Attention! Another Southeast Asian country announced taxation

Another market has issued new regulations to impose taxes on cross-border e-commerce sellers.

In today's environment where red oceans are everywhere, it is not easy to find a new blue ocean market. In recent years, Vietnam, a Southeast Asian country, has been constantly coming into view. Data shows that Vietnam has successfully ranked among the top ten fastest growing e-commerce countries in the world.

Since the beginning of 2022, the Vietnamese market has grown at a gratifying rate. From 2022 to 2023, the Vietnamese market grew by 25%, and continued to maintain a double-digit growth rate from 2023 to 2024, reaching 18%.

Vietnam's position in Southeast Asia cannot be ignored. Earlier data revealed that Vietnam has become the third largest e-commerce market in Southeast Asia, after Indonesia and Thailand.

Vietnam's market is growing rapidly, and old regulations are not compatible with the new environment

In 2023, the size of Vietnam's e-commerce market reached US$20.5 billion (approximately RMB 150.2 billion), and is expected to grow to US$45 billion (approximately RMB 329.9 billion) by 2025, and may continue to grow to US$63 billion (approximately RMB 461.8 billion) in 2030.

The rapid growth of the market has also made Vietnam more popular. Cross-border e-commerce platforms and sellers who have sensed development opportunities have continued to flock to this gold-digging land, bringing more choices to consumers while also bringing a certain degree of impact to local companies, intensifying market competition.

In 2024, the total value of goods imported through express delivery services and valued at less than 1 million VND (about RMB 300) reached 27.7 trillion VND (about RMB 8.3 billion).

A report from e-commerce data platform Metric shows that there are currently about 4 million to 5 million small order packages shipped from China to Vietnam through e-commerce platforms every day . As the Vietnamese market becomes bigger and bigger, the number of e-commerce transactions may increase exponentially .

The report also shows that in the first nine months of 2024, goods worth less than 200,000 Vietnamese dong (about 60 yuan) accounted for almost more than half of the total sales of Vietnam's e-commerce market . It can be seen that low-priced goods account for a very high proportion in Vietnam .

In view of the above, Vietnam’s motivation for issuing this tax decision is clear.

Prior to this, Decision No. 78 of the Prime Minister of Vietnam in 2010 exempted imported goods with a value of less than 1 million VND ( about RMB 300 ) from VAT and import tax when imported via express delivery services.

This tax-free policy has its advantages. On the one hand, it helps to optimize the domestic market structure of Vietnam, continuously enhance the strength of local enterprises through competition, promote international trade, and boost the progress of the entire industry. It can also enrich the variety of goods in the domestic market and provide consumers with more choices .

On the other hand, it can reduce the tax burden of cross-border enterprises, lower cross-border costs, make products more price-competitive in the Vietnamese market, and attract more consumers.

But with the rapid growth of e-commerce in Vietnam, the government believes that the tax-free policy is no longer suitable for the current market environment.

Recently, the Vietnamese government abolished Decision No. 78 in Decision No. 01 signed on January 3, 2025, and announced that from February 18, 2025, value-added tax and import tax will be imposed on goods imported through express delivery services with a single value of less than 1 million Vietnamese dong (about RMB 300).

Regarding the end of the tax exemption policy, Vietnam’s Ministry of Finance said: “The cancellation of tax exemption regulations is to ensure fair competition and encourage consumers to buy domestically produced products.”

The Ministry of Finance also stated that the cancellation of the tax-free policy for small parcels has been implemented in many countries. Countries such as the United Kingdom, Australia, Thailand, and Singapore have already issued relevant laws and regulations to cancel the VAT exemption regulations for small imported goods to varying degrees , so it is timely for Vietnam to cancel the tax-free policy for small parcels.

Chinese cross-border platforms are popular in Vietnam

In recent years, many Chinese cross-border e-commerce platforms have performed well in the Vietnamese market. For example, e-commerce platforms such as Shopee and TikTok Shop have achieved impressive data in the past year, and Chinese cross-border products are becoming more and more popular among consumers in Vietnam.

Data shows that Shopee and TikTok Shop account for nearly 90% of Vietnam's e -commerce market share. They are also on the list of Vietnam's most popular e-commerce platforms.

Shopee has clearly grown into a leading company in Vietnam's e-commerce market. In the first quarter of 2024, Shopee's gross merchandise volume (GMV) in Vietnam reached 53.74 trillion VND (about 16.1 billion RMB) , accounting for 67.9% of Vietnam 's market share .

In the first nine months of 2024 , Shopee Vietnam 's total sales reached 227.7 trillion Vietnamese dong (about 68.3 billion yuan) , a year-on-year increase of 37.66% . The rapid development has further consolidated its leading position in Vietnam's e-commerce market .

Shopee has been deeply involved in the Vietnamese market for many years, bringing many high-quality products to consumers and improving their shopping experience. In the 2024 Vietnam Best Brands Ranking Report jointly released by YouGov and Decision Lab recently , Shopee topped the list and replaced Samsung as the most recognized brand by Vietnamese consumers.

Although TikTok Shop has only entered the Vietnamese market in the past one or two years, its growth momentum is obvious.

In the second quarter of 2024, TikTok Shop ranked second with a market share of 22%, second only to Shopee‌. In addition, in the first half of 2024, its sales in Vietnam increased by 150.54% year-on-year, making it one of the fastest growing platforms in Vietnam's e-commerce market.

Taxation puts pressure on sellers’ profits

The Vietnamese government's announcement to cancel the policy of exempting small cross-border packages from value-added tax and import taxes is, to a certain extent, unfriendly to cross-border sellers, especially small and medium-sized cross-border e-commerce sellers who rely too much on small package transportation. It may increase their tax costs and compress certain profit margins.

Not only Vietnam announced taxation, but other countries also announced many cross-border tax policies. For example, the Mexican National Tax Service announced that from January 1, 2025, a 16% value-added tax (VAT) will be levied on all foreign companies selling goods through e-commerce platforms, including Amazon and Temu.

In addition, the European Commission is proposing to impose import taxes on goods worth less than 150 euros (about 1,135 yuan). The proposed amendments will take effect before March 2028. The European Council is currently discussing it and the European Parliament has voted in favor.

In 2024, there were also reports that the United States proposed to end the tax-free policy for small cross-border packages with a value of less than US$800 (approximately RMB 5,864), and planned to officially implement the relevant new regulations on January 11, 2025.

There are many similar situations like this. Now more and more countries are beginning to announce taxation, which also indicates that tax supervision will be stricter in the future.

Therefore, on the basis of ensuring tax compliance, sellers can also reduce corresponding costs by optimizing operations, improving efficiency, etc., always maintain their own competitiveness, and cope with challenges brought about by increased taxes.

Vietnam

Small Package

tax