Inspection of fertiliser sample at Thuan Phong IEC, southern Dong Nai Province. Domestically produced fertilisers would require an altered value added tax law to make more profit and less loss in near future. — Photo cvdvn.net

Fertiliser producers are petitioning the Government and the National Assembly to add a tax exemption for fertiliser products to the Law on Value-added Tax.

Producers argue that imported fertilisers’ minus 5 per cent value added tax automatically puts domestic products at a price disadvantage. This makes competition fierce for Vietnamese producers, causing them to decrease production quantity.

Furthermore, even though fertilisers have been cleared of value-added tax since the beginning of 2015, domestic businesses and farmers have been suffering from losses from the higher input and output prices.

While other countries have put up technical barriers to protect domestic production, the new Law on Value-added Tax encourages imported fertilisers against Vietnamese ones, despite clearing the latter’s taxed value.

As such, producers are urging the Government to change the law and help them improve production.

According to a representative from the Dam Phu My Company, their plant had a production capacity of 800,000 tonnes per annum with 5 per cent value-added tax before 2015, but the imported ingredients--with 10 per cent tax--were abated. Yet, according to the new law, their products will not be subjected to output tax, but their input tax will receive no abatement either, making the company’s production cost go up VND400 billion (US$18.04 million) each year.

The Fertiliser Association of Viet Nam asserted that without an immediate change to the law, many fertiliser producers will be standing on the brink of bankruptcy, and a well-meaning policy will regrettably backfire. — VNS