Fixing VAT rates with fertilizers brings dual benefits to "3 houses"

VCN - According to representatives of various businesses, the current regulations regarding value-added tax (VAT) rates on fertilizers have created significant challenges for these businesses. The proposed amendments to the VAT Law for fertilizers, if implemented, have the potential to alleviate many of these difficulties, providing enterprises with better opportunities to capture market share and foster a more equitable market environment.
Fixing VAT rates with fertilizers brings dual benefits to
When the VAT Law is amended, domestic fertilizer businesses will have better opportunities to capture the market. Source: Internet

Assessment of the current VAT Law, at a seminar on "The Fertilizer Industry and Tax Policies" organized by the Audit Newspaper, Mr. Phung Ha, Vice President and General Secretary of the Vietnam Fertilizer Association, stated that after nearly 10 years of implementation, the VAT Law has had many advantages, contributing to the socio-economic development of the country as well as the revenue of the state budget.

However, Mr. Ha also acknowledged that there have been some shortcomings in the implementation. For instance, for production, the conversion of fertilizers to non-VAT-subject items has resulted in all input VAT for fertilizer production and business not being deductible and having to be accounted for as costs, causing the profits of fertilizer manufacturing enterprises to decline significantly.

In addition, when applying Law No. 71/2014/QH13, imported fertilizers are not subject to VAT. This benefits foreign manufacturers when exporting fertilizers to Vietnam without having to bear VAT costs and affects domestic manufacturers.

The non-deduction of VAT for machinery, equipment, installation, etc., leads to an increase in total investment, reduces project efficiency, and makes businesses hesitant to invest in new projects for new-generation and high-tech fertilizers.

Sharing the specific case of an enterprise, Mr. Do Duc Hung, Deputy General Director of Apromaco Agricultural Materials Joint Stock Company, a company specializing in the production, business, and import-export of fertilizers, said that before 2015, when the VAT rate for fertilizers was 5%, the company was still able to deduct taxes when carrying out investment activities, purchasing, and paying costs. However, after the Tax Law 71 took effect from January 1, 2015, fertilizers are no longer subject to VAT, so the company is no longer able to claim a refund of this tax difference.

Over the past 10 years, the company has carried out many investment activities to improve the technology of superphosphate production, install additional NPK lines, etc., to increase the output and especially the quality of fertilizers for agricultural production. "However, input taxes from investment activities and raw material costs are not deductible, so they have to be added to the cost, leading to an increase in total investment and production costs, which forces the selling price to increase," Mr. Do Duc Hung said.

In addition, the increase in selling prices depends on supply and demand factors, so businesses cannot increase prices too high to compensate for costs, which will result in losses and the consequence of inefficient business operations, leaving no capital for reinvestment and research and development. In the past 10 years, the amount of non-deductible VAT has been around VND300 billion.

Currently, in the draft VAT Law (amendment) being consulted by the Ministry of Finance, fertilizers are expected to be transferred from the non-VAT-subject item to the VAT-subject item with a tax rate of 5%.

Appreciating the impact of this amendment on businesses, Mr. Phung Ha said that when the VAT Law is amended, businesses will have better opportunities to capture the market as the cost of domestic fertilizers decreases, increasing their competitiveness with imported fertilizers, as imported fertilizers will also be subject to VAT.

In addition, this is also an important motivation for businesses to invest in building new-generation, high-tech fertilizer production lines with better quality and more environmentally friendly, contributing to reducing input costs.

For farmers, the cost of domestically produced fertilizers will decrease as all input VAT is deductible. Farmers will benefit in the long run when domestic fertilizer businesses produce stably and efficiently, enabling them to lower costs and reduce selling prices to farmers.

"For the State, if the VAT rate is applied to fertilizers, imported fertilizers will also be subject to VAT and the state budget will collect all of this revenue. Applying VAT will improve the production and business efficiency of domestic enterprises and will contribute to the state budget from corporate income tax," Mr. Phung Ha affirmed.

By Hoài Anh/Thanh Thuy

Related News

Considering to impose 5% of VAT on fertilizers

Considering to impose 5% of VAT on fertilizers

VCN - Under the draft amended Law on Value-Added Tax (VAT), fertilizers are expected to be included in the category of goods subject to VAT at a rate of 5% to address the difficulties faced by domestic production enterprises and ensure that this item can compete effectively with imported products of the same type.
Imported cars decreased, budget revenue of Ho Chi Minh City Customs encountered difficulties

Imported cars decreased, budget revenue of Ho Chi Minh City Customs encountered difficulties

VCN - Although the import-export turnover of taxable goods through Ho Chi Minh City border gates from the beginning of the year to the end of April 2024 increased, many items with high tax rates and large values ​​decreased, affecting revenue sources of State budget of Ho Chi Minh City Customs Department.
VND83,000 billion of State budget 2023 saved in 2023

VND83,000 billion of State budget 2023 saved in 2023

VCN - In 2023, the management of state budget expenditure was implemented proactively and strictly according to estimates, ensuring correct policies and regimes, thoroughly saving regular expenditures, and cutting down on unnecessary and slow spending tasks.
About 5,400 foreigners are refunded VAT

About 5,400 foreigners are refunded VAT

VCN – In the first four months of the year, HCM City Customs Department has refunded Value-added tax (VAT) worth over VND 460 billion for goods of about 5,400 foreigners on exit.

