Does organic and nitrogen fertilizer subject to VAT in Vietnam?

What is organic and nitrogen fertilizer?

Based on the regulations specified in section 1.3.48, subsection 1.3, Section 1 of the National Technical Regulation QCVN 01-189:2019/BNNPTNT on Fertilizer Quality issued together with Circular 09/2019/TT-BNNPTNT, organic and nitrogen fertilizer (organic urea fertilizer, organic SA fertilizer, ...) is defined as a fertilizer containing elements of nutritional nitrogen and organic matter as the primary quality indicators.

Does organic and nitrogen fertilizer subject to VAT in Vietnam?(Image from the Internet)

Does organic and nitrogen fertilizer subject to VAT in Vietnam?

Pursuant to Clause 3a, Article 5 of the Law on Value-Added Tax 2008, supplemented by Clause 1, Article 3 of the Law on Amendments and Supplements to Several Articles of the Tax Laws 2014, regarding subjects not subject to VAT as follows:

Subjects Not Subject to Tax

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3a. Fertilizer; specialized machinery and equipment for agricultural production; offshore fishing vessels; animal feed, poultry feed, and feed for other livestock.

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Additionally, based on Clause 3a, Article 4 of Circular 219/2013/TT-BTC, supplemented by Clause 2, Article 1 of Circular 26/2015/TT-BTC, the subjects not subject to VAT are defined as follows:

Subjects Not Subject to Value-Added Tax

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3a. Fertilizer includes organic fertilizers and inorganic fertilizers such as phosphate fertilizers, nitrogen (urea) fertilizers, NPK fertilizers, mixed nitrogen fertilizers, phosphate fertilizers, potassium fertilizers; bio-fertilizers and other types of fertilizers;

Feed for livestock, poultry, aquatic, and other animals, including both processed and unprocessed products such as bran, dregs, oil cakes of various types, fish meal, bone meal, shrimp powder, and other feed types for livestock, poultry, aquatic and other animals, feed additives (such as premix, active ingredients, and carriers) as stipulated in Clause 1, Article 3 of Decree No. 08/2010/ND-CP dated February 5, 2010, of the Government of Vietnam on feed management and Clauses 2 and 3, Article 1 of Circular No. 50/2014/TT-BNNPTNT dated December 24, 2014, by the Ministry of Agriculture and Rural Development;

Offshore fishing vessels are those with main engines of 90 HP or more used for seafood exploitation or logistical services supporting seafood exploitation; specialized machinery and equipment serving the exploitation, preservation of products for fishing vessels with a total main engine capacity of 90 HP or more used for seafood exploitation or logistical services supporting seafood exploitation;

Specialized machinery and equipment for agricultural production include plows; harrows; rotary tillers; seeding machines; root levelers; field leveling equipment; sowing machines; planting machines for sugarcane; casting systems for seedbed production; tillers, trenchers, spreaders, broadcast fertilizers; spraying equipment for plant protection agents; harvesters for rice, corn, sugarcane, coffee, cotton; root, fruit, tuber harvesters; tea pruners, tea pickers; threshers; corn husking and threshing machines; corn threshers; soybean threshers; groundnut shellers; coffee hullers; equipment for preliminarily processing wet coffee, paddy; agricultural dryers (rice, corn, coffee, pepper, cashew...), aquatic dryers; machines for collecting and loading sugarcane, rice, straw in the field; incubators and hatchers for poultry eggs; grass harvesters, straw and grass balers; milkers and other specialized machinery.

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Thus, organic and nitrogen fertilizer is not subject to VAT.

When is the time of determining VAT for goods sales?

Based on the regulations specified in Article 8 of Circular 219/2013/TT-BTC regarding the point of determining VAT is as follows:

Point of Determining Value-Added Tax

1. For goods sales, it is the time of transfer of ownership or use rights of goods to the buyer, regardless of whether payment has been received.

2. For service provision, it is the time of completion of service provision or issuance of service provision invoices, regardless of whether payment has been received.

For telecommunications services, it is upon completion of the reconciliation of service charge data according to economic contracts between telecommunications service businesses, but no later than 2 months from the date of service charge occurrence.

3. For electricity and clean water supply, it is the day reading the consumption meter to record on the billing invoice.

4. For real estate business activities, infrastructure construction, housing construction for sale, transfer or lease, it is the time of money collection according to project implementation progress or payment schedule recorded in the contract. The business entity collects the output VAT arising in the period based on the collected money.

5. For construction and installation, including shipbuilding, it is the time of acceptance and handover of the completed construction, project items, construction volume, installation completion, regardless of whether payment has been received.

6. For imported goