Vietnam to Lower Fertilizer VAT

Vietnam to Lower Fertilizer VAT

The Ministry of Industry has agreed to the proposal by the Ministry of Finance to remove value-added tax (VAT) imposed on locally produced and imported fertilizer.

The ministry has also asked relevant agencies to control distribution and prevent speculation, adding that coal price policies for fertilizer manufacturers are under new consideration, following the Vietnam Coal Corporation (Vinacoal) plans for coal price hikes sold to fertilizer plants.

The world price of urea fertilizer is soaring quickly due to large demand from China and the increasing price of crude oil, at $227-228 a ton, Ukrainian Port FOB basis, up by $17 a ton against early this month. The prices of imported urea products to Vietnam from China on March 22 also soared by $15-18 a ton to around $269 a ton, CIF basis.

Domestic prices of urea were around VND4,300-4,3500 a  kilo, up by VND50-100 a kilo on the same day. ($1=VND15,778)

The ministry forecast that this year Vietnam needs around 6.5 million tons of fertilizer, including 2.4 million tons of urea, 2.4 million tons of NPK and 1.6 million tons of phosphate. Vietnam is to import only around 2.2 million tons of fertilizer this year, down by one million tons, as local producers can meet the domestic demands for phosphate and NPK. The country now has around 400,000 tons of fertilizer in stockpiles.