The Vietnam Fertiliser Association has just sent a written response to the Ministry of Finance regarding the draft proposal of imposing a 5 percent export tax on inorganic fertilisers.

Currently, urea and phosphate fertilisers have already been subject to the 5 percent export tax. Therefore, applying the tax does not affect the export of these products.

However, NPK fertiliser is currently subject to 0 percent export tax. Therefore, a 5 percent export tax will significantly impact the NPK fertiliser industry.

Similar to NPK, the DAP fertiliser is also imposed a 0 percent export tax, which will be affected if the new regulation is applied.

The fertiliser association said that the application of the tax should only be applied temporarily in certain times when there was a short supply, and the world price rose too high.

Inorganic fertilisers include many types, each with its own characteristics in terms of raw materials and markets. Therefore, it is necessary to evaluate and impose export taxes separately for each type, said the association.

"The imposition of the 5 percent export tax on NPK fertilisers will greatly affect producers because currently there is excess capacity in the country, reducing competitiveness because the price will increase from 30 USD to 60 USD per tonne," said Phung Ha, Vice President and General Secretary of the Vietnam Fertiliser Association.

The Ministry of Finance said that the unification of an export tax of 5 percent would increase budget revenue from fertilisers.

However, the Vietnam Fertiliser Association believed that the above goal was unlikely to be achieved because the export tax on urea fertiliser remains unchanged at 5 percent, while its export volume is relatively large.

Meanwhile, NPK export revenue may decrease because NPK export volume was at significant risk of plummeting when the competitiveness weakened.

Therefore, the association recommended the Ministry of Finance consider, evaluate and propose a separate export tax rate for each type of fertiliser flexibly to ensure that it does not negatively affect the competitiveness of domestic producers.

In the long term, the fertiliser association proposes the Ministry of Finance submit to the National Assembly an amendment to the Law on Value Added Tax so that value-added tax could be refunded to domestic fertilisers and an equal playing ground would be created among domestic manufactured fertilisers and imported ones.

The General Department of Customs reported that the country's fertiliser exports reached about 1.28 million tonnes last year, with a turnover of 559 million USD, while the country's import of fertilisers of all kinds was 4.54 million tonnes, with a turnover of more than 1.4 billion USD.

Vu Van Bang, General Director of DAP Vinachem, hopes that the Government will maintain and not increase the export tax on fertilisers in groups 31.02, 31.03, 31.04, 31.05 in the Export Tariff.

The consumption of this company's products in the domestic market was currently the highest at only 49 percent of its designed capacity, which forces the company to export, said Bang.

If the tax is increased to limit fertiliser exports, the production cost of DAP fertiliser would certainly rise due to inventory, he added./.

Source: VNA