The report of the National Assembly Standing Committee shows that there is consensus on changing fertilizer from non-taxable to 5% tax rate while there is a proposal to keep it as current regulations.
On the morning of October 29, discussing some controversial contents of the draft Law on Value Added Tax (amended), many National Assembly deputies expressed concern that imposing a 5% tax on fertilizers would increase the price of fertilizers in the market and farmers would be directly affected, affecting the cost of agricultural products.
Concerns about increasing agricultural production costs
The report of the National Assembly Standing Committee shows that there are opinions in agreement with the Government's draft Law, changing fertilizer from non-taxable to subject to a tax rate of 5%. There are other opinions suggesting keeping it as the current regulations.
The National Assembly Standing Committee believes that the value-added tax on fertilizers was amended in 2014 in the Value-Added Tax Law No. 71/2014/QH13, changing it from being subject to a 5% tax rate to being tax-free.
This policy has had a very negative impact on domestic fertilizer production enterprises over the past time, because the input value added tax of these enterprises is not deductible, must be accounted for in costs, including very large input tax on investment and purchase of fixed assets, causing domestic production costs to increase, making it impossible to compete with imports.
On the contrary, imported fertilizers benefit from being taxed at 5%, being converted to being tax-free and still receiving a full refund of input VAT.
There are also concerns that when fertilizers are taxed at 5%, farmers will be directly affected if domestic enterprises collude with traders to sell imported goods, raising the selling price including the value added tax payable, increasing the price level of fertilizers, leading to increased agricultural production costs.
According to Chairman of the Finance and Budget Committee Le Quang Manh, fertilizer is currently a commodity whose price is stabilized by the state, so the competent management agencies can use market management measures and strictly handle cases where domestic fertilizer production enterprises take advantage of newly issued policies, collude with private traders to commit acts of profiteering, causing large fluctuations in prices in the market, affecting the agricultural sector.
Therefore, to address the shortcomings in policies for the fertilizer production industry in recent times, the National Assembly Standing Committee would like to keep the draft Law as it was submitted by the Government to the National Assembly at the 7th Session.
Commenting that not applying the 5% VAT on fertilizers could bring many benefits to farmers, especially small-scale producers who often face difficulties from market price fluctuations, harsh weather, and increasing input costs, delegate Thach Phuoc Binh (Tra Vinh) analyzed that fertilizers account for a large part of farmers' production costs. Not applying the 5% VAT will help reduce their financial burden. This will not only help increase farmers' income but also help them have the conditions to reinvest in production, improve productivity and quality of agricultural products.
He also said that in the context that agriculture is still the backbone of the Vietnamese economy, it is necessary to introduce policies to support this sector. If a 5% VAT is applied to fertilizers, production costs will increase, leading to increased prices of agricultural products, which could reduce the competitiveness of Vietnamese agricultural products, not only affecting farmers but also negatively affecting consumers.
Proposing that the drafting agency consider and move fertilizers to the category of products not subject to value added tax, delegate Pham Thi Kieu (Dak Nong) explained that applying a 5% tax on fertilizers will certainly increase fertilizer prices on the market and this will have a significant impact on the agricultural sector and farmers.
Meanwhile, our country's agricultural sector is still unstable and unsustainable, and agricultural product output still has difficulty competing with foreign products.
Only affects import businesses
On the other hand, delegate Trinh Xuan An (Dong Nai) argued that applying a tax rate of 5% would allow domestic fertilizer production enterprises to deduct input prices, and that this regulation would only affect importing enterprises.
According to the analysis of delegate Truong Trong Nghia (Ho Chi Minh City), applying a 5% value added tax rate "is not only beneficial for businesses but also for farmers."
He suggested “analyzing the problem more broadly,” paying attention to farmers but also “not forgetting that businesses are where millions of workers are working. If they cannot survive and go bankrupt, what will happen to the workers?”
"When we are self-reliant, autonomous, and self-reliant in many areas, the Government will be able to control and apply measures to reduce the burden on consumers," said the delegate.
Delegate Ha Sy Dong (Quang Tri) said that in the short term, farmers may suffer losses, but domestic production will be better guaranteed, domestic supply will be boosted, there will be no dependence on imported fertilizers, and no worries about supply chain disruption.
Participating in the debate and clarifying further, delegate Nguyen Van Chi (Nghe An) said that this product is not subject to tax, so domestic enterprises cannot deduct input tax, adding all the costs so the cost is very high. However, with imported fertilizers, enterprises when exporting to Vietnam can still deduct input tax, so they benefit more.
"We have discriminated between domestically produced fertilizers and imported fertilizers by the non-tax mechanism... The switch to applying a 5% tax does not mean that the price level will increase by 5% because domestic fertilizer enterprises have room to reduce prices when they are deducted input tax, or in many cases will be refunded tax. Therefore, the price level will decrease. Therefore, it cannot be said that farmers or the agricultural sector are affected," said Deputy Head of the Finance and Budget Committee Nguyen Van Chi.
She asked, “Vietnam is an agricultural country, do we need to have stability based on domestic fertilizer production, or do we want our agriculture to rely mainly on imported fertilizers?”
At the end of the session, Deputy Prime Minister and Minister of Finance Ho Duc Phoc further explained this content. According to the Deputy Prime Minister, fertilizer prices do not only depend on tax increases or decreases but also on production costs and market supply and demand. When taxes are introduced, the price of imported fertilizers will mainly increase, domestic enterprises will benefit greatly, have conditions to apply modern technology, reduce product costs, and reduce selling prices for farmers./.
Source
Comment (0)