Coffee association to seek scrapping of VAT

Viet Nam's coffee exports from the 2012-13 crop -- from October last year to the end of this month – have fallen in terms of both volume and value, with 1.4 million tonnes being exported for US$2.8 billion.—Photo capheluong

HCM CITY (Biz Hub)– Members of the Viet Nam Coffee and Cocoa Association (Vicofa) have agreed to petition the Government to scrap the 5 per cent value-added tax imposed on coffee exporters for a year starting in November.

It is aimed at plugging a loophole, which has caused a loss of revenue for the Government and created unhealthy competition among enterprises, Do Ha Nam, Vicofa deputy chairman, told a meeting in HCM City on Tuesday.

Many traders evade the tax and so are willing to pay higher prices to farmers, pricing real export firms out of the market.

The traders do not export themselves but resell to exporters.

If the problem is not resolved, the country's coffee exports would be affected since no one would dare export, Nguyen Thi Ngoc Mai, general director of coffee exporter Packsimex Company, said.

Conference participants also agreed to petition the Ministry of Finance to hold a dialogue with them on tax policy.

Luong Van Tu, Vicofa chairman, said besides resolving the VAT issue, "the Government should consider allowing the sector to stockpile 200,000-300,000 tonnes of seeds to sustain coffee prices in the domestic market."

To ensure sustainable development of the coffee industry, he said "the industry must replant old and stunted coffee trees, which currently account for 30 per cent of all trees."

Coffee firms should focus more on improving processing technology to add value to their products, he said.

Nam called on the Ministry of Agriculture and Rural Development and the association to establish close ties with their counterparts in other major coffee producing countries to share information.

Association members should work together to boost development of the industry, he added.

Domestic prices have fluctuated violently during the period, going down from VND39,500-40,000 a kilogramme last October to VND36,000 now, the lowest in the last two or three years, according to Vicofa.

In the world market, Arabica and Robusta coffee prices also fell down to a four-year low and three year low in the New York market and London market, respectively, Tu said.

The association asked the Government to help solve difficulties faced by coffee firms to facilitate their export before the new crop starting. - VNS