• Iman Deschâtres
• 2 Comments
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Up until July 2018, it was possible to send low‑value parcels internationally without paying customs duties, VAT, GST, or Sales Tax if the seller had no local presence. The reasoning was simple: the administrative cost of collecting these taxes was considered higher than the revenue generated. When these rules were written, few expected that shopping from a computer, and eventually a phone, would become more appealing to many consumers than going to a physical shop. 

Change started in 2018, when Australia introduced GST on low‑value imported goods, and the landmark Wayfair case in the United States, reshaped the rules for taxing remote sellers.

Today, cross‑border online sales have ballooned—by 2024, the global cross‑border e‑commerce market was valued at approximately US $1.98 trillion

This summer brought a major shake-up for international shipping: the United States announced the removal of its de minimis threshold. From now on, every parcel entering the U.S.—regardless of its value—will be subject to customs duty and potentially sales tax.

The move signals a broader trend. Other regions are beginning to rethink their de minimis rules for tariffs such as in Europe, the current €150 threshold is set to disappear by 2028.

As tariff reforms dominate headlines, there’s another crucial piece businesses shouldn’t overlook, VAT/GST/Sales Tax. Unlike customs duties, VAT applies more broadly and often without de minimis. In this post, we’ll explore the key changes that have impacted import VAT since 2018 and what they mean for businesses.

From July 2018, more jurisdictions began removing the small-value goods exemption and shifting VAT collection from the point of importation to the point of sale. Today, these rules are in force in several jurisdictions (the list below is not exhaustive).

While these legislations are built on the same core principles, their implementation has varied. In some jurisdictions, obligations only apply once a seller exceeds a certain sales threshold—for example, in the United States (where thresholds differ by state), as well as in Australia and New Zealand. In others, such as the EU, the UK, and Switzerland, no thresholds apply, meaning the rules kick in from the very first sale.

On top of this, the rules themselves can differ: in some cases they are optional—such as in the EU (until becoming mandatory in 2028) or the UK—while in others they are mandatory, as in New Zealand, Australia, and Singapore. Another distinction lies in how the taxable value is calculated: some jurisdictions base it on the value of each parcel (e.g. the EU, Australia), while others use the value of the individual goods within a shipment (e.g. New Zealand, Norway).

These obligations can fall on different actors in the supply chain: direct sellers, sellers operating through marketplaces in certain scenarios, and the marketplaces themselves.

For direct sellers, the rules are more straightforward—there is no ambiguity about who is liable. Broadly, three scenarios can apply:

• For goods below the threshold: the seller can use a simplified registration and charge VAT at the point of sale.

• For goods above the threshold: the VAT treatment depends on the terms of sale and the transport arrangements. In these cases, VAT may be paid by the logistics provider (i) on behalf of the seller, or (ii) directly by the customer when the package is delivered.

When sales take place through a marketplace, the rules become more nuanced. OECD policy guidance suggested that the obligation to collect and remit VAT/GST should be shifted from the seller to the marketplace. However, the way this has been implemented varies across jurisdictions. The extent of a marketplace’s tax obligations can depend on several factors:

Location of sellers – In some jurisdictions, the marketplace is responsible for all sellers (e.g. certain scenarios in Singapore). In others, the obligation only applies to non-domestic or non-registered sellers, or depends on where their goods are located.

Location of goods – Rules may also hinge on where the goods are situated. For example, marketplaces can be liable for domestic sales in the UK, or for intra-EU sales when the seller is based outside the UK/EU. They may also be liable when goods are shipped from outside the EU/UK by sellers established within the region, while not liable for goods already located within the EU/UK.

Type of customer –Marketplace obligations generally focus on B2C sales, since B2B sales often fall under the reverse-charge mechanism. However, the EU is considering extending marketplace liability to B2B transactions. Even when they are not directly liable, marketplaces may still have compliance duties, such as verifying a buyer’s business status (EU) or issuing invoices (UK).

These variations create additional complexity and increase the risk of errors or even fraud. Marketplaces must be able to demonstrate robust processes to validate and control the information provided by third parties—whether sellers or customers. At the same time, the cost of entering new markets is rising: it is no longer enough to learn the rules once; businesses must be ready to adapt as they evolve.

Adding to this challenge is the pace of legislative change. Many countries are now extending their rules beyond digital services to include physical goods, and the time between a law being passed and coming into effect has shortened considerably. This acceleration is driven by the rapid growth of e-commerce, governments’ need for new revenue, and the fact that many jurisdictions already had digital services frameworks and systems to build upon.

We should expect more countries to introduce new rules quickly, and the de minimis threshold for tariffs is likely to disappear—it is currently under review in the UK and already scheduled for removal in the EU in 2028. With this change, marketplaces may also become liable for customs duties, further expanding their compliance burden. As tax authorities continue to enhance their systems, we can also expect a stronger shift toward collecting taxes at the point of sale rather than at the border, whether through marketplaces or directly from sellers.

Is your system ready?

Disclaimer: The views, statements or opinions expressed in this article are solely those of the author and do not represent tax advice and are not to be designated to be the views, statements or opinions of any other person, group, association or company.

Image by: leungchopan

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