Brian Jeffrey
Changes in Duty-Free Import Policies
On January 3, 2025, Deputy Prime Minister Ho Duc Phoc enacted Decision No. 01/2025/QD-TTg, which repealed the earlier Decision No. 78/2010/QD-TTg. The new decision will come into effect on February 18, 2025, ending the duty-free import exemption for goods valued at 1 million VND or less.
Under the former Decision 78, goods imported through express delivery with a value up to 1 million VND were free from import duties and value-added tax (VAT). Items exceeding this valuation incurred standard taxes.
This policy was initially introduced in 2010 to simplify customs procedures during a time of manual document processing. The exemption was beneficial for expediting the clearance of lower-value goods and reducing administrative duties.
However, with the surge in e-commerce, especially in cross-border transactions, the relevance of Decision 78 has diminished. Currently, it is estimated that 4-5 million low-value shipments are sent from countries like China to Vietnam daily through e-commerce channels.
The automated customs management system (VASSCM) has considerably improved operational efficiency, streamlining the clearance process and reducing delays at entry points. More than 99% of customs declarations are now processed electronically via Vietnam’s automated clearance system (VNACCS/VCIS), effectively managing high volumes of daily submissions.
This modernization has bolstered revenue collection for express shipments, allowing for quick and centralized handling while maintaining smooth trade operations.
Opponents of the previous tax exemptions raised concerns regarding the uneven tax treatment between imported goods and domestically produced items. While local products faced VAT, imported goods valued under 1 million VND benefiting from tax exemptions created an unfair competitive landscape.
This exemption led to pricing discrepancies, ultimately hindering the competitiveness of local manufacturers. Decision 01 aims to rectify these issues by ensuring equitable tax treatment, supporting local production, and fostering fair competition.
The revocation of Decision 78 is a part of Vietnam’s comprehensive tax reform efforts aimed at broadening the tax base, covering all revenue sources, and promoting fair and adequate taxation.
Through the implementation of Decision 01, the government intends to align tax regulations for low-value imports with global standards and encourage the consumption of domestically produced goods.
