Customs declaration when stopping VAT exemption for small value goods

Professional activities at the Express Customs Branch (Hanoi Customs Department). Photo: Document

Amend regulations to suit reality

In order to implement the Kyoto Convention on the requirement that national laws prescribe a minimum value and/or minimum amount of customs duties and other taxes below which no customs duties and other taxes are collected, the Prime Minister issued Decision No. 78/2010/QD-TTg (Decision No. 78) exempting value added tax (VAT) on low-value goods sent via express delivery services. However, during the implementation of Decision No. 78 up to now, the provisions of tax laws, the development of e-commerce as well as international practices related to tax policies for low-value imported goods sent via express delivery services have changed a lot, leading to the need to review and adjust the regulations.

In addition, the current VAT Law as well as the VAT Law No. 48/2024/QH15 recently passed by the National Assembly on November 26, 2024 do not have provisions on VAT exemption in general and VAT exemption for low-value imported goods in particular. The Law only stipulates non-taxable subjects or taxable subjects. In addition, recently, a number of countries in the world such as the EU, the UK, Australia, Singapore, Thailand, etc. have also abolished the regulation of not collecting VAT on low-value imported goods.

Based on the domestic and international context, the Ministry of Finance has submitted to the Prime Minister Decision No. 01/2025/QD-TTg to abolish Decision No. 78, effective from February 18, 2025. This means that small-value imported goods sent via express delivery services are not exempt from VAT from February 18, 2025. The declaration and payment of VAT for small-value imported goods are carried out in accordance with the provisions of the Law on VAT and related legal documents.

According to the General Department of Customs, Decision No. 78 does not regulate administrative procedures, so the abolition of this Decision will not affect current administrative procedures. However, while waiting for the system to be upgraded, customs declarants must declare additional information on paper declarations and detailed lists of goods for the purpose of declaring and paying VAT.

Ensure collection is in accordance with policy

Imported goods belong to the group with customs value within the import tax exemption limit and are not items requiring import license and specialized inspection (group 2). Currently, customs declarants declare on the low-value goods declaration form and the information indicators of the declaration do not have information indicators related to tax calculation. Customs procedures do not have regulations related to tax collection by customs authorities. The system does not have functions related to tax calculation and collection by customs authorities.

To implement Decision No. 01/2025/QD-TTg abolishing Decision No. 78 effective from February 18, 2025, while the Ministry of Finance has not been able to issue a Circular and the General Department of Customs has not yet had a Support System, the General Department of Customs has submitted to the Ministry of Finance instructions for immediate implementation.

For imported goods of group 2 sent via international express delivery service by air or sea, express delivery enterprises shall make customs declarations electronically on the VNACCS System (low-value import goods declaration - MIC Declaration) according to current regulations. Express delivery enterprises shall calculate the VAT payable and present it to the customs authority according to Form No. 02-BKTKTGT Appendix I List 2 issued with Circular No. 56/2019/TT-BTC dated August 23, 2019 of the Minister of Finance, in which the lines "Total customs value", "VAT rate" and "VAT amount" are added.

For imported goods of group 2 sent via international express delivery service transported by road or rail, express delivery enterprises shall declare customs declarations according to form HQ/2015/NK issued with Circular No. 38/2015/TT-BTC dated March 25, 2015 of the Ministry of Finance. In which: In index box (18) on the import goods declaration, enterprises declare the name of goods representing the shipment and the number of attached files HYS (Detailed list of goods). In index box (29), VAT - "Taxable value" is "Total customs value"; "Tax rate (%)/Tax rate" is "VAT rate according to regulations"; "Tax amount" is "total tax amount payable according to VAT rate". Customs authorities shall base on the tax calculation list submitted by enterprises to update tax obligations payable into the centralized tax accounting system.

For imported goods subject to VAT (5%, 8%, 10%) and not subject to VAT, enterprises prepare lists of imported goods subject to the same VAT rate.

Implementing this plan can ensure that tax collection is in accordance with policies and does not put pressure on the VNACCS System. However, the disadvantages are that it is not convenient to manage and compile data (data is compiled on paper declarations and on the Small Value Declaration System); it creates a large amount of work for officials and civil servants receiving declaration registrations due to having to manually check and confirm the completion of tax obligations.

Mr. Dao Duy Tam - Deputy Director of the Department of Customs Supervision and Management said that e-commerce is still a new model in Vietnam, although trading activities through e-commerce trading floors have existed for a long time and especially after the Covid-19 pandemic, e-commerce activities in Vietnam are more vibrant than before.