If fertilizers are subject to 5% VAT, farmers will have to spend 6,000 billion VND.

On the afternoon of June 24, the 7th session of the 15th National Assembly discussed in groups the draft Law on Value Added Tax (amended). The proposal to include fertilizers; machinery and specialized equipment for agricultural production... into the objects subject to 5% VAT received many comments from National Assembly deputies.

Delegate To Ai Vang (National Assembly Delegation of Soc Trang province) proposed that the National Assembly consider amending the VAT Law in the direction that fertilizers are subject to a 0% VAT rate.

“If a 5% VAT is applied to fertilizers, farmers will have to spend about 6,000 billion VND; if the draft law applies 0% to this item, about 2,000 billion VND, instead of being added to the state budget, will be used to support businesses and farmers. Thus, farmers will have their input costs significantly reduced,” said delegate To Ai Vang.

In addition, according to the delegate, Vietnam is one of the five countries most affected by climate change. If fertilizers are subject to a 5% VAT, it will increase pressure on farmers in a context where the agricultural sector is the most vulnerable.

"Currently, farmers make up 62% of the population, but investment in agriculture only accounts for 14% of the state budget, which is not satisfactory," said the delegate.

Sharing the same view, delegate Tran Thi Thanh Huong (National Assembly delegation of An Giang province) said that international experience shows that fertilizer is a product serving agricultural production, so many countries design policies in a more preferential direction than other common products. There are many countries such as the US, Thailand, Laos, Myanmar... that still do not collect VAT or sales tax on fertilizer.

“The Ministry of Finance’s report estimates that if VAT is increased, fertilizer alone will increase by VND6,200 billion, not to mention agricultural machinery and equipment. Is this revenue from agriculture and farmers?” – a delegate asked.

According to the delegate, increasing VAT means increasing the price of fertilizers and agricultural materials, machinery and equipment used in agricultural production. Increasing input prices will increase product prices, reduce the competitiveness of agricultural products and increase farmers' costs.

“Most Vietnamese farmers and agriculture are small-scale producers; farmers in the Mekong Delta in particular and the whole country in general are always worried about the complicated developments of climate change, and now they continue to struggle with the fear of losses if the prices of fertilizers and agricultural materials continue to increase,” the delegate said.

Delegate Tran Anh Tuan (HCM City National Assembly Delegation) also expressed concern about applying a 5% VAT on items such as fertilizers, machinery, and specialized equipment for agricultural production, because this will directly affect the final consumer price of agricultural products, affecting farmers' production.

Explaining and clarifying issues of concern to delegates, Minister of Finance Ho Duc Phoc said that the 5% VAT on fertilizers is to ensure that there is no inequality with importing enterprises; at the same time, when the tax is refunded, it will create resources for enterprises to innovate technology, reduce product costs, and develop sustainably. The Minister also said that price increases are not necessarily due to taxes but are also affected by supply and demand.

The Minister said that according to the impact assessment, if a 5% VAT is applied to fertilizers, each farming household will pay an additional VND461,000 per year and VND38,000 per month.

The Minister will take into account the opinions of the delegates and will assess the impact of this proposal again and submit it to the National Assembly by the end of 2024.

Source: https://laodong.vn/thoi-su/neu-phan-bon-chiu-thue-vat-5-nong-dan-phai-bo-ra-6000-ti-dong-1356948.ldo