Continuing to evaluate impacts and controversial issues to complete VAT Bill

	Proposal to continue reducing VAT by 2% to support people and businesses
	Considering to impose 5% of VAT on fertilizers
	Proposing to empower the Minister of Finance to regulate application of 0% VAT on export goods

Minister of Finance Ho Duc Phoc explains a number of issues of concern to delegates.

Need to evaluate impacts on fertilizer prices when applying 5% VAT

Commenting on the Bill, delegate Nguyen Tam Hung (Ba Ria - Vung Tau Delegation) said that the regulation on transfer of land use rights that is not subject to tax can easily cause confusion in all related activities of transfer of land use rights which are not subject to tax, while at Point h, Clause 1, Article 7, the draft stipulates taxable prices for real estate business activities and only the transfer price of land use rights is deductible when calculating VAT.

At the same time, at Point h, Clause 1, Article 7, the phrase "deductible land price" after the paragraph "deducting land use right transfer price or land rent payable to the state budget" can also easily cause confusion in understanding that the deductible land price in real estate business activities only include the price of transferring land use rights or land rent, while in reality the deductible land price is very diverse depending on each specific case such as land use fees payable to the state budget, compensation for site clearance if any, winning land price at auction...

Therefore, in reality over the years, there have been different understandings and applications of VAT on land use rights transfer activities that are not synchronous and inconsistent. Therefore, the delegates requested the drafting committee to consider amending the law towards more specific regulations on deductible land prices when calculating VAT for unified implementation.

Regarding VAT on fertilizer products, delegate Nguyen Danh Tu (Kien Giang Delegation) said that removing difficulties and obstacles to promote the domestic fertilizer production industry is very necessary. However, I suggest that we consider continuing to research and evaluate carefully the transfer of fertilizers to the subject of a 5% tax rate.

According to the delegate, the reason is that the price of fertilizer is directly related to the input cost of agricultural production, VAT is an indirect tax, the taxpayer is the final consumer. Therefore, if fertilizer is converted to a 5% tax rate, farmers who directly use fertilizer in agricultural production will be greatly affected by this regulation.

The delegate also asked the drafting committee to evaluate the impact more carefully with the decision to transfer fertilizer to a 5% tax rate for businesses. It is necessary to evaluate how the 5% VAT tax on fertilizers will affect the price of fertilizers on the domestic market.

At the discussion session, delegates also gave many comments to the draft Law related to issues such as: regulations on specialized machinery and equipment serving agricultural production and fishing vessels in offshore and sea areas from non-taxable subject to subject of a 5% VAT; the conversion of public postal and telecommunications services from non-taxable subject to subject of a 10% VAT; about taxable objects.

VAT refund will create resources for fertilizer businesses

Explaining a number of issues raised by National Assembly delegates, Minister Ho Duc Phoc emphasized that VAT has a very wide scope, therefore, the Ministry of Finance has carefully and closely researched and assessed the impact on each issue.

Regarding the regulations on tax rates for fertilizer products, the Minister said that in the process from the formulation of the VAT Law in 2008 to 2013 and 2014, fertilizers were included in the group of a 5% tax and then removed from the taxable subject.

According to the Minister, domestic fertilizer production output is 73.3%, imported is 26.7%, the regulation of a 5% tax rate will not create inequality between domestic businesses and importing businesses.

In addition, VAT refund will create resources for businesses to continue investing in technological innovation, reducing product costs and developing sustainably.

The Minister also emphasized that fertilizer prices are not only affected by taxes but also by supply and demand. If the supply increases, the price will be cheap, on the contrary, if the supply is low, the price will be high.

Regarding the issue raised by delegates about taxable real estate business, the Minister stated clearly that land use fees and land rent are non-taxable subjects. However, real estate business will have to invest in inputs such as infrastructure, equipment, materials, etc. If input tax is deductible, output VAT will be paid. If the output VAT is not paid, the input tax will not be deducted.

Speaking the issue of VAT on small value imported goods, the Minister said that VAT on small value imported goods is currently implemented according to Decision No. 78/2010/QD-TTg of the Prime Minister on the basis of implementation of international agreement. However, currently, many countries have abandoned this regulation. Typically, the EU has eliminated the VAT exemption for shipments of 22 Euro or less; the UK abolished the VAT exemption for imported goods valued at 135 pounds or less...

In the explanation, the Minister also clarified the content that delegates mentioned about assigning the Government to regulate the level of revenue from goods and services of households and individuals that are not subject to VAT.

The Minister affirmed that the drafting agency will continue to listen and receive opinions of National Assembly delegates, evaluate impacts of each policy and controversial issues to continue to complete the draft Law.