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Wednesday, July 17, 2024




Lesson from policy goodwill

The goodwill in policymaking may sometimes cause adverse effects. That is the story of lowering the value added tax (VAT) for fertilizers from 5% to zero to help cut input costs, but eventually farmers do not benefit while businesses suffer losses. During its session on December 18, 2023, the National Assembly’s Standing Committee decided to add the draft amended VAT Law to the legal agenda for the legislature’s two sittings in 2024. The move has multiple objectives, among them is addressing shortcomings arising in the course of enforcement of the law, including the VAT policy for fertilizers. Fertilizers are the prime agricultural material, as they account for the highest percentage in the cultivation cost, while the cultivation industry is responsible for 64-68% of the production value of agriculture. As of 2008, the VAT for fertilizers was 5% and was fully deductible. However, in November 2014 the National Assembly approved a law amending and supplementing some articles of the tax laws (Law 71/2014/QH13), putting fertilizers in the category of goods not subject to the VAT, to reduce input costs for farmers. Nguyen Van Phung, former director of the Tax Policy Department of the Ministry of Finance, said during the drafting of […]
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