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Sunday, July 14, 2024

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VAT cut

For the benefit of farmers

National Assembly deputies have debated the possible implications of a 5% value-added tax (VAT) on fertilizers. They argue that while the tax could boost business competitiveness and profit, and increase budget revenue, it would burden farmers. Conversely, applying a 0% VAT would protect farmers from price hikes but would necessitate offsetting the budget by VND1,500 billion per year. Deputies urge the National Assembly and the Government to prioritize the interests of farmers. On the afternoon of June 26, the National Assembly (NA) deliberated on the draft of the amended Law on Value Added Tax (VAT). A significant point of discussion was whether to impose the VAT on fertilizers and, if so, what is the right rate? In the report presented to the NA, the Government suggested reclassifying commodities used in agricultural production, including fertilizers, from VAT-exempt to 5%. This change, they argued, would prevent product cost increases and support domestic production amid import competition, thereby better supporting agriculture. Domestic fertilizer companies have provided feedback indicating that the absence of the VAT on fertilizers prevents them from deducting the VAT on materials, equipment and services. This situation drives up fertilizer prices and diminishes the competitiveness of domestic fertilizer producers compared to […]
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