On the afternoon of November 26th, with 84.97% of participating delegates voting in favor, the National Assembly officially passed the amended Value Added Tax Law.
Notably, the amended Value Added Tax Law has set a tax rate of 5% for fertilizers.
Before the draft law was passed, presenting the report explaining, receiving feedback, and revising the draft law, the Chairman of the Finance and Budget Committee, Le Quang Manh, provided further information on the issue of tax rates, which had attracted much attention and differing opinions from the delegates.
According to him, there is much agreement with the proposal to impose a 5% tax on fertilizers. Some opinions suggest maintaining the current regulations; others propose applying a tax rate of 0%, 1%, or 2%.
Some have suggested a comprehensive assessment of the impact of this regulation on farmers and agricultural and fisheries production. There are concerns about the possibility of businesses exploiting the policy to raise prices, thereby negatively impacting farmers.
In response to the proposal to include fertilizers under a 0% (or 1%, 2%) VAT rate, the Standing Committee of the National Assembly stated that applying a 0% VAT rate to fertilizers would ensure benefits for both domestic fertilizer manufacturers and importers, as both would receive a refund of input VAT already paid and would not have to pay output VAT.
However, in this case, the government would have to allocate funds annually to refund taxes to businesses.
Besides the drawbacks for the state budget, applying a 0% VAT rate to fertilizers is contrary to the principle and practice of VAT, which is that a 0% rate should only apply to exported goods and services, not to domestic consumption.
Implementing this approach would disrupt the neutrality of tax policy, set a bad precedent, and be unfair to other industries.
According to the drafting agency's explanation, adding a 2% tax rate would require restructuring the Value Added Tax Law, such as designing a separate section on tax rates and adding provisions for VAT refunds in this case.
Setting a 1% or 2% tax rate on fertilizers is also inconsistent with the VAT reform objective of reducing the number of tax rates, not increasing them compared to current regulations, as explained to National Assembly deputies.
Based on the opinions of National Assembly deputies, in Report No. 1035 dated October 28, 2024, the Standing Committee of the National Assembly explained and reported on the impact of transferring fertilizers from the tax-exempt category to the category subject to a 5% tax rate.
The government also issued document No. 692 providing additional explanations and specific supporting data.
To accurately reflect the National Assembly's stance on this issue, on November 26th, the Secretary General of the National Assembly sent out two options for the opinions of National Assembly deputies: one is to apply a 5% tax rate, and the other is to maintain the current regulations.
Based on the compiled opinions, 72.67% of the total National Assembly delegates agreed with the proposal of the National Assembly Standing Committee and the Government to stipulate a 5% tax rate on fertilizers, specialized machinery and equipment for agricultural production, and fishing vessels. Therefore, this content has been included in Clause 2, Article 9 of the draft Law.
The Value Added Tax Law (amended) will take effect from July 1, 2025.
According to Thuy An/VTV
Source: https://doanhnghiepvn.vn/kinh-te/chot-ap-thue-vat-5-doi-voi-phan-bon/20241126081918023
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