On May 31, 2023, the Government promulgated the Decree on Export Tariff (Export), Preferential Import Tariff (import), List of goods and absolute tax rates, mixed tax, and out-of-quota import tax. Tariffs. Accordingly, the import tax rate for DAP and NPK fertilizers will be reduced to 0%. This Decree takes effect from July 15, 2023.
1. Adjust fertilizer export tax to 0%
Decree No. 26/2023/ND-CP focuses on adding three main groups of contents.
Consolidate regulations related to the revised and supplemented export and import tax schedules from 2016 up to now. Continue to promote the reform of administrative procedures, simplify and facilitate search and implementation.
Converting the Export Tariff and the Preferential Import Tariff; List of goods and rates of absolute tax, mixed tax, import tax outside the tariff quota. The purpose is to ensure compliance with the ASEAN Harmonized Tariff Schedule 2022.
Amending and supplementing export tax rates and preferential import tax rates of some goods to overcome obstacles and difficulties in the implementation process on the basis of recommendations of ministries, branches, associations and businesses.
2. Expectations on value-added tax correction
The exemption of fertilizers from value-added tax (VAT) has had a significant impact on domestic fertilizer enterprises, exerting a considerable influence. According to the Ministry of Industry and Trade, the rise in production costs will diminish competitiveness in relation to imported fertilizers. As a result, farmers will inevitably face higher prices when purchasing fertilizers due to input VAT.
The regulation, which excludes fertilizers from the increased VAT, fails to establish conditions for farmers to benefit from lower fertilizer prices. Additionally, this creates favorable circumstances for enterprises to engage in importation, while simultaneously increasing pressure on domestic fertilizer production enterprises.
Consequently, many domestic fertilizer enterprises may need to operate with moderation or halt production, leading to substantial losses within the domestic industry. Moreover, this issue not only impacts national food security but also squanders social resources.
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