Fertiliser producers are pleased about new VAT tax

17-Oct-2020 Intellasia | Vietnamnet | 6:02 AM Print This Post

The Ministry of Finance (MOF) has proposed adding fertiliser to the list of products subject to VAT with a 5 percent tax rate.

The proposal has been made by MOF under the framework of a resolution on VAT policy to support fertiliser enterprises.

Fertiliser enterprises have been expecting this for a long time.

In order to give optimal support to farmers and help force fertiliser prices down, the National Assembly approved a law on amending some articles of the laws on taxes, which took effect on January 1, 2015.

Under the law, fertiliser, both domestically made and imports, is not subject to VAT. Therefore, fertiliser production enterprises cannot get VAT deductions for input goods and services. The input VAT is included in expenses when calculating corporate income tax.

The regulation supports farmers, but causes difficulties for domestic fertiliser enterprises.

Lao Dong reported that the Vietnam National Chemical Group (VCG), when reporting a sharp decline in business indexes in Q1 2020 compared with the same period last year and the possibility of failing to meet business targets, urged the Vietnam Fertiliser Association to propose amending the current laws and impose a VAT of 0-5 percent on fertiliser products.

If so, the State would not have to spend money to help enterprises cope with Covid-19, but just needs to adjust the policy to ensure equal conditions for both domestic products and imports.

It stressed that once the fertiliser production cost decreases, enterprises will reduce the selling prices, which will benefit farmers.

MOF confirmed it has received documents from the Ministry of Industry and Trade (MOIT), Ministry of Agriculture and Rural Development (MARD) and Vietnam Fertiliser Association which pointed out that fertiliser producers face difficulties because of the regulation, because they cannot get VAT deduction for input materials and services.

This leads to higher production cost and lower profit, thus making it difficult for local products to compete with imports of the same kinds.

MOF thinks it is necessary to issue a National Assembly resolution on amending the VAT policy to support the development of fertiliser companies and help them overcome current difficulties.

The 5 percent VAT imposition is expected to be applied in all stages, including import, production, wholesale and retail, thus creating a fair competition for domestically made products and imports.

The two trillion-dong loss-making projects developed by VCG, namely Ha Bac and Ninh Binh, will benefit from the new tax policy if it is applied. These are two of 12 loss-making mega-projects under MOIT.

https://vietnamnet.vn/en/business/fertiliser-producers-are-pleased-about-new-vat-tax-680546.html

 


Category: Economy, Vietnam

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