Publish Date
Feb 26, 2025
Asia Tax Update
E-commerce activities have been reshaping the landscape and behaviour of the consumer markets. One significant change would be where consumers are no longer limited to purchasing domestically, thanks to the increasing availability of global e-commerce platforms. A report released by DHL in 2024[1] suggested that over 50 percent of consumers worldwide buy from online retailers in other countries. The increasing ability to purchase low-value consumer products from overseas sellers (de minimis imports) has been under the spotlight of governments in many jurisdictions in recent years. Specifically, many tax authorities have been revisiting the applicability of the ‘de minimis exemption rules.’
Discussions and actions around removing de minimis exemption rules have already existed for several years, and are no longer a new matter. However, the recent issuance of the executive orders by President Trump in the United States brought has brought this issue back into the spotlight. Nations, including the U.S., are revising their taxation of de minimis imports, which has a major effect on e-commerce and online sellers.
The removal of de minimis imports exemption rules primarily affects businesses in the retail and consumer goods sectors, particularly those with an online sales channel (either operated in its own capacity or listed on other online marketplaces). E-commerce marketplace operators are also potentially affected.
It is critical that businesses understand the implications of the relevant developments globally and how to react, in an era where changes are occurring at an exceptionally rapid pace. This article outlines how to navigate the latest changes and shares our insight as to how to effectively manage change in your organisation.
When goods are imported from overseas into a particular country, import duties and/or taxes will be levied in that country. A common exception could be where the value of the goods falls below a certain threshold (commonly referred to as a ‘de minimis threshold’), where relevant import duties and taxes may be exempted. Traditionally, having such a threshold is commonly regarded as a measure for boosting customs’ efficiency because it allows the customs to focus their resources on shipments with higher value (and higher risk).
However, the significant growth of e-commerce marketplaces and online shopping has led to many low-value goods sold by e-commerce businesses falling below this de minimis imports threshold, resulting in exemptions from import duties and taxes. This situation has caught the attention of the public and governments.
The non-taxation position of these foreign businesses, as compared to domestic businesses that are normally subject to indirect taxes, is considered to be undermining domestic market competitiveness and results in a loss of government revenue. The issues have led the government and tax authorities in many jurisdictions to revisit whether the import de minimis exemption rules should still be retained. Example of first movers of removing import de minimis rules include Australia (since 2017), New Zealand (since 2019) and the European Union countries (since 2021). Similar movements are observed in a number of other countries, too.
In general, shipments with an aggregate value up to USD800 per day per person can be imported into the United States free of duties.
However, on 1 February 2025, President Trump issued executive order that imposes additional tariff on goods imported from China.[2] Similar executive orders affecting goods imported from Mexico and Canada have been postponed. Importantly, these executive orders not only impose additional tariffs on goods sourced from China, but also remove the entitlement to the de minimis exemption rules of these goods. However, the actual effective date of the removal of de minimis exemption is yet to be known, as a more recent executive order (issued on 5 February 2025)[3] postponed it until the time of notification by the Secretary of Commerce to the President that adequate systems are in place to fully and expediently process and collect tariff revenue.
According to a report released on 31 January 2025 by the Congressional Research Service of the United States,[4] the CBP estimated that from fiscal year 2018 to 2021, 67.4 percent of United States’ low-value imports were from China (roughly USD228.3 billion); and in 2023, roughly one-third of the total United States’ low-value imports were from China (roughly USD18.4 billion). This indicates the extent of impact of such executive order on the relevant goods and businesses.
It is useful to also note that prior to the issuance of these executive orders, the United States Customs and Border Protection (CBP) has in fact proposed measures to exclude the de minimis duty exemption for certain low-value shipments (mainly those subject to Section 301, Section 201 and Section 232) entering the United States for public comments.[5] A wide range of China-sourced goods fall under Section 301 and are therefore affected. The issuance of the executive orders essentially expedited the process of removing de minimis rules for China-sourced goods, urging affected businesses to react even more promptly.
