Vietnam is receiving around 4-5 million applications daily worth less than one million VND from China through platforms like Shopee and Tiktok. The Finance and Budget Committee believes that taxing VAT on these transactions is crucial to ensure revenue sources are covered. During a meeting on June 17, Minister of Finance Ho Duc Phoc presented a proposal for an amended VAT law, which includes exempting VAT on certain imported goods within the import tax exemption norms, as well as exempting VAT on small-value goods.
However, the committee suggests eliminating VAT exemptions for small-value imports, especially those made through cross-border e-commerce channels. This move aims to protect revenue sources and promote a fair business environment between domestic production and imports. The average daily value of goods circulating through platforms like Shopee, Lazada, and Tiktok is around 45-63 million USD, totaling 1.3-1.9 billion USD per month. Considering the significant impact of these transactions on tax revenue, the committee emphasizes the need to implement appropriate policies to expand revenue sources.
The proposal also includes imposing a 5% VAT on items like fertilizers, offshore fishing vessels, and securities depository, which were previously taxed at 0%. This change aims to encourage domestic production and reinvestment by businesses. However, there are concerns about how this tax will affect fertilizer prices and farmers. The committee points out that Vietnam’s current 10% VAT rate is lower than many other countries in the region and the world. Therefore, there is room to increase VAT rates to expand the revenue base. Some ASEAN countries have already increased VAT rates to improve budget collection efficiency post-Covid-19, and the committee suggests the Vietnamese government assess the impact and consider a possible increase in tax rates after the economy has recovered.
