Choosing the wrong business structure for 1688 imports costs money in two directions. Set up an LLC too early and you're spending VND 3-6M/month (~$120-240) on compliance before the product is proven. Stay individual too long and customs reclassifies your shipments as commercial activity, sometimes retroactively. Here is how to decide based on where your revenue actually sits.
Three Structures, Three Risk Profiles
Vietnam has three common setups: individual (no registration), sole trader (personal tax ID), and LLC (separate legal entity). Import duty does not change across these. MFN tariffs are applied by HS code, and all three structures pay the same rate at the border.
What changes: customs declaration method, ability to issue VAT invoices, and tax authority scrutiny. The wrong pick is expensive in either direction.
Individual Import: Free to Start, Hard Ceiling at ~$1,200/Month
No registration needed. Works for testing a new SKU or running a trial shipment under the non-commercial customs threshold (currently VND 1M per shipment, or one shipment per day). The risk starts when imports become regular. Customs can reclassify repeat personal imports as commercial activity and assess duties retroactively.
You also cannot issue VAT invoices, cannot expense import costs against income tax, and every profit sits on your personal income return with no deductions.
Practical ceiling: total imports under VND 20-30M/month (~$800-1,200), no more than 2-3 shipments per month. Beyond that, reclassification risk grows fast. Before your first order, check how to estimate minimum starting capital for 1688 imports sold on Shopee to see if this structure fits your opening volume.
Sole Trader: Best Fit for VND 50-300M/Month ($2K-12K)
A sole trader registration gives you a business tax ID and keeps fixed costs low. Tax for goods traders runs roughly 1% of declared revenue, often VND 0-500K/month ($0-20/month), which is far cheaper than running an LLC. No dedicated accountant, no audited statements, no minimum registered capital.
For C2C retail on Shopee or TikTok Shop where buyers never ask for a VAT invoice, this covers what you need.
Hard limits: retail receipts only (not VAT invoices), no formal B2B distribution contracts, and Vietnamese law caps household businesses at 10 employees. Build the flat tax into your per-unit cost before you price anything. This guide on calculating total import fees from 1688 shows how to split that overhead correctly across your monthly shipment volume.
LLC: When the Fixed Overhead Actually Pays Off
Fixed costs for an LLC: accountant at VND 2-5M/month (~$80-200), annual financial statements, and VND 2-3M/year in business license tax. Total fixed overhead lands at VND 30-70M/year (~$1,200-2,800) before accounting software.
What you get in return: deduct import costs against a 20% corporate income tax rate, issue VAT invoices to B2B buyers, sign formal distribution contracts, and open corporate bank accounts more easily when you need trade financing. LLC status also allows you to reclaim import VAT if goods are re-exported or used in production, though for most retail importers this does not apply. The MFN duty rate itself does not change.
Reasonable threshold: annual revenue above VND 500M (~$20,000), B2B customers regularly requesting VAT invoices, or needing to sign an exclusive distribution agreement. Before filing any paperwork, use this cost-of-goods breakdown for 1688 imports to confirm the overhead actually fits your current margin, not your projected margin.
Direct Comparison
| Factor | Individual | Sole Trader | LLC |
|---|---|---|---|
| Import duty | Same (MFN by HS code) | Same | Same |
| Import VAT | 10% at customs | 10% at customs | 10%, reclaimable if re-exported |
| Profit tax | Personal income, no deductions | ~1% revenue flat | 20% corporate, costs deductible |
| Monthly fixed cost | VND 0 | VND 0-500K | VND 2-6M+ |
| VAT invoice output | No | No | Yes |
| Legal risk | High at regular volume | Low | Very low |
Example: a VND 50M (~$2,000) shipment of 1688 goods. All three structures pay the same import duty plus roughly VND 10.5M in combined border taxes. The difference is entirely in what happens to profit after that. For a full landed-cost model including freight channel options, see the cheapest ways to ship from 1688 to Vietnam before adding the income tax layer on top.
When to Upgrade Your Structure
Individual to sole trader: Monthly import value consistently above VND 30M (~$1,200), starting to sell wholesale to other resellers, or regular business payments hitting a personal bank account.
Sole trader to LLC: B2B buyers asking for VAT invoices more than occasionally, wanting to sign a formal distribution or exclusivity contract, revenue approaching VND 500M/year, or needing to bring in outside capital or a co-owner.
Do not upgrade to LLC if: all sales are C2C retail, no buyer has ever asked for a VAT invoice, and you are not willing to pay a bookkeeper every month. The overhead does not pay for itself at that stage.
One practical note: closing an LLC is significantly slower and more complicated than closing a sole trader registration. Do the math at your current revenue, not projected revenue, before you decide.
Frequently Asked Questions
Can customs hold goods I import as an individual from 1688? Yes. Shipments above VND 1M per consignment, or anything that looks commercial based on frequency or quantity, can be held until you provide a business tax ID. Sole trader registration removes most of this friction for operators importing regularly.
What does a sole trader need to declare at customs for 1688 goods? Your personal business tax code, the supplier invoice from 1688 (order confirmation or proforma), and payment of MFN duty plus 10% VAT at the port. Your freight forwarder handles the paperwork in most cases.
What taxes does an LLC pay when importing from 1688? Same MFN duty and 10% import VAT as every other structure. The import VAT is reclaimable on the quarterly VAT return if you issued VAT invoices on the downstream sale. Corporate income tax at 20% applies to net profit after deducting import costs and operating expenses.
At what revenue level should I register as a sole trader? Once monthly imports consistently exceed VND 20-30M (~$800-1,200). Registration typically takes 3-5 business days and costs under VND 500K in filing fees.
Is it legal to split shipments across different names to stay under the non-commercial threshold? No. Customs treats coordinated splitting as a single commercial operation. If flagged, all shipments can be reclassified and assessed retroactively as commercial imports. It is not a workable approach at any meaningful scale.
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