Why not reduce export tax on fertilizer products to 0%?

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The Ministry of Finance proposed to maintain the export tax on some fertilizer products as current regulations. Photo: Internet

Carry out assigned tasks in Resolution No. 58/NQ-CP dated April 21, 2023, to promptly meet practical requirements, remove difficulties for production and business, and contribute to promoting the innovation of administrative procedures and preventing trade fraud in classification and coding. Based on opinions of businesses, the Vietnam Fertilizer Association and the Ministry of Finance have reviewed export and import tax rates of input materials for production to support domestic production and business in the spirit of Resolution No. 58/NQ-CP. At the same time, the Ministry of Finance has developed a draft Decree amending and supplementing a number of articles of Decree No. 26/2023/ND-CP dated May 31, 2023 of the Government on Preferential Export Tariffs and Import Tariffs, list of goods and absolute tax rates, mixed taxes, import taxes outside the tariff quota.

Commenting on the draft Decree amending and supplementing a number of articles of Decree No. 26/2023/ND-CP on export tax rates for some types of fertilizers, the Vietnam Fertilizer Association continues to propose to adjust tax rates. Specifically, according to the Vietnam Fertilizer Association, the application of a 5% export tax rate on urea is not consistent with the viewpoint of the Ministry of Finance when submitting the draft Decree "applying a lower export tax rate for domestically produced goods that meet demand or are in surplus”. Domestic excess production forces manufacturers to export to ensure capacity maintenance. The 5% export tax rate has reduced business opportunities, reduced production and business efficiency of domestic manufacturers, and reduced the competitiveness of urea producers in Vietnam with other countries in the region and around the world. Therefore, the Association proposes to adjust the export tax rate for this item to 0%.

In addition, according to the Vietnam Fertilizer Association, production capacity compared to the domestic demand for superphosphate fertilizer has been not only sufficient but also surplus. The export of superphosphate fertilizer should be encouraged to increase the value of national products, create jobs for workers, earn foreign currency for the country, and pay taxes for localities. Therefore, this unit also requested the Ministry of Finance to consider adjusting the superphosphate fertilizer export tax rate to 0%. Besides, to encourage domestic enterprises to invest in the production of completely new fertilizers, while Vietnamese farmers are not yet in the habit of using them, the Vietnam Fertilizer Association and the State Capital Management Committee at Enterprises also proposed to apply 0% export tax on SOP fertilizer products.

Commenting on the draft, the Ministry of Industry and Trade said that, for fertilizer export tax rates, the Ministry of Finance is requested to synthesize the opinions of the Vietnam Fertilizer Association and the Ministry of Agriculture and Rural Development to regulate Export tax rates to be consistent with the domestic supply and demand production situation, ensuring harmony between the interests of fertilizer producers and users.

Reporting on the proposals of the Vietnam Fertilizer Association and other ministries and branches, the Ministry of Finance said that keeping the export tax rate higher than 0% for fertilizer products will contribute to retaining the source of fertilizer domestically being used, stabilizing the fertilizer market in the context of fertilizer prices tending to increase.

According to the Ministry of Finance, before Decree No. 26/2023/ND-CP took effect, fertilizer products, if the value of mineral resources plus energy costs were less than 51% of the product price, had a tax rate. Export tax is 0%; For fertilizer products, if the value of mineral resources plus energy costs accounts for 51% or more of the product cost, the export tax rate is 5%. To contribute to lowering domestic fertilizer prices, stabilizing supply, at the same time, creating favorable conditions, ensuring strict management, avoiding fraud during implementation, in Decree No. 26/2023/ND- CP, the Ministry of Finance has submitted to the Government to abolish the regulation on applying export tax rates based on the value of mineral resources plus energy costs to 51%; Specifically stipulate the export tax rate of 5% for fertilizers that cannot be produced domestically or do not meet demand and 0% for fertilizers that are produced domestically or in excess. Specifically, stipulate an export tax rate of 5% for fertilizers such as urea and phosphate fertilizers (this is also the rate that businesses are currently applying when calculating based on the 51% rate mentioned above) and a rate of 0 % for NPK and DAP fertilizer products.

The Ministry of Finance believes that current regulations also contribute to reducing administrative procedures for both Customs authorities and businesses, reducing financial costs due to having to determine this ratio in product prices. , ensuring the principles of promulgating tax schedules stated in Clause 4, Article 10 of the Law on Export and Import Taxes. According to previous regulations, calculating this ratio has incurred costs for having to monitor and declare related costs and check documents and books, especially when costs frequently change according to the market. school. The same type of fertilizer is exported, but the application of export tax rates depends on the time of export and export price. From the above reasons, the Ministry of Finance proposes to maintain the export tax rate of some fertilizer products as current regulations.

