What did the leader of the Plant Protection Department say?

Recently, according to the feedback of many fertilizer manufacturing enterprises, Tax Law 71/2014/QH13 (Tax Law 71) issued in 2014 stipulates that fertilizers are not subject to VAT. After 10 years, not only fertilizer enterprises suffer losses, but farmers are also affected because they have to buy fertilizers at a price 5-8% higher because enterprises have to account for a portion of non-deductible tax into production costs.

On the afternoon of June 24, the National Assembly discussed in the hall the draft Law on Value Added Tax (amended). Notably, Point b, Clause 2, Article 9 of the draft law stipulates that fertilizers are subject to VAT at a rate of 5% instead of "fertilizers are not subject to tax" as currently regulated, which has attracted the attention of many National Assembly deputies, who focused on discussing and debating. The majority of opinions disagree with the imposition of a 5% VAT on fertilizers, as it will create more difficulties for farmers.

Fertilizer production at Lam Thao Super Phosphate and Chemical Joint Stock Company. Photo: Thien Huong

On the afternoon of June 28, at the press conference of the Ministry of Agriculture and Rural Development, Mr. Nguyen Quy Duong, Deputy Director of the Plant Protection Department, said that the story of whether fertilizers should be subject to VAT at a rate of 5% or not subject to tax has been "hot" for the past 3 years.

Mr. Duong said that the purpose of including fertilizers in the list of products exempted from the 5% tax in Tax Law 71 of 2014 is to bring domestic fertilizer prices in balance with imported fertilizer prices. However, when applied in practice, it has "the opposite effect", especially affecting domestic fertilizer production enterprises.

Currently, the agricultural sector uses about 10 million tons of fertilizers each year, of which inorganic fertilizers account for 75%. Each year, Vietnam imports 3-4 million tons, while the capacity of domestic enterprises reaches nearly 30 million tons/year. Recently, the Plant Protection Department has also advised the leaders of the Ministry of Agriculture and Rural Development to give opinions to the Ministry of Finance to support fertilizers as being subject to VAT at a rate of 5% to encourage domestic fertilizer production enterprises.

"It is also impossible to say that if a 5% VAT is imposed, domestic fertilizer prices will increase, because currently, only a tax is proposed to be imposed on imported fertilizers," said Mr. Duong.

Source: https://danviet.vn/dua-hay-khong-dua-phan-bon-vao-dien-ap-thue-gtgt-5-lanh-dao-cuc-bao-ve-thuc-vat-noi-gi-20240628174308737.htm