HCMC – The Ministry of Finance has proposed exempting value-added tax (VAT) on the trading of unprocessed or minimally processed agricultural, forestry, and fishery products to simplify tax procedures and ease financial pressure on businesses.
Under the draft amendment to the Law on Value-Added Tax, businesses and cooperatives that buy unprocessed or simply processed crops, livestock, or aquatic products for resale to other businesses or cooperatives would not have to declare or pay VAT. They would still be allowed to deduct input VAT.
The proposal also maintains VAT exemption for individuals and organizations that sell their own agricultural and aquatic products, as well as for such products at the import stage.
According to the ministry, companies currently pay 5% VAT on traded agricultural products, which they later claim back for exported goods such as catfish, pepper, and coffee. This process delays refunds, ties up working capital, and increases financing costs, as banks do not provide loans to cover refundable VAT amounts.
The ministry noted that imported agricultural and fishery products are not subject to VAT at the border, creating a disparity with domestically produced goods. Importers are not required to borrow to pay VAT on imports, while exporters of local goods must do so before claiming refunds.
