HÀ NỘI — The Ministry of Finance has recently submitted a draft amending the Law on Value Added Tax (VAT) to the National Assembly (NA) for approval, aiming to resolve VAT-related difficulties for agricultural businesses, especially following recent natural disasters.

Under draft law, enterprises will not have to pay 5 per cent VAT on unprocessed agricultural products traded at the commercial stage, helping to reduce financial pressure and increase business efficiency.

Currently, according to the VAT Law, unprocessed agricultural products, including coffee, pepper, cashew nuts, shrimp, fish and raw timber, are imposed a 5 per cent VAT, and then refunded.

However, the agricultural business community said the ‘pay first, refund later’ mechanism reduces cash flow, affecting the competitiveness and sustainable development of the industry.

After receiving the petition from the agricultural business associations, the Ministry of Finance reviewed and found there is a situation that the collection and the refund of VAT for catfish, pepper and coffee export goods waste time, money and cause capital stagnation of enterprises while credit institutions do not disburse this tax value when providing working capital. It causes financial pressure and reduces business efficiency.

For example, the tax value, which temporarily collects and then refunds, is estimated at about VNĐ4 trillion for rice businesses; VNĐ2.16 trillion for pepper and spices businesses; and VNĐ10 trillion for coffee businesses yearly.

The ministry, on behalf of the Government and authorised by the Prime Minister, sent the amended draft law to the NA for consideration and approval at the NA’s ongoing meeting. — BIZHUB/VNS