Vietnam’s new VAT move to impact Thai businesses

Vietnam’s decision to collect value-added tax (VAT) on cheap products imported via express delivery service will affect Thai businesses, the Department of International Trade Promotion said on Sunday.

Citing a report from its international trade promotion office in Ho Chi Minh City, the DITP said Vietnam on February 18 cancelled the VAT exemption on goods valued at less than 1 million dong (1,315 baht) imported via express delivery service.

This cancellation will oblige manufacturers and distributors to pay 10% VAT on such goods. Meanwhile, it is expected to maintain fairness in trading and prevent smuggling of products to the country.The DITP noted that Vietnam’s measure would result in a tax burden for foreign manufacturers and distributors, especially those that operate direct-to-consumer (D2C) business through e-commerce platforms.

Previously, VAT exemption enabled foreign entrepreneurs to compete against products in Vietnam effectively, the department explained.It said the VAT burden would result in rising prices of imported products, impacting consumers’ behaviour. In the long term, foreign manufacturers and distributors would import products in big lots or set up warehouses in Vietnam to reduce costs.

The DITP advised Thai entrepreneurs to seek distributors or set up warehouses in Vietnam to reduce costs. They could allow local distributors to boost their brand's reliability and meet market demand, it said.

(2025/02/23-00:00)