Amending the Law on VAT: Freeing up capital flow for agricultural exports

There have been problems and difficulties after more than 5 months of implementing the Law on Value Added Tax. Agricultural, forestry and fishery products that were not required to declare tax are now subject to a tax rate of 5-10%. When exporting these products, businesses must temporarily pay and wait for a tax refund. Meanwhile, the new process is more stringent, causing the tax refund time to be extended and capital flow to be affected.

During the implementation process, the Government and the Ministry of Finance received many recommendations from businesses and industry associations about the risk of losing export contracts due to lack of working capital. On that basis, the Ministry of Finance believes that it is necessary to amend and supplement a number of contents of the Law on Value Added Tax to remove "bottlenecks" in tax refunds for businesses.

The current Law on Value Added Tax stipulates that: Enterprises are only entitled to tax refunds when the supplier has declared and paid tax on input invoices. This means that if the seller has not paid tax, the buyer will not be entitled to a tax refund, causing the enterprise's capital flow to stagnate, especially in export activities.

To remove this "bottleneck", the Ministry of Finance has just proposed to amend and supplement a number of articles of the Law on Value Added Tax. Among them are 3 important proposals: Remove the regulation "buyers are only entitled to tax refunds when sellers have declared and paid taxes"; Restore the regulation of not declaring and calculating taxes on agricultural inputs that have not been pre-processed or only pre-processed normally; The group of animal feed ingredients will not be subject to value added tax.

Ms. Tran Thi Tuyet - Representative of the Department of Tax, Fee and Charge Policy Supervision, Ministry of Finance said: "With this regulation, businesses do not have to pay in advance 5% value added tax and at the same time do not have to go through VAT refund procedures. This not only creates favorable conditions for businesses in terms of capital, but also contributes to reforming administrative procedures. Especially in the current storm and flood situation, it also contributes to businesses consuming agricultural products for farmers."

It is estimated that in the last 6 months of the year, businesses in the agricultural sector will have to pay nearly 10,000 billion VND in value added tax. If these proposals are approved, the above amount will no longer have to be temporarily paid, helping businesses proactively manage capital flows and more effectively rotate production and business. That is also the motivation for each Vietnamese coffee bean, shrimp, and bundle of wood to continue to overcome the waves and reach out to the world market more conveniently and sustainably.

It is expected that the proposal to amend and supplement a number of contents of Law on Value Added Tax No. 48 will be submitted to the National Assembly for comments and approval at the 10th Session. This is considered a timely policy move, meeting the urgent requirements of production and export.

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