July 15, 2025 | 07:21 GMT +7
July 15, 2025 | 07:21 GMT +7
Hotline: 0913.378.918
Before the implementation of Law No. 71/2014/QH13 (Law No. 71), fertilizers, machinery, and specialized equipment for agricultural production were subject to a 5% value-added tax (VAT) rate. Accordingly, goods and services within this category were eligible for input VAT deductions.
From January 1, 2015, Law No. 71 came into effect, and these items were classified as non-taxable under VAT (as opposed to a 0% tax rate) and were no longer eligible for input VAT deductions.
In practice, the regulation that classifies fertilizers, machinery, and specialized equipment for agricultural production as non-taxable under VAT (Article 3, Clause 1 of Law No. 71) has hindered the development and investment in domestic fertilizer production and has failed to achieve the goal of reducing fertilizer prices when Law No. 71 was enacted.
The application of a 5% value-added tax (VAT) helps ensure the proactive development of fertilizer supply for agriculture from domestic production.
At a recent conference in Hanoi to disseminate the Project on Improving Soil Health and Managing Crop Nutrition, Dr. Phung Ha, President of the Vietnam Fertilizer Association, stated that since the enactment of Law No. 71, the number of enterprises investing in the construction of high-tech and green fertilizer plants has been minimal, with one of the main reasons being the restrictions imposed by Law No. 71.
Therefore, according to Dr Phung Ha, transitioning fertilizers to be subject to a 5% VAT is essential. This would allow producing companies to declare and deduct the input VAT of goods and services, including investments in purchasing fixed assets for fertilizer production.
The application of a 5% value-added tax (VAT) on fertilizers benefits not only production enterprises but also farmers and the government.
For enterprises: The input VAT (incurred domestically and at the import stage) of fertilizer production companies will be deductible or refundable in accordance with the regulations of VAT law.
For the Market: The implementation of a 5% value-added tax (VAT) contributes to promoting the domestic fertilizer production sector, which serves as an essential input for agriculture. This measure creates a stable supply for farmers, reduces dependence on imports, and addresses price instability and fluctuations in imported fertilizer prices, thereby contributing to the sustainable development of agriculture.
For the State Budget: The government budget will fully collect the amount generated from applying VAT on imported fertilizers.
Translated by Hoang Duy
(VAN) In its 2025 National Action Plan for Trade Promotion, the Ministry of Industry and Trade has clearly defined niche markets as a primary focus, in addition to its initiatives in traditional markets.
(VAN) From a 5-hectare field, the organic rice cultivation area in Ky Anh Commune has now expanded to over 50 hectares and continues to grow, aiming toward export.
(VAN) By improving biosecurity and traceability, the Department of Livestock Production and Animal Health aims towards a sustainable pig farming industry.
(VAN) Hai Phong has successfully resolved the issue of IUU fishing boats through decisive action, marking a major step forward in the journey to lift the European Commission’s 'yellow card' warning.
(VAN) Despite its ideal location and rich natural resources, Hai Phong's agricultural sector continues to face challenges, with fragmentation and underdevelopment, largely due to outdated processing technology.
(VAN) This was the directive of Minister of Agriculture and Environment Do Duc Duy at the Consultation Conference on the Air Pollution Control Action Plan for the 2025–2030 period, held on July 5 in Hanoi.
(VAN) For more than half a century, the Japanese government has encouraged rice farmers to grow less of the crop so that prices of the national staple grain remained relatively high and steady.