Latest News

Hundreds of tons of imported raw cashew nuts stuck in quarantine

Hundreds of tons of imported raw cashew nuts stuck in quarantine

VCN – A company is facing problems with plant quarantine regulations when carrying out procedures to import over 384 tons of "raw cashew nuts, originating from Tanzania" from a bonded warehouse in Dong Nai.
Extend deadline for paying Special Consumption Tax on domestically produced and assembled cars

Extend deadline for paying Special Consumption Tax on domestically produced and assembled cars

VCN – The Government has issued Decree 65/2024/ND-CP dated June 17,2024 extending the deadline for paying Special Consumption Tax on domestically produced and assembled cars. The Decree takes effect from the date of signing until December 31, 2024.
Extend the deadline for paying taxes and land rent in 2024

Extend the deadline for paying taxes and land rent in 2024

VCN - The Government has just issued Decree No. 64/2024/ND-CP dated June 17, 2024 extending the deadline for paying value added tax (VAT), corporate income tax (CIT), personal income tax (PIT) and land rent in 2024. This Decree takes effect from June 17, 2024 to December 31, 2024. After the extension period according to this Decree, the deadline for paying taxes and land rent will comply with current regulations.
Tax payment deadline for domestic cars extended

Tax payment deadline for domestic cars extended

The Government has decided to extend the deadline for special consumption tax payment for domestically manufactured or assembled automobiles.

More News

13 cases must register for tax at Tax office

13 cases must register for tax at Tax office

VCN - The Ministry of Finance is collecting comments on a draft Circular guiding tax registration to replace Circular 105/2020/TT-BTC. According to the draft, in case the National Population Database proactively transmits information to the Tax Database when issuing personal identification numbers, the Tax agency will immediately update the personal identification number into the Tax registration system to use as a tax code for individuals without requiring individuals to carry out tax registration procedures with the Tax authority.
Regulations on bad debt trading, settlement revised

Regulations on bad debt trading, settlement revised

The State Bank of Vietnam (SBV) has issued Circular 03/2024/TT-NHNN on bad debt trading and settlement of the Vietnam Asset Management Company (VAMC) to make the work more effective.
Policy on business registration to be revised

Policy on business registration to be revised

The revised decree (No. 01/2021/NĐ-CP) aims to streamline lots of processes, creating maximum favourable conditions for enterprises, respecting the autonomy of enterprises and protecting the legitimate rights and interests of the company.
Proposal to extend the special consumption tax payment deadline for domestically produced and assembled cars

Proposal to extend the special consumption tax payment deadline for domestically produced and assembled cars

VCN - According to calculations by the Ministry of Finance, the total amount of special consumption tax (SCT) on domestically produced and assembled cars, if extended, is about VND 8,560 billion. However, the latest tax payment deadline is November 20, 2024, it does not affect the state budget revenue estimate for 2024.
Proposal to reduce the collection rates of 36 fees and charges in 2024

Proposal to reduce the collection rates of 36 fees and charges in 2024

VCN - According to the draft circular regulating the collection rates of some fees and charges in 2024, the Ministry of Finance is consulting with ministries, branches, People's Committees of provinces and cities, and the drafting agency proposes to reduce the collection rates from 10- 50% of 36 fees and charges.
Removing problems on settlement reports and archive for export processing enterprises

Removing problems on settlement reports and archive for export processing enterprises

VCN - During the customs clearance process, issues such as management of raw materials, supplies or settlement reports are always of concern to export manufacturing and production and export processing enterprises. Hanoi Customs Department has answered many questions about customs procedures for export processing enterprises.
Clear policies needed for addressing violations of new generation tobacco products

Clear policies needed for addressing violations of new generation tobacco products

VCN - Although the authorities have rigorously inspected and handled violations related to new generation tobacco products, to improve management efficiency, it is urgent to develop clear policies for managing these products.
Inventory of public assets aims to accurately reflect the true nature of state budget resources

Inventory of public assets aims to accurately reflect the true nature of state budget resources

VCN - Implementing Decision No. 213/QD-TTg of the Prime Minister on the Project for a total inventory of public assets (TSC), currently the lead unit, the Ministry of Finance, is implementing work to carry out a total inventory of TSC at agencies, organizations, units and infrastructure assets invested and managed by the State in ministries, branches and localities across the country.
Hanoi Customs: Thoroughly addressing the concerns of processing, export production, and export processing enterprises

Hanoi Customs: Thoroughly addressing the concerns of processing, export production, and export processing enterprises

VCN - Processing, export production, and export processing enterprises account for 65% of the total customs declarations and 85% of the total import-export turnover through the Hanoi Customs Department. Therefore, addressing policy and procedural issues for this type of business is a priority for the department.
Read More

Your care

Latest Most read
Hundreds of tons of imported raw cashew nuts stuck in quarantine

Hundreds of tons of imported raw cashew nuts stuck in quarantine

VCN – A company is facing problems with plant quarantine regulations when carrying out procedures to import over 384 tons of "raw cashew nuts, originating from Tanzania" from a bonded warehouse in Dong Nai.
Extend deadline for paying Special Consumption Tax on domestically produced and assembled cars

Extend deadline for paying Special Consumption Tax on domestically produced and assembled cars

VCN - The Decree stipulates that the payment deadline for the Special Consumption Tax for the Tax terms of May, June, July, August and September in 2024 for domestically produced and assembled cars.
Extend the deadline for paying taxes and land rent in 2024

Extend the deadline for paying taxes and land rent in 2024

VCN - For corporate income tax, extend the tax payment deadline for the temporarily paid corporate income tax amount of the second quarter of the 2024 corporate income tax period of enterprises and organizations subject to the extension.
Tax payment deadline for domestic cars extended

Tax payment deadline for domestic cars extended

The Government has decided to extend the deadline for special consumption tax payment for domestically manufactured or assembled automobiles.
13 cases must register for tax at Tax office

13 cases must register for tax at Tax office

VCN - The Ministry of Finance is collecting comments on a draft Circular guiding tax registration to replace Circular 105/2020/TT-BTC. According to the draft, in case the National Population Database proactively transmits information to the Tax Database w
Mobile Version