Hanoi (VNS/VNA) – The proposal to impose a 5% tax on exports of inorganic fertilizers could increase costs and reduce the competitiveness of
Vietnam Fertilizer Association has just sent a written response to the Ministry of Finance regarding the draft proposal to impose a 5% export tax on inorganic fertilizers.
Currently, urea and phosphate fertilizers are already subject to the 5% export tax. Therefore, the application of the tax does not affect the export of these products.
However, NPK fertilizers are currently subject to a 0% export tax. Therefore, a 5% export tax will have a significant impact on the NPK fertilizer industry.
Similar to NPK, DAP fertilizer is also imposed a 0% export tax, which will be affected if the new regulations are applied.
The fertilizer association said the application of the tax should only be applied temporarily during certain times when there was a shortage and the world price rose too much.
Inorganic fertilizers include many types, each with its own characteristics in terms of raw materials and markets. Therefore, it is necessary to assess and impose export taxes separately for each type, the association said.
“The imposition of the 5% export tax on NPK fertilizers will greatly affect growers as there is currently excess capacity in the country, which will reduce competitiveness as the price will drop from $30 to $60 per ton. said Phung Ha, Vice President and Secretary General of the Vietnam Fertilizer Association.
The Ministry of Finance said that the unification of a 5% export tax would increase budgetary revenue from fertilizers.
However, the Vietnam Fertilizer Association estimated that the above target is unlikely to be achieved because the export tax on urea fertilizers remains unchanged at 5%, while its volume export is relatively large.
Meanwhile, NPK’s export revenue may decline as NPK’s export volume may fall when competitiveness weakens.
Therefore, the association recommended the Ministry of Finance to consider, assess and flexibly propose a separate export tax rate for each type of fertilizer to ensure that it does not not adversely affect the competitiveness of domestic producers.
In the long term, the fertilizer association proposes that the Ministry of Finance submit to the National Assembly an amendment to the law on value added tax so that value added tax can be refunded to national fertilizers and that a level playing field is created between domestic manufactures. fertilizers and those imported.
General Directorate of Customs reported that the country’s fertilizer exports reached about 1.28 million tons last year, with a turnover of 559 million dollars, while the country’s imports of fertilizers of all kinds were 4.54 million tons, with sales of over $1.4 billion.
Vu Van Bang, general manager of DAP Vinachem, hopes that the government will maintain and not increase the export tax on fertilizers in groups 31.02, 31.03, 31.04, 31.05 of the export tariff.
Consumption of the company’s products in the domestic market was currently the highest, at only 49 percent of its planned capacity, forcing the company to export, Bang said.
If the tax is increased to limit fertilizer exports, the production cost of DAP fertilizer will certainly increase due to inventory, he added./.