT on small-value goods is implemented by the Government in accordance with the commitment to the Tokyo Convention.
Deputy Prime Minister of the Government admitted that many countries have abandoned this commitment. For example, Thailand has imposed a 7% tax on small-value goods.
“The Government will abolish Decision 78/2010 and include it in the draft VAT Law. All imported goods of small value must pay tax,” said Deputy Prime Minister of the Government.
Referring to the recent phenomenon of the Temu e-commerce platform selling cheap goods in Vietnam, Mr. Phoc said that this platform has taken advantage of Decision 78 to sell cheap goods (under 1 million VND) in Vietnam.
“We have asked to check with Temu,” the Deputy Prime Minister added.
At the discussion session, National Assembly delegate Hoang Minh Hieu (Nghe An delegation) said that although the value of each order may be small, the total volume of imported goods in this form has been, is and will continue to be quite large.
If tax exemption is granted, it will result in not collecting a large amount of tax, not to mention it can lead to the situation of splitting the order value to avoid tax.
According to delegates, this exemption of VAT on imported goods of small value also directly affects domestic manufacturers and retailers because imported goods enjoy many advantages such as lower prices.
The delegate cited an example of recent days, where foreign e-commerce platforms are selling goods at very cheap, competitive prices, attracting public attention. Without timely solutions, it will greatly affect the domestic manufacturing industry.
Emphasizing that many countries in the world have abolished the tax exemption for small-value goods imported through e-commerce platforms, the delegate said that the current law and draft law do not stipulate this, but the tax exemption is being implemented according to the provisions of Decision 78/2010 of the Prime Minister.
Delegates proposed to clearly stipulate in the joint resolution of the National Assembly session the need to soon terminate the validity of Decision 78.
Decision 78/2010 of the Prime Minister allows imported goods with a value of less than 1 million VND sent via express delivery service to be exempt from import tax and VAT at the import stage.
According to the National Assembly Standing Committee, this has greatly affected the efficiency of VAT collection (and import tax) for online transactions of goods on e-commerce platforms.
In the report explaining, revising and accepting the bill, the National Assembly Standing Committee cited data from the Vietnam Posts and Telecommunications Corporation, as of March 2023, about 4-5 million small-value orders were shipped from China to Vietnam via e-commerce platforms every day. Every day, an average of 45-63 million USD of small-value goods were not subject to import tax and VAT.
The e-commerce report for the first 9 months of 2024 by e-commerce data platform Metric shows that products under 200,000 VND account for more than half of the total sales of the Vietnamese e-commerce market; Vietnamese people spend 1 billion USD shopping online every month.
With the effect of Decision 78/2010, we are losing tax revenue on a large amount of imported goods on e-commerce platforms.