Carry out assigned tasks in Resolution No. 58/NQ-CP dated April 21, 2023, to promptly meet practical requirements, remove difficulties for production and business, and contribute to promoting innovation. administrative procedures and preventing trade fraud in classification and coding. Based on opinions of businesses, the Vietnam Fertilizer Association and the Ministry of Finance have reviewed export tax rates, import of input materials for production to support domestic production and business in the spirit of Resolution No. 58/NQ-CP. At the same time, the Ministry of Finance has developed a draft Decree amending and supplementing a number of articles of Decree No. 26/2023/ND-CP dated May 31, 2023 of the Government on Export Tariffs and Import Tariffs. Preferential exports, list of goods and absolute tax rates, mixed taxes, import taxes outside the tariff quota.

Commenting on the draft Decree amending and supplementing a number of articles of Decree No. 26/2023/ND-CP on export tax rates for some types of fertilizers, the Vietnam Fertilizer Association continues to propose Proposal to adjust tax rates. Specifically, according to the Vietnam Fertilizer Association, the application of a 5% export tax rate on urea is not consistent with the viewpoint of the Ministry of Finance when submitting the draft Decree "applying a lower export tax rate". for domestically produced goods that meet demand or are in surplus. Domestic excess production forces manufacturers to export to ensure capacity maintenance. The 5% export tax rate has reduced business opportunities, reduced production and business efficiency of domestic manufacturers, and reduced the competitiveness of urea producers in Vietnam with other countries in the region. region and around the world. Therefore, the Association proposes to adjust the export tax rate for this item to 0%.

In addition, according to the Vietnam Fertilizer Association, production capacity compared to the domestic demand for superphosphate fertilizer has been not only sufficient but also surplus. The export of superphosphate fertilizer should be encouraged to increase the value of national products, create jobs for workers, earn foreign currency for the country, and pay taxes for localities. Therefore, this unit also requested the Ministry of Finance to consider adjusting the superphosphate fertilizer export tax rate to 0%. Besides, to encourage domestic enterprises to invest in the production of completely new fertilizers, while Vietnamese farmers are not yet in the habit of using them, the Vietnam Fertilizer Association and the State Capital Management Committee Enterprises also proposed to apply 0% export tax on SOP fertilizer products.

Commenting on the draft, the Ministry of Industry and Trade said that, for fertilizer export tax rates, the Ministry of Finance is requested to synthesize the opinions of the Vietnam Fertilizer Association and the Ministry of Agriculture and Rural Development to regulate Export tax rates are consistent with the domestic supply and demand production situation, ensuring harmony between the interests of fertilizer producers and users.

Reporting on the proposals of the Vietnam Fertilizer Association and other ministries and branches, the Ministry of Finance said that keeping the export tax rate higher than 0% for fertilizer products will contribute to retaining the source of fertilizer used. domestic use, stabilizing the fertilizer market in the context of fertilizer prices tending to increase.

According to the Ministry of Finance, before Decree No. 26/2023/ND-CP took effect, fertilizer products, if the value of mineral resources plus energy costs were less than 51% of the product price, had a tax rate. Export tax is 0%; For fertilizer products, if the value of mineral resources plus energy costs accounts for 51% or more of the product cost, the export tax rate is 5%. To contribute to lowering domestic fertilizer prices, stabilizing supply, at the same time, creating favorable conditions, ensuring strict management, avoiding fraud during implementation, in Decree No. 26/2023/ND- CP, the Ministry of Finance has submitted to the Government to abolish the regulation on applying export tax rates based on the value of mineral resources plus energy costs to 51%; Specifically stipulate the export tax rate of 5% for fertilizers that cannot be produced domestically or do not meet demand and 0% for fertilizers that are produced domestically or in excess. Specifically, stipulate an export tax rate of 5% for fertilizers such as urea and phosphate fertilizers (this is also the rate that businesses are currently applying when calculating based on the 51% rate mentioned above) and a rate of 0 % for NPK and DAP fertilizer products.

The Ministry of Finance believes that current regulations also contribute to reducing administrative procedures for both Customs authorities and businesses, reducing financial costs due to having to determine this ratio in product prices, ensuring the principles of promulgating tax schedules stated in Clause 4, Article 10 of the Law on Export and Import Taxes. According to previous regulations, calculating this ratio has incurred costs for having to monitor, declare related costs and check documents and books, especially when costs frequently change according to the market. The same type of fertilizer is exported, but the application of export tax rates depends on the time of export and export price. From the above reasons, the Ministry of Finance proposes to maintain the export tax rate of some fertilizer products as current regulations.