Amending the Law on Value Added Tax to support agriculture and remove obstacles to tax refunds for businesses

The important highlight of the draft Law on amending and supplementing a number of articles of the Law on Value Added Tax is to promptly overcome the consequences of natural disasters, soon restore production and business, especially in the agricultural sector; and remove "bottlenecks" in value added tax refunds.

Thoroughly resolve practical problems

According to the Government's report presented by Minister of Finance Nguyen Van Thang to the National Assembly on the morning of December 8, amending the Law on Value Added Tax (VAT) is necessary to promptly overcome the consequences of natural disasters, storms and floods, and soon restore production and business, especially in the agricultural sector; and at the same time, remove "bottlenecks" in VAT refunds.

The Government's submission stated that on November 26, 2024, the National Assembly issued the VAT Law No. 48/2024/QH15, effective from July 1, 2025. After the Law took effect, many recommendations and reflections from associations and enterprises pointed out practical difficulties arising from VAT policies in the fields of agriculture , animal feed and tax refund conditions.

On that basis, the draft Law focuses on amending 3 main contents to thoroughly resolve practical shortcomings, including:

(1) Including agricultural products in the category of not being subject to VAT but still being allowed to deduct input (the content has been regulated stably since 2014). Specifically, enterprises, cooperatives, and cooperative unions that buy and sell crop, forest, livestock, and aquatic products (not yet processed into other products or only through normal preliminary processing) to other enterprises, cooperatives, and cooperative unions are not required to calculate VAT.

Input VAT of goods and services not subject to VAT is fully deductible. This regulation has been implemented stably for many years and has not affected the state budget revenue. The Government believes that the amendment will reduce the burden of administrative procedures and at the same time contribute greatly to supporting the export of agricultural, forestry and fishery products, because businesses do not have to pay in advance to pay taxes and then go through tax refund procedures, avoiding wasting time and opportunity costs.

An animal feed production line. Illustration photo: VNA

(2) Ensuring a consistent tax policy for animal feed: The Government submitted to the National Assembly to remove the content "products of crops, planted forests, livestock, aquaculture, and fishing 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 VAT at the tax rate prescribed for products of crops, planted forests, livestock, and aquaculture" (currently stipulated in Clause 5, Article 9, Law on VAT No. 48) to ensure the consistent application of value added tax according to the provisions of the law on animal feed, ensuring equality with imported animal feed (because imported animal feed is not subject to tax, while domestically produced animal feed has an input VAT of 5%, so it must be included in the cost, increasing the selling price). This regulation will remove difficulties for agricultural production, especially in the context of the agricultural sector being heavily affected by the consequences of natural disasters and prolonged floods.

(3) Omit the provision on tax refund conditions: "The buyer is only entitled to a tax refund when the seller has declared and paid taxes" (at Point c, Clause 9, Article 15, Law on VAT 2024). This provision, although added in 2024 to prevent and combat fraud, has led to a situation where export enterprises are delayed in refunding taxes because they have to wait to determine that the seller has declared and paid taxes. The Government believes that this causes difficulties and risks for tax refund enterprises, because they do not have legal or technical tools to check the tax compliance status of the seller. Many opinions also reflect that this provision is not consistent with the principle of independent responsibility of the buyer and seller.

According to the Government's proposal, tax refund inspection and supervision will be carried out consistently according to the provisions of the law on tax management, especially when the draft Law on Tax Management (amended) being submitted to the National Assembly has added regulations to more closely manage taxpayers.

Due to the urgency, the Government proposed that the draft Law will take effect from January 1, 2026 to provide timely support to the agricultural sector and remove bottlenecks for businesses.

Need to carefully assess risks and the possibility of fraud

Reviewing the amendments and supplements to a number of articles of the Law on Value Added Tax, Chairman of the Economic and Financial Committee Phan Van Mai said that the Committee agreed that receiving opinions from relevant parties during the law implementation process is necessary to promptly find solutions to remove obstacles and bottlenecks for people and businesses. The contents proposed by the Government to amend are all provisions to be considered when amending the Law on Value Added Tax in 2024 and will take effect from July 1, 2025. Many opinions in the Economic and Financial Committee suggested careful consideration because the Law and guiding documents have just been implemented, there is not enough time for comprehensive assessment.

Chairman of the Economic and Financial Committee Phan Van Mai presents the Verification Report. Photo: quochoi.vn

The Economic and Financial Committee believes that the main problem lies in the slow tax refund process. Therefore, it is necessary to clearly distinguish which content really needs to be amended in the Law, which content belongs to the implementing organization or needs to be handled in sub-Law documents. At the same time, it is necessary to ensure that there are no loopholes, causing revenue loss and in accordance with Regulation 188.

The review agency proposed that in case of immediate need to address bottlenecks, the Government could issue a Resolution according to Resolution No. 206 of the National Assembly, then conduct a comprehensive assessment to propose amendments to the Law before March 2027. However, in order to promptly remove obstacles for businesses and during the 10th Session, the National Assembly Standing Committee agreed to submit the draft law to the National Assembly for consideration at this session.

The Chairman of the Economic and Financial Committee emphasized and requested the drafting agency to carefully assess, anticipate and clarify the risks, frauds, and legal gaps that may occur for officials in VAT refund work; handling measures and responsibilities of state management agencies in cases of VAT refund invoice fraud, causing budget losses.

Source: https://phunuvietnam.vn/sua-luat-thue-gia-tri-gia-tang-de-ho-tro-nong-nghiep-go-vuong-hoan-thue-cho-doanh-nghiep-23825120816181975.htm