Speed up the progress of building VAT policy on fertilizers

Sending a petition to the Ministry of Finance, voters of Hai Phong City proposed to speed up the progress of drafting the Law on Value Added Tax (amended), reporting to the Government to submit to the National Assembly for consideration and decision as soon as possible to remove difficulties for domestic fertilizer production enterprises, creating an equal competitive environment between domestically produced fertilizers and imported goods.

Responding to this issue on September 25, the Ministry of Finance said that the Ministry had conducted a review and assessment of the implementation of the Law on Value Added Tax, collected international experience; prepared a dossier to propose the development of the Law on Value Added Tax (amended) in accordance with the provisions of the Law on promulgation of legal documents; sent for comments from ministries, branches, People's Committees of provinces and centrally-run cities; widely solicited opinions from relevant organizations and individuals on the Government's and the Ministry of Finance's electronic information portals and synthesized and explained their opinions; requested appraisal opinions from the Ministry of Justice and synthesized and explained appraisal opinions to submit to the Government for consideration and decision.

Currently, the Ministry of Finance has submitted to the Government Document No. 150/TTr-BTC dated July 18, 2023 on proposing to develop a draft Law on Value Added Tax (amended) to submit to the National Assembly, registering the draft Law in the National Assembly's Law and Ordinance Development Program in accordance with the provisions of the Law on Promulgation of Legal Documents.

Regarding the proposal to impose VAT on fertilizers, the Ministry of Finance proposed to change fertilizers from being non-VAT subject as per current regulations to being VAT subject, with a tax rate of 5%.

Accordingly, some fertilizer production and trading enterprises (not subject to VAT) are facing difficulties because they cannot declare and deduct input VAT on goods and services but must calculate it into product costs, causing prices to increase and profits to decrease.

This causes a disadvantage in competition with imported goods of the same type, discouraging businesses from investing, purchasing, repairing, and upgrading fixed assets to create high-quality products.

Based on the above situation, many opinions suggest changing fertilizer products to taxable objects to be deducted input VAT, thereby increasing the competitiveness of domestically produced goods.

Thus, if the above proposal is quickly included in the Law, the input VAT of fertilizer production enterprises will be deducted by about 950 billion VND; the remaining input VAT (about 250 billion VND) will be deducted in the next period or refunded.

Obviously, domestically produced fertilizers will have more competitive conditions with imported fertilizers, by having more opportunities to lower costs and improve product quality.

Source