Removing obstacles in value added tax policy for agriculture, forestry and fishery sectors

At the workshop "Removing obstacles in value-added tax policy for the agriculture, forestry and fishery sector" organized by the Vietnam Federation of Commerce and Industry (VCCI) this morning, October 9, delegates said that, in addition to breakthrough reforms, the 2024 Law on Value-Added Tax also poses a number of challenges for agricultural, forestry and fishery enterprises during the implementation process.

Enterprises worry about "capital congestion"

At the workshop, the associations said that many regulations in the 2024 Law on Value Added Tax, effective from July 1, 2025, are still inadequate and not suitable to the characteristics of agricultural, forestry and fishery production and business activities. The main bottlenecks lie in determining taxable subjects, tax rates and tax refund procedures.

Overview of the Workshop. Photo: Vu Quang

Mr. Thai Nhu Hiep, Vice President of the Vietnam Coffee and Cocoa Association, said that 85% of Vietnam's green coffee output is being exported to more than 80 countries. However, the 5% value-added tax (VAT) rate on coffee products is putting great pressure on businesses. Specifically, according to the provisions of Point c, Clause 9, Article 15 of the Law on Value Added Tax 2024, sellers must declare and pay VAT on invoices issued to businesses requesting tax refunds.

This regulation puts exporting enterprises at risk: while the purchasing enterprise has paid the full tax to the seller, they still have to wait a long time to get a tax refund. At the same time, it leads to a situation where the enterprise's capital is stuck in the 5% VAT waiting to be refunded. With complicated procedures and a long time, the financial difficulties of enterprises are not only not resolved but also become more serious.

Mr. Nguyen Hoai Nam, General Secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP), said that currently, even though the same aquatic products are farmed or caught without further processing, businesses have to apply two different tax rates: according to Clause 1, Article 5, they are not subject to tax, while Point d, Clause 2, Article 9 stipulates a tax rate of 5%. This overlap forces exporting businesses to temporarily pay tax and wait for a refund later, while the tax refund procedure is both complicated and has many strict conditions, creating great pressure for both businesses and tax authorities.

The Vietnam Pepper and Spice Association (VPSA) said that many businesses in the industry have not received VAT refunds despite having submitted all documents, causing capital to stagnate, increasing financial risks, forcing some units to reduce operations or temporarily stop purchasing. The lengthy tax refund process and the regulation limiting the amount to no more than 10% of revenue are considered inappropriate to the seasonal characteristics, affecting the liquidity and competitiveness of the pepper industry.

Ms. Do Kim Chi, representative of the Vietnam Animal Feed Association, reflected that some localities still apply a 5% tax rate on raw materials used to produce animal feed, although the Law on Value Added Tax clearly stipulates that this is not subject to tax. The incorrect application of tax rates causes production costs to increase, pushing the price of domestic products higher than imported goods, directly affecting livestock farmers - the group that suffers the greatest losses when feed costs account for up to 70% of the cost of livestock products.

Businesses recommend policy adjustments

In the context of the complicated global geopolitical situation, and at the same time, the Politburo has issued strategic resolutions to turn Vietnam into a developed, high-income country by 2045, industry associations believe that it is necessary to promptly remove policy obstacles to create momentum for the private economy, promote agricultural, forestry and fishery exports, contributing to achieving the double-digit growth target. Therefore, the associations recommend that the Government consider adjusting the value-added tax policy in the direction of bringing unprocessed agricultural, forestry and fishery products (including raw materials for animal feed production) back to the category of not having to declare and calculate taxes. At the same time, it is necessary to simplify and shorten tax refund procedures, issue detailed and unified instructions to ensure synchronous implementation nationwide.

Sharing the difficulties of the business community in the agricultural sector, Dr. Nguyen Minh Thao, Institute for Policy and Strategy Research, Ministry of Finance, said that associations and industries need to have detailed information on the losses and benefits when applying the Law on Value Added Tax 2024, from which, through VCCI, they can make recommendations to the Government and relevant agencies to remove obstacles.

Deputy Secretary General, Head of the Legal Department of VCCI Dau Anh Tuan said that he will fully synthesize the opinions and recommendations at the workshop to send to the authorities, with the goal of supporting businesses to remove barriers, create a stable and transparent business environment, thereby improving the competitiveness of Vietnam's agricultural sector in the context of deep integration. He also emphasized that tax policies, if not suitable to the production and business characteristics of the agricultural sector, will reduce competitiveness, affect cash flow, disrupt the supply chain and put businesses in a passive position in the context of deep integration.

Source: https://daibieunhandan.vn/thao-go-vuong-mac-ve-chinh-sach-thue-gia-tri-gia-tang-voi-nganh-nong-lam-thuy-san-10389758.html