While development on tariff policies in the United States under Trump’s presidency remain a focus for many industry participants, it is critical to note that similar movements of removing de minimis imports rules are also happening in other parts of the world, which similarly require attention.
Tax and customs changes in the Asia Pacific region are occurring at an exceptionally rapid pace — the changes cited here took place in just a matter of months.
Several other jurisdictions in the region have already put in place measures that levy import taxes and/or duties on low-value goods, such as Singapore, Malaysia, Australia and New Zealand.
Tax and customs development around e-commerce activities is occurring at an exceptionally rapid pace — the abovementioned updates all happened in just a matter of months.
It is critical for all e-commerce businesses (including e-commerce marketplace operators, retail businesses with an online sales channel and other e-commerce sellers) to closely monitor the changes and proactively manage the compliance with the evolving regulatory requirements. In the context of managing implications arising from de minimis rules, possible actions include:
A&M works closely with clients in the e-commerce and retail sectors to keep abreast of the tax and regulatory changes that affect their business. We also assist our clients with evaluating and improving the effectiveness of their business models in light of the dynamic tax environment. It is important to recognize that any change of business models is not purely a tax matter — any operational impacts (such as IT, legal and business process) because of changing the business models should also be carefully considered.
A&M pulls together professionals specialised in taxation and business process optimisation who are dedicated to collaborating closely to deliver practical solutions and helping clients navigate a dynamically changing business landscape.
Connect with us to discuss this further.
[1] “Cross-Border Buying Report: What (and why) the world is buying from abroad,” DHL, Accessed February 17, 2025, https://www.dhl.com/content/dam/dhl/local/global/dhl-ecommerce/documents/pdf/g0-dhl-e-commerce-cross-border-report-2024.pdf
[2] “Imposing Duties to Address the Synthetic Opioid Supply Chain in the People’s Republic of China,” Presidential Executive Order, February 1, 2025, https://www.whitehouse.gov/presidential-actions/2025/02/imposing-duties-to-address-the-synthetic-opioid-supply-chain-in-the-peoples-republic-of-china/
[3] “Amendment to Duties Addressing the Synthetic Opioid Supply Chain in the People’s Republic of China, Presidential Executive Order, February 5, 2025, https://www.whitehouse.gov/presidential-actions/2025/02/amendment-to-duties-addressing-the-synthetic-opioid-supply-chain-in-the-peoples-republic-of-china/
[4] “China’s E-Commerce Exports and U.S. De Minimis Policies,” Congressional Research Service, Updated February 5, 2025, https://crsreports.congress.gov/product/pdf/IF/IF12891
[5] “CBP Proposes New Rule to Strengthen Enforcement and Limit Duty Exemption for Low-Value Shipments,” U.S. Customs and Border Protection, January 17, 2025, https://www.cbp.gov/newsroom/national-media-release/cbp-proposes-new-rule-strengthen-enforcement-and-limit-duty
[6] “Viet Nam to levy low-value imports from February 18,” Government of Viet Nam, January 6, 2025, https://en.baochinhphu.vn/viet-nam-to-levy-low-value-imports-from-february-18-11125010609453845.htm
[7] ประกาศกรมศุลกากร ที่ 232/2567 (Customs Department Announcement No. 232/2567),” กรมศุลกากร (Customs Department), December 25, 2024, https://www.customs.go.th/cont_strc_download_with_docno_date.php?lang=th&top_menu=menu_homepage¤t_id=14232a324149505e4f464b49464b4b (in Thai)
[8] “令和7年度税制改正大綱 (Outline of the Tax Reform for Fiscal Year 2025),” 自由民主党・公明党 (the Liberal Democratic Party and Komeito), December 20, 2024, https://storage2.jimin.jp/pdf/news/policy/zeisi_2025.pdf (in Japanese)
