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.
