|A farmer is seen working on rice field in the Mekong Delta region - PHOTO: TL
The Fertilizer Association of Vietnam (FAV), the Vietnam Farmers’ Union (VNFU) and the Vietnam Chamber of Commerce and Industry have also suggested imposing a VAT rate of 5% on fertilizer as earlier.
At a seminar on tax policies for promoting production and business held by Tuoi Tre newspaper on June 2, attendees said since fertilizer was free from VAT, domestic fertilizer producers had not been entitled to VAT refunds for input materials, which had sent fertilizer prices rising 5-8%.
The situation has paved the way for foreign fertilizer to enter the local market more easily as it is not subject to VAT either.
Vietnam imported 3.7 million tons of fertilizer in 2014 but the figure leapt to 5.6 million tons last year, according to data by the General Department of Vietnam Customs.
Local firms now do not get refunds for VAT paid for machinery, equipment and other fixed assets in their projects.
Nguyen Hac Thuy, acting chairman and general secretary of FAV, told the seminar that Law No. 71/2014/QH13 treating fertilizer as a VAT-free item should be amended to help local producers out of the doldrums.
Duong Tri Hoi, deputy general director of PetroVietnam Fertilizer and Chemicals Corporation (PVFCCo), said the law has piled pressure on local companies, especially those having invested in modern technology. Between 2015 and 2017, the amount of VAT deductions which PVFCCo should have enjoyed totaled VND1 trillion.
Ha Bac Nitrogenous Fertilizer and Chemicals Co Ltd has the same fate as its production costs annually grow by VND250 billion. DAP - Vinachem JSC saw its costs rising by VND360 billion within three years.
Foreign-invested fertilizer producers such as Baconco Co Ltd, Japan Vietnam Fertilizer Company and Viet Han Fertilizer Co Ltd are not spared either.