As an agricultural country, fertilizers are extremely important to farmers, any price impact has a direct impact on agricultural production activities.
According to a recent survey by the Department of Crop Production and Plant Protection of Vinh Long province, the cost of physical investment in production accounts for a very high proportion (71.7%) of the total cost of rice production and increased by 5.3%. compared to the same period last year. Of which, the cost of fertilizer is 33.1% and pesticide cost is 14.6%.
Ensure farmers' rights when promulgating policies
Therefore, in recent times, in order to reduce the burden of input costs in agricultural production for farmers when the fertilizer market fluctuates, finding and promulgating the most appropriate policy solutions in each situation has been necessary. stages and times to ensure the rights of farmers and businesses are always of concern to the state.
Since January 1, 2015, Fertilizers; specialized machinery and equipment serving agricultural production; offshore fishing vessels; Cattle, poultry and other pet food are not subject to value added tax - this is the content, stipulated in Clause 1, Article 13 of Law No. 71/2014/QH13 dated November 26 2014 and in which fertilizer; Specialized machinery and equipment serving agricultural production are subjects that farmers and fertilizer manufacturers, including state management agencies, are very concerned about, with opinions on some shortcomings, difficult to apply in recent times.
According to Dr. Phung Ha, Vice President and General Secretary of the Vietnam Fertilizer Association, Clause 1, Article 3 of Law No. 71/2014/QH13 dated November 26, 2014 of the National Assembly stipulates that fertilizer is a commodity belonging to Subjects are not subject to value added tax (VAT) from January 1, 2015. Therefore, fertilizer production enterprises are not allowed to deduct or refund VAT on purchased goods and services (including VAT on goods purchased or imported to create fixed assets) used for fertilizer production. fertilizer, all of this cost must be included in production costs.
Business and market response
As an agricultural country, fertilizers are extremely important to farmers, any price impact has a direct impact on agricultural production activities.
And immediately, when Tax Law 71 was implemented, domestic fertilizer production enterprises were directly affected as well as subject to price adjustment and in the end, farmers had to pay high prices. due to the fact that businesses are not allowed to deduct production input materials, deduct investment machinery and equipment costs... pushing up all production and business costs, which means increasing selling prices in addition to having Reduce costs to share with farmers.
This is different when fertilizer is a taxable item, input materials for fertilizer production will be deducted, indirectly reducing the cost of fertilizer production to harmonize the interests of all parties, creating equality. equality between domestically produced and imported fertilizers, contributing to reducing production costs.
On the other hand, because fertilizer is a commodity that is not subject to VAT, investment projects for fertilizer production are not entitled to VAT refunds for technological equipment that constitutes the project's fixed assets, increasing the total cost. project investment and directly increase product costs.
At that time, input materials for fertilizer production will be deducted, indirectly reducing the cost of fertilizer production to harmonize the interests of all parties, creating equality between domestically produced and imported fertilizers. , contributing to reducing production costs.
In addition, the competitiveness of domestically produced fertilizer products will be less than that of imported fertilizer products when exporters have stable technology and operate with appropriate policies, so they have good prices. become more competitive and when domestic products raise prices, they have the ability to raise prices at more competitive prices.
Receiving feedback from representatives of some domestic fertilizer production enterprises:
According to Mr. Vu Viet Tien, General Director of DAP Joint Stock Company No. 2 - Vinachem, the amendments and supplements to Tax Law 71, including fertilizers as taxable objects, have not been approved by the National Assembly, the cost of input materials is not approved. Deductions cause high production costs, reducing competitive advantage for imported DAP products.
Mr. Nguyen Ngoc Son, Deputy General Director, DAP - Vinachem Joint Stock Company, said that the biggest difficulty today is still the inadequacies of the tax policy, which currently stipulates that domestically produced fertilizers are not included in the list of fertilizers. Items subject to VAT have caused the entire input tax cost to be added to the product price. This is a direct factor, creating unfair competition between imported fertilizer products and domestically produced fertilizer products.
Sharing more about this issue at the seminar "Finding solutions to stabilize supply and stabilize fertilizer prices" on August 30, 2022, Mr. Vu Xuan Hong, Deputy General Director of Superphosphate and Chemical Joint Stock Company Lam Thao said that during the past 7 years, fertilizer businesses were not allowed to deduct input taxes, so they suffered an average loss of 90 - 100 billion VND/year.
This causes the product cost to increase to 6 - 7% and must be included in the selling price. Therefore, it is necessary to amend Law No. 71/2014/QH13, calculating the VAT tax on fertilizers in a reasonable manner, about 4 - 5%, to ensure competition for imported fertilizers and domestically produced fertilizers. .
Source: Industry and Trade Magazine
