Businesses propose to reduce fertilizer export tax to 0%

Fertilizer producers want to reduce export tax to 0% amid a surplus of hundreds of millions of tons each year, but the Ministry of Finance disagrees.

Commenting on the draft Decree on preferential import and export tariffs, the Vietnam Fertilizer Association proposed imposing a 0% export tax on urea and superphosphate fertilizers, instead of the current 5%. The reason, according to the association, is that domestic production capacity is currently in excess of demand.

According to statistics, Vietnam needs 1.7-2 million tons each year, 23-35% lower than the production level of the four fertilizer plants Phu My, Ca Mau, Ha Bac and Ninh Binh. That is, domestic production is in surplus, forcing businesses to export to maintain capacity.

However, the Vietnam Fertilizer Association believes that the current 5% export tax reduces business opportunities and efficiency. High taxes also reduce the competitiveness of Vietnamese urea products compared to other countries in the region and the world. For example, this product is facing competition from products from Indonesia, Malaysia, and Brunei - places that are not subject to 5% tax like Vietnam.

The demand for domestically produced superphosphate products for direct use and for NPK production is 500,000 tons and 600,000 tons per year, respectively. This product also has a surplus of millions of tons per year, when the production of 4 factories reaches about 1.5-1.6 million tons.

According to the Fertilizer Association, the export of superphosphate fertilizer should be encouraged to increase product value, create jobs, earn foreign currency, and pay taxes.

In addition, this association and the State Capital Management Committee at Enterprises jointly proposed applying a 0% export tax on potassium sulphate (K2SO4, trade name SOP) to encourage domestic enterprises to invest in producing this new product.

Responding to the above proposals, the Ministry of Finance rejected the proposal to reduce this tax, and said it would continue to submit to the Government to maintain the 5% rate for urea and superphosphate fertilizers. The 0% tax rate was proposed for NPK and DAP fertilizers. This view was agreed upon by the Ministry of Agriculture and Rural Development.

Instead, the Ministry of Finance will submit to the Government a proposal to remove the regulation on imposing export tax based on the value of mineral resources plus energy costs. This is to avoid costs of monitoring declarations and checking documents and books.

Phuong Dung

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