Farmers harvest pepper - Photo: N.TRI
VAT collection is only 55 billion, refund is up to 2,135 billion VND
The Vietnam Pepper and Spice Association (VPSA) has just sent a dispatch to the Government Office , the National Assembly Office and relevant ministries and agencies, proposing to review the value added tax (VAT). According to the industry's calculations, if a 5% VAT is applied, the State will only collect 1 VND but have to refund 39 VND, which will create many unreasonable things.
VPSA analyzed that the domestic pepper industry currently has an estimated production output of about 200,000 tons per year. Of which, up to 190,000 tons (accounting for 95%) are exported and only 10,000 tons (accounting for 5%) are consumed domestically.
In the domestic market, only about 5,000 tons of this (accounting for 2.5%) are deeply processed and consumed domestically. Therefore, the State only collects VAT from this part of the product. Most of the remaining output will be exported without VAT, so the exporting enterprises will be refunded this part.
According to calculations, the total export turnover of the pepper industry reached 1.3 billion USD, of which the 5% VAT for the entire industry would amount to 65 million USD. However, only about 1.6 million USD (equivalent to about 42 billion VND) was collected from domestically consumed products. The remaining 63.4 million USD will be refunded to exporting enterprises.
Similarly, other spice groups with a total export output of about 200,000 tons are only used for processing about 5,000 tons for domestic consumption. In general, the Vietnamese spice industry, with a total export volume of more than 400,000 tons (according to 2024 figures), only about 10,000 tons of pepper and other spices are consumed domestically.
Thus, the actual VAT revenue for the State is estimated at only 55 billion VND. In contrast, the expected tax refund is about 2,135 billion VND (nearly 39 times higher).
Consider applying 0.5% export tax
To support the pepper and spice industry to develop stably and sustainably, VPSA has made recommendations.
Specifically, apply a 0% VAT rate to input materials used to produce export goods. Eliminate the tax refund mechanism for exported pepper and spice products, due to low efficiency, creating high capital pressure and easy to generate fraud risks.
Consider applying a 0.5% export tax, helping the State collect revenue right at the transaction stage, supporting businesses to proactively manage cash flow, and shortening capital turnover.
Maintain 5% VAT on domestically consumed products. Propose to delay the implementation of the new VAT Law to have more time to evaluate and adjust to suit reality.
"These recommendations will contribute to building a transparent and effective tax environment, both supporting businesses to fulfill their obligations to the budget and creating conditions to promote sustainable development of the industry and increase added value for Vietnamese agricultural products," VPSA expects.
Recently, the food and coffee industry also proposed that the Prime Minister remove rice and coffee beans from the list of goods subject to 5% value-added tax (VAT) from July 1.
According to the new regulations in the Law on Value Added Tax, green coffee and rice will be subject to a 5% VAT. However, the Vietnam Food Association (VFA) and the Vietnam Coffee and Cocoa Association (VICOFA) said that this is causing a lot of pressure on capital and procedures for businesses. The two associations proposed that the Prime Minister consider removing exported rice and green coffee from the list of products subject to VAT to reduce the impact on working capital and improve competitiveness.
Regarding the rice industry, in the first 6 months of the year, Vietnam exported more than 4.7 million tons of rice, with a turnover of 2.45 billion USD.
Meanwhile, in the first 6 months of this year, Vietnam exported nearly 1 million tons of coffee, worth 5.5 billion USD - up 5% in volume and 66% in value over the same period in 2024.
According to VICOFA representative, the new regulation is pushing businesses into a similar capital vicious cycle, easily leading to stagnation in the market.
Before 2013, green coffee was subject to 5% VAT under the 2008 VAT Law. Due to tax refund abuse and difficulties for legitimate businesses, this item was removed from the taxable list in 2013. However, with the new law, green coffee was put back on the list subject to 5% tax.
Source: https://tuoitre.vn/thu-1-dong-nhung-phai-hoan-den-39-dong-den-luot-nganh-ho-tieu-kien-nghi-bo-thue-vat-202507311752438.htm
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