10:29 | 22/12/2015 Economy- Society
(VEN) - Law 71/2014/QH13 amending and supplementing some articles of tax laws has excluded fertilizer from the list of products that are subject to the value added tax (VAT). This has created difficulties for fertilizer businesses and reduced the competitiveness of domestic fertilizer products. From the viewpoint of the Van Dien Fused Magnesium Phosphate Fertilizer Joint Stock Company (VADFCO), fertilizer products should continue to be subject to the VAT as in the time prior to January 1, 2015.
Under new regulations, annual production costs of fertilizer businesses have increased
VADFCO General Director Hoang Van Tai said that to ensure a sufficient supply of fertilizer for agricultural production, the company had to reserve fertilizer products and input materials for production. Prior to January 1, 2015, most of these input materials were subject to a 10 percent VAT, while fertilizer products were subject to a five percent VAT, leading to a gap between the input and output VAT. Under previous regulations, the company got VAT refunds annually.
Under Law 71/2014/QH13, fertilizer products are no longer subject to the VAT. So fertilizer businesses are not allowed to deduct the input VAT from production costs. To maintain production, businesses cannot lower prices at which their products are sold - this has made it difficult for domestic fertilizer businesses to sell their products and compete with imported products.
“Before Law 71/2014/QH13 was promulgated, VADFCO received an average VND14-15 billion of VAT refunds each year (VND11.5 billion in 2010; VND17.7 billion in 2011; VND14 billion in 2012; VND14.4 billion in 2013; and VND22 billion in 2014). Under new regulations, the company’s annual production costs have increased by VND14-15 billion, leading to a decline in its profits and worker incomes. Obviously, the law requires fertilizer businesses to cope with higher pressures while bringing farmers no benefit,” Hoang Van Tai said.
To resolve difficulties for fertilizer businesses and assist farmers in agricultural production, VADFCO requested the Vietnam Fertilizer Association Central Committee to submit a proposal to the Ministry of Finance and concerned departments for consideration. The proposal is for fertilizer products to be subject to a zero or five percent VAT. If this proposal is accepted, it will help reduce the cost of fertilizer and agricultural production, thus promoting agricultural development in accordance with the spirit of Law 71/2014/QH13.
VADFCO has more than 50 years of experience in producing and trading in fertilizer. The company has always fulfilled its tax obligations. VADFCO’s products have won many awards such as Vietnam Golden Rice Award, High Quality Vietnamese Goods Award, Vietnam Famous Brand Award, Golden Cup for International Economic Integration, Golden Cup for WTO Integration Quality, Golden Globe Award, and Thang Long Cup. VADFCO was the only fertilizer business to stand among the Top Ten Vietnamese Brands 2011, Top Ten Vietnamese Golden Products and Services 2012, Top Ten Perfect Products and Services 2013, Top Ten Favorite Vietnamese Goods of Consumers 2014, Top Ten Vietnamese Creative Businesses 2014, and Outstanding Vietnamese Agricultural Products.