Tran Van Lam, a full-time member of the Committee for Delegate Affairs, presented this information during a discussion session on the amended Value Added Tax (VAT) Law on the afternoon of 9/12.

According to Lam, the government's draft proposes additional regulations to address current issues for certain goods, including animal feed, agricultural, and aquatic products. These items are not subject to VAT, meaning input VAT cannot be deducted or refunded. This increases costs and reduces the competitiveness of domestically produced goods compared to imports.

However, he argued that fertilizers are also an input material for agriculture, similar to animal feed, yet they are treated differently. From 1/7/2025, fertilizers will be subject to a 5% VAT.

The delegate stated that retaining this regulation would increase input costs for fertilizers, harming farmers. Therefore, he proposed returning fertilizers to the VAT-exempt category, as they were previously, but allowing manufacturing businesses to deduct input tax, similar to animal feed.

Mr. Tran Van Lam, member of the Committee for Delegate Affairs, speaking at the session on the afternoon of 9/12. Photo: National Assembly Media.

Ta Van Ha, Vice Chairman of the Culture and Social Affairs Committee, also agreed with the proposal. Ha mentioned that during the 8th session last year, he had "earnestly requested" that VAT should not be applied to fertilizers. Addressing arguments about supporting fertilizer manufacturing businesses, he emphasized the need to consider over 100 million citizens, as a 5% tax on this item "affects the daily meals of workers."

"If we have made calculations for animal feed, we should also consider fertilizers," the Vice Chairman of the Culture and Social Affairs Committee commented, adding that this item should be returned to the tax-exempt category, but businesses should still be allowed input deductions or a similar option that benefits farmers.

Meanwhile, Trinh Xuan An, a full-time member of the National Defense and Security Committee, recalled that delegates had extensively debated this issue in the previous session. He stated that domestic fertilizer manufacturing associations and businesses had all proposed applying VAT to fertilizers. This is because previously, in 2016, when fertilizers were removed from the taxable group, domestic manufacturers had to include tax costs in their product prices, making them uncompetitive with imports.

If fertilizers are returned to the VAT-exempt category, An suggested the draft must also include regulations allowing for deductions, similar to agricultural products. "If the proposal is only for fertilizers to be tax-exempt without input deduction, businesses would suffer greatly," An shared.

Delegate Truong Trong Nghia, Vice Chairman of the Ho Chi Minh City Bar Association, also urged the government to consider policies that harmonize the interests of citizens with the competitiveness of domestic manufacturing businesses.

Minister of Finance Nguyen Van Thang explaining at the session on the afternoon of 9/12. Photo: National Assembly Media.

Minister of Finance Nguyen Van Thang acknowledged the National Assembly delegates' feedback regarding VAT on fertilizers. He stated that the Ministry would continue to research, review, and report to the competent authorities for consideration and resolution.

Regarding the need to amend the new law just a few months after its implementation, Thang stated he felt he had "not fully fulfilled his responsibility" as the agency advising on the drafting of the Value Added Tax Law. However, he noted that after a few months of the law being in effect, the Ministry of Finance received numerous reports from associations and businesses concerning practical difficulties.

Regarding the proposal to exempt animal feed from VAT, Thang explained it aims to ensure equality and competitiveness with imported goods. "This will alleviate difficulties for agricultural production, especially as the sector has been significantly impacted by natural disasters and prolonged floods," Thang said.

The National Assembly is expected to vote on the amended Value Added Tax Law on 11/12.

Anh Tu