Fertilizer VAT: Delegates propose to return to the non-taxable group

Many National Assembly deputies proposed putting fertilizer back into the group not subject to VAT to reduce input costs for farmers and create consistency in tax policy.

On the afternoon of December 9, under the direction of Vice Chairman of the National Assembly Nguyen Duc Hai, the National Assembly discussed in the hall the draft Law on amending and supplementing a number of articles of the Law on Value Added Tax (VAT). In particular, the issue of VAT on fertilizers became the focus when the 5% tax rate is directly affecting the input costs of agricultural production.

Vice Chairman of the National Assembly Nguyen Duc Hai moderated the discussion. Photo: Quochoi.vn

Pointing out the inconsistency between two items that are both input materials for agriculture, delegate Tran Van Lam ( Bac Ninh delegation) said that the VAT policy is "treating differently" animal feed and fertilizer. He cited: animal feed is still in the group not subject to VAT but is deductible for input, while fertilizer is subject to 5% tax just to be deductible.

“If we maintain this approach, the input cost of fertilizers will still be subject to tax, causing prices to increase, causing losses for businesses and farmers. Meanwhile, the agricultural sector has suffered a lot of damage after storms and floods and is in dire need of support,” Mr. Lam emphasized, and at the same time suggested moving fertilizers back to the group not subject to VAT to ensure equality and policy consistency.

Delegate Ta Van Ha (Da Nang delegation). Photo: Quochoi.vn

Supporting the above viewpoint, delegate Ta Van Ha (Da Nang delegation) said that the 5% tax rate is creating a burden not only for fertilizer production enterprises but also directly affecting farmers and food prices. “There is no product that has increased tax but reduced price… So where does this 5% go?”, he asked.

From the perspective of attracting investment and production autonomy, delegate Truong Trong Nghia (HCMC delegation) said that many FDI enterprises reported that they could not compete with imported goods when fertilizers were exempt from tax but were not deductible for input. This situation caused enterprises to consider withdrawing from Vietnam. Therefore, he suggested that the Government and ministries should comprehensively review VAT on fertilizers, animal feed and veterinary drugs to support domestic production.

Delegate Tran Khanh Thu (Hung Yen delegation). Photo: Quochoi.vn

From another perspective, delegate Tran Khanh Thu (Hung Yen delegation) proposed to add a group of non-VAT products for derivative products in the electricity sector. She said that the Electricity Law has stipulated VAT for transactions in electricity futures contracts, options contracts or electricity futures contracts, but the current Law on Value Added Tax has not mentioned it, causing a "legal gap" in the implementation of the competitive electricity market.

Therefore, delegates suggested that the drafting agency add this content immediately in the law amendment, to avoid the electricity market operating without a legal basis.

Taking note of the opinions at the discussion session, Minister of Finance Nguyen Van Thang said that the Ministry will continue to research, review and report to competent authorities on VAT policy for fertilizers.

Source: https://nongnghiepmoitruong.vn/thue-vat-phan-bon-dai-bieu-de-nghi-dua-tro-lai-nhom-khong-chiu-thue-d788500.html