Proposal to amend VAT regulations in the agricultural and animal feed sectors

(Chinhphu.vn) - The Ministry of Finance is drafting a Law amending and supplementing a number of articles of the Law on Value Added Tax (VAT).

The Ministry of Finance is drafting a Law amending and supplementing a number of articles of the Law on Value Added Tax.

The Ministry of Finance said that on November 26, 2024, the National Assembly issued the Law on Value Added Tax, effective from July 1, 2025. Through implementation, the Ministry of Finance received petitions from the Ministry of Agriculture and Environment , the Prime Minister's Policy Advisory Council, Associations and enterprises reflecting on difficulties in VAT policy for the agricultural and animal feed sectors, specifically as follows:

Paying 5% input VAT on agricultural products traded at the commercial stage. The VAT collected and then refunded for items whose production output is mostly for export (such as catfish, pepper, coffee, etc.) leads to wasting time, money and stagnating capital of enterprises while credit institutions do not disburse this tax when providing working capital, causing financial pressure and reducing business efficiency.

In addition, imported agricultural and aquatic products are not subject to VAT when imported into Vietnam. Importers will not have to borrow from banks to pay VAT at the import stage while exporting enterprises will have to borrow from banks to pay this tax to the State when purchasing domestically produced agricultural and aquatic products for export.

For animal feed production enterprises, the increased cost due to the non-deductible 5% input VAT must be included in the cost, which will increase the selling price, thereby affecting the livestock farmers. This regulation is unfair and reduces the ability to compete with imported animal feed products because imported animal feed is not subject to VAT.

Enterprises are entitled to refund of input VAT when exporting, but are delayed because they have to wait for their sellers to declare and pay tax according to the provisions of Point c, Clause 9, Article 15 of the Law on VAT, causing difficulties and practical risks for enterprises requesting tax refunds because the purchasing enterprise does not have legal or technical tools to check the tax compliance status of the supplier at the time of preparing the tax refund dossier. If the seller has not submitted the tax declaration dossier or still owes VAT, the invoice of the purchasing enterprise will not be accepted for tax refund, even though the purchasing enterprise has fully performed the obligation to declare, keep valid documents and make payment via bank as prescribed. The refusal of tax refund for this reason will affect cash flow, production and business progress and cause damage to the enterprise even though there is no subjective fault of the purchasing enterprise.

According to the Ministry of Finance, amending and supplementing the Law on VAT is necessary.

Modified content

The Draft Law proposes to amend and supplement a number of articles of the Law on VAT on agricultural products, animal feed and tax refund conditions in Clause 1, Article 5, Clause 5, Article 9 and Clause 9, Article 15 of the Law on VAT No. 48/2024/QH15.

Specifically, the draft proposes to amend and supplement Clause 1, Article 5 (non-taxable subjects) as follows:

"1. Products of crops, forests, livestock, aquaculture, and fishing that have not been processed into other products or have only undergone conventional preliminary processing by organizations and individuals that produce, catch, and sell them, and are at the import stage.

Enterprises and cooperatives that purchase unprocessed crop, forest, livestock, aquaculture, and fishing products that have not been processed into other products or have only undergone conventional preliminary processing and sell them to other enterprises and cooperatives do not have to declare and pay value added tax, but are entitled to deduct input value added tax." (Clause 1, Article 5 of the current Law on VAT stipulates the following non-taxable subjects: Unprocessed crop, forest, livestock, aquaculture, and fishing products that have not been processed into other products or have only undergone conventional preliminary processing by organizations and individuals that produce, catch, and sell them themselves, and at the import stage.).

Amend and supplement Clause 5, Article 9 (tax rate) as follows:

"5. Waste, by-products, and scrap collected for recycling and reuse when sold shall be subject to the tax rate of the waste, by-product, and scrap sold." (Clause 5, Article 9 of the current Law on VAT stipulates: Products of crops, planted forests, livestock, and aquaculture that have not been processed into other products or have only undergone normal preliminary processing and are used as animal feed or medicinal materials shall be subject to the value added tax rate prescribed for products of crops, planted forests, livestock, and aquaculture.

Waste, by-products, and scrap collected for recycling and reuse when sold are subject to tax rates according to the tax rates of the waste, by-products, and scrap sold.

The draft also proposes to abolish Point c, Clause 9, Article 15. (According to Point c, Clause 9, Article 15 of the current Law on VAT: The seller has declared and paid value added tax according to regulations for invoices issued to the business establishment requesting a tax refund.).

We invite readers to read the full draft and give comments here./.

Source: https://baochinhphu.vn/de-xuat-sua-quy-dinh-thue-gtgt-linh-vuc-nong-nghiep-thuc-an-chan-nuoi-102251028151029394.htm