A contentious debate has arisen over whether Việt Nam should impose a 5 per cent VAT on fertilisers to boost local production or retain the current tax exemption to support farmers.
If 5 per cent VAT is added to fertilisers, farmers will be greatly affected because prices will increase, leading to higher cost of agricultural products.
The absence of VAT on fertilisers has prevented domestic producers from declaring and deducting input VAT, which leads to higher cost of domestically produced fertilisers, by an estimated 5-8 per cent, and makes them vulnerable in competition from imported fertilisers.
The disruption of fertiliser supply caused by the COVID-19 pandemic has led to mounting counterfeit fertilisers in the past two years, exposing the need to tighten up the market.
As prices of fertilisers keep soaring to the all-time high and showing no signs of cooling down, World Bank expected that the uptrend will continue next year.
The Ministry of Industry and Trade (MoIT) has decided to extend the imposition of safeguard measures on several imported fertilisers for the next two years.
Rising input production costs, unfavourable weather conditions, a saturated domestic market and stiff competition are causing difficulties for fertiliser businesses.
Many fertiliser companies are steadily increasing production of organic fertilisers since they expect demand for them to rise sharply over the coming years.
A wide range of fertilisers, agricultural machinery, packaging equipment, pesticides and and other products are on display at the third international exhibition for the fertilizer and pesticide industry at an expo that opened in HCM City today (June 11).
On March 7 the Ministry of Industry and Trade issued Decision No 686/QD-BCT with safeguards against the import of diammonium phosphate and monoammonium phosphate fertilisers.