Hanoi (VNS/VNA) - National Assembly deputies have been debating whether a 5% VAT tax on fertilisers should be reintroduced.
Opponents of the tax advised the Government to exercise caution, as it may increase fertiliser prices, which would adversely affect millions of farmers across the country.
Supporters, meanwhile, raised concerns over how the tax exemption has been a burden for local fertiliser manufacturers, hurting their competitiveness and creating an unfair playground.
The 5% VAT tax was removed in 2014, which according to local fertiliser manufacturers, has created a situation in which locally made fertilisers suffer unfairly in competition with imports as they could not deduct VAT from their input. It has led to increased production costs. They said their products should also be taxed as it would allow them to benefit from VAT deductions and refunds, which can bring prices down in the domestic market.
Deputy Trinh Xuan An from Dong Nai province said reintroducing the tax will benefit the public, manufacturers and the State.
"For instance, when a company purchases raw materials worth 80 VND it costs an additional 8 VND in VAT input. If their fertiliser is sold at 100 VND without input VAT deductions, they would need to price it at 108 VND. With a 5% tax, they can deduct 8 VND, and the price should be 105 VND. Accounting rules dictate that a 5% tax doesn’t necessarily mean prices rise by 5%."
Deputy Dang Bich Ngoc from Hoa Binh province said fertiliser remains so far the largest expense in crop production, amounting to 64% to 68% of the agricultural sector’s total production value.
Fertiliser not being taxed means manufacturers cannot claim VAT tax refunds, even for goods imported as fixed assets required in fertiliser production. This severely handicapped local manufacturers' profit and investment planning, as well as their ability to upgrade to more sustainable technologies.
Meanwhile, imported fertiliser, previously taxed at 5% and now tax-exempt can still reclaim full VAT input, allowing for lower prices.
The fertiliser market which has been struggling with oversupply issues during 2015-2020 had seen significant price drops with local manufacturers reporting negative growth and financial difficulties.
Ngoc said allowing local manufacturers to benefit from VAT input refunds will benefit everyone, farmers, manufacturers and the Government while at the same time, reducing Vietnam's reliance on imports.
She said Vietnam could learn from China, the world's largest producer and consumer, which imposes an 11% VAT on fertilisers, while offering tax incentives for more environmentally friendly and R&D advanced manufacturers. Similarly, Russia, the world's largest fertiliser exporter, also imposes VAT for the same reasons.
"The current situation favours imports while harming domestic manufacturers. Left alone unchecked, it may reduce the size of Vietnam's fertiliser industry making the country even more reliant on imports and undermining long-term strategy such as agricultural sustainability," she said.
Deputy Nguyen Van Chi from Nghe An province said Vietnam, as an agricultural country, should not allow itself to become overly reliant on foreign fertiliser.
Several Governmental agencies including the Ministry of Industry and Trade and the State Audit have petitioned the Government to reintroduce the tax to balance the playing field for domestic manufacturers./.
See more
Ba Ria-Vung Tau to develop international port worth nearly 230 million USD
The project aims to construct the My Xuan International General Port, capable of accommodating ships with a capacity of up to 60,000 DWT.
Vietnam's automobile industry to face multiple challenges in 2025
The Ministry of Industry and Trade has forecast that Vietnam's automobile market could grow by approximately 12% in 2025, with sales expected to reach 600,000 units.
Vietnam-Singapore trade hits record high in 2024
Vietnam’s trade with Singapore hit an all-time high in 2024, surpassing 31.67 billion SGD (approximately 23.5 billion USD).
500kV transmission line from Laos energised
The Monsoon – Thanh My 500kV transmission line project is designed to import electricity from Laos’ Monsoon wind power plant to Vietnam, adding 600 MW to the national power grid during the 2024–2025 period.
Vietnam's digital tech sector boasts nearly 74,000 companies
Total revenue of Vietnam's digital tech companies reached nearly 158 billion USD in 2024, a 10.2% year-on-year increase, according to the Ministry of Information and Communications (MIC).
Banks selling mortgaged assets to recover bad debts
The Viet Dragon Securities Company (VDSC) said that bad debts might continue to increase slightly this year, after a circular allowing banks to reschedule debt repayment periods and maintain the debt group for certain sectors expired at the end of 2024.
Vietnam’s export to Philippines tops 6 billion USD for first time
Vietnam’s trade with the Philippines has reached an impressive milestone, with turnover exceeding 8.6 billion USD in 2024, up 11% year-on-year, according to the Ministry of Industry and Trade’s Agency of Foreign Trade.
Vietnam seeks to set up cooperation with Brazilian locality
In his meeting with Governor of Brazil's Espirito Santo Renato Casagrande, Ambassador to Argentina Bui Van Nghi Bui Van Nghi valued the potential for cooperation between the two sides, particularly in priority areas such as tourism, information technology, hi-tech agriculture, and seaport.
Vietnam embraces circular economy with national action plan till 2035
Between now and 2030, Vietnam is committed to reducing the extraction and use of non-renewable and water resources, while simultaneously enhancing the efficiency of resource, material and energy usage.
Remittances surge as Tet approaches
According to the State Bank of Vietnam’s Ho Chi Minh City branch, 9.6 billion USD, or 60% of the total remittances, flew through financial institutions, representing a 140 million USD increase from the previous year.
Reference exchange rate continues downward trend
The State Bank of Vietnam set the daily reference exchange rate for the US dollar at 24,325 VND/USD on January 24, down 3 VND from the previous day.
Banks' credit up 11.3% in HCM City in 2024
Total outstanding loans of credit institutions in Ho Chi Minh City as of the end of last year were worth over 3.9 quadrillion VND (153.3 billion USD), a 11.3% increase for the year, according to the central bank.
Vietnam to become Asia-Pacific region's fastest growing economy in 2026
The World Bank projects Vietnam's GDP growth at 6.3% in 2026, the highest in the Asia-Pacific region.
Vietnam's rice export predicted to face challenges in 2025
The Vietnamese rice sector is likely to face a host of challenges in export in 2025 after a successful year in 2024, according to experts.
Hai Phong seaport system strives to handle 112 million tonnes of cargo this year
To reach targets, the Hai Phong Maritime Port Authority is promoting administrative procedure reform by applying a specialised software, creating the most favourable conditions for maritime enterprises while still ensuring the effectiveness and efficiency of State management in the Hai Phong seaport area.
Can Tho industrial zones attract nearly 314 million USD in investment in January
In January, Can Tho’s export processing and industrial zones attracted nearly 314 million USD in investment, according to the zones’ management board.
Quang Tri, Italian company to collaborate in carbon credit generation
Acting Chairman of Quang Tri province Ha Sy Dong expressed his hope that the collaboration will effectively contribute to Vietnam’s and Italy’s international ecological environment commitments.
Remittances to HCM City surge ahead of Tet
Ho Chi Minh City received nearly 493 million USD in remittances in the first 20 days of this year, according to Nguyen Duc Lenh, Deputy Director of the State Bank of Vietnam's HCM City branch.
Kon Tum cracks down on durian, jackfruit quality control violations
The Central Highlands province of Kon Tum is implementing stricter quality control measures for durian and jackfruit exports following a warning from China about food safety lapses in some Vietnamese durian shipments.
Retail petrol prices down in latest adjustment
The price of E5RON92 bio-fuel was priced at 20,592 VND (0.82 USD) per litre, representing a 158 VND decrease from the previous baseline, while RON95-III decreased to 21,142 VND per litre, down 78 VND.