Vietnam proposes lowering import tax exemption threshold to $4

Vietnam proposes lowering import tax exemption threshold to $4

Vietnam’s Ministry of Finance has proposed lowering the tax exemption threshold for low-value imports and exports to $4 per shipment, from the current thresholds of $2-$40.

The ministry is seeking comments on a draft decree detailing provisions of the Law on Export and Import Duties.

Under the proposal, goods valued at less than $4 per import or export shipment would be exempt from import and export duties. The threshold would also apply to goods sent through postal and express delivery services.

The Customs Department estimates that low-value goods worth between $1.3 billion and $1.9 billion cross Vietnam’s borders and receive tax exemptions each month. Photo: Le Toan

Under Decree No.134/2016/ND-CP, as amended by Decree No.18/2021/ND-CP, imported goods sent via postal and express delivery services are currently exempt from import duty if their value is no more than $40 or the payable import duty is no more than $4. If both thresholds are exceeded, import duty is calculated on the entire shipment.

For other imported and exported goods, the current exemption applies to shipments valued at no more than $20 or with payable tax of no more than $2. The rule does not apply to gifts, goods bought, sold or exchanged by border residents, or goods sent through postal and express delivery services.

The Ministry of Finance (MoF) said the proposed adjustment comes amid rapid growth in cross-border e-commerce, which has led to a sharp increase in the volume and frequency of low-value import shipments. Vietnam’s e-commerce retail market was estimated at $38 billion last year and continued to grow at double-digit rates in the first half of this year.

The low-value tax exemption was originally introduced to reduce administrative costs and facilitate trade. However, the rapid increase in transactions has raised concerns that the mechanism could give imported goods an advantage over domestic products, while encouraging the splitting of orders to qualify for exemptions, undervaluation and other forms of trade fraud.

Several economies are also tightening exemptions for low-value imports. According to the Customs Department, Indonesia exempts imports valued at no more than $3, while India does not grant import duty exemptions for goods purchased directly from overseas through e-commerce. From July 2026, the EU has imposed a fixed customs duty of €3 per item on consignments worth no more than €150, equivalent to about $174.6, and plans to abolish the low-value exemption threshold entirely from July 2028.

Vietnam also abolished VAT exemptions for low-value imports delivered through express services from the beginning of 2025. The preferential treatment now applies only to import duties.

The MoF said it does not support continuing import and export duty exemptions for low-value goods. However, as Vietnam is a member of the Kyoto Convention and the Law on Export and Import Duties still provides for exemptions for this category, the ministry has proposed retaining the exemption while lowering the threshold to ensure greater fairness between imported and domestically produced goods.

The proposed $4 threshold is based on an average preferential import duty rate of around 11.8 per cent, with a 10 per cent rate used to determine the corresponding value of goods.

VIR