Vietnam imposed VAT on low-value imports from February 18, 2025, affecting goods under 1 million VND ($39.40). The policy aims to boost tax revenue by 2.7 trillion VND ($105.6 million) annually and ensure fair competition.
Vietnam’s recent move to impose a value-added tax (VAT) on low-value imported goods has now been in effect for over a month. The policy, which came into force on February 18, 2025, marks a significant shift in the country’s approach to eCommerce and cross-border trade. It applies to imported goods valued at less than 1 million VND (approximately $39.40) that are shipped via express delivery services.
For years, small-scale imports enjoyed tax exemptions, a policy that benefited millions of shipments entering Vietnam, particularly from China. However, this exemption has now been removed, reshaping the competitive landscape for both domestic businesses and foreign eCommerce retailers. The change is expected to generate additional tax revenue for Vietnam while also addressing concerns about unfair competition. But as the first month has shown, implementing this new tax has not been without challenges.
Why Vietnam introduced VAT on low-value imports
The primary motivation behind this policy shift is fairness in taxation. Previously, domestic manufacturers had to pay VAT on their products, while low-value imports, mainly entering through eCommerce, remained tax-free. This created an imbalance, allowing foreign sellers to offer goods at more competitive prices. By closing this loophole, Vietnam’s government aims to support local businesses and encourage domestic consumption.
Another key reason for imposing VAT on low-value imports is to recover lost tax revenue. Vietnam’s eCommerce sector has been booming, with millions of small-value shipments entering the country daily, mostly from China. Authorities have expressed concerns that without proper taxation, the government is missing out on a significant source of revenue. The General Department of Customs (GDC) estimates that VAT collection on these imports could generate an additional 2.7 trillion VND ($105.6 million) annually.
Additionally, the new policy helps regulate the rapid growth of cross-border eCommerce. Over the past few years, the surge in online shopping has led to an increase in small-value imports, many of which enter Vietnam with limited oversight. By enforcing VAT on these goods, customs authorities gain better control over these transactions, ensuring compliance with local tax laws.
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Immediate impact and challenges
Changes for businesses and consumers
The first month of implementation has seen significant adjustments from eCommerce platforms, logistics companies, and importers. Businesses had to quickly adapt their pricing strategies to reflect the new VAT charges. Many online retailers revised their price structures to include VAT, which has led to higher costs for consumers purchasing low-value imported goods.
For Vietnamese consumers, particularly those who frequently buy small items from international sellers, this means paying more than they were accustomed to. Many online shoppers, especially those ordering from platforms like Shopee and Lazada, have expressed concerns over increased costs. Some have adjusted their buying habits, shifting towards domestic alternatives or reconsidering their purchase frequency.
Delays in customs processing
Vietnam’s customs authorities have also faced challenges in adapting to the new system. The sudden surge in VAT-related processing caused temporary delays in clearing shipments. Initially, customs officers had to manually process tax declarations for millions of parcels while waiting for system upgrades to automate VAT collection. This manual process created a backlog, slowing down import clearance for express delivery services.
Although customs officials are working to streamline the system, businesses relying on fast shipping have reported disruptions. Ecommerce companies and logistics providers have had to coordinate closely with authorities to ensure compliance while minimizing delays.
How Vietnam’s policy compares to other countries
Vietnam’s approach follows a global trend in eCommerce taxation. Many countries have eliminated VAT exemptions on low-value imported goods to protect domestic businesses and prevent tax losses.
- Singapore introduced a similar policy in 2023, requiring overseas sellers to register and collect VAT on low-value imports.
- Thailand imposed VAT on foreign eCommerce sellers to ensure a level playing field for local businesses.
- Australia and the European Union have also taken steps to remove VAT exemptions, ensuring that imported goods are taxed similarly to domestically sold products.
By implementing VAT on low-value imports, Vietnam aligns itself with these international efforts to regulate cross-border eCommerce and secure additional tax revenue.
Long-term implications
More revenue for the government
With an estimated 2.7 trillion VND ($105.6 million) in additional VAT revenue expected annually, the Vietnamese government stands to benefit financially from the new policy. These funds can be reinvested in infrastructure, public services, and economic development projects.
Strengthening domestic businesses
Local manufacturers and retailers, who previously struggled to compete with untaxed imports, are likely to see a more balanced market. With the VAT now applied to foreign imports, domestic businesses can compete on more equal footing, potentially increasing their market share.
More regulatory oversight on cross-border eCommerce
The new tax regime also gives Vietnamese authorities greater control over eCommerce imports. By requiring proper tax declarations and compliance from foreign sellers, the government can better regulate the volume and value of goods entering the country, reducing the risk of tax evasion.
Potential price adjustments and consumer behavior changes
While some consumers may continue purchasing from foreign eCommerce platforms despite the added tax, others may shift towards local alternatives. This change could drive growth in Vietnam’s domestic eCommerce market, as local sellers adapt to the new landscape.
What’s next?
Vietnam’s customs system is still undergoing improvements to handle VAT collection more efficiently. Authorities are working on upgrading automated systems to reduce delays and streamline tax processing for millions of imports. As these systems become more advanced, the initial bottlenecks are expected to ease.
For businesses, the focus now is on compliance. Ecommerce platforms and logistics providers must ensure that VAT is properly included in pricing and that shipments are processed correctly under the new regulations.
For consumers, the long-term effects remain to be seen. Some may continue purchasing low-value imports despite the added cost, while others may seek out domestic alternatives. Regardless, Vietnam’s VAT on low-value imports signals a major shift in the country’s approach to eCommerce taxation and international trade.
As the policy continues to evolve, further refinements and adjustments may be made. But for now, one thing is clear: the days of tax-free small imports in Vietnam are over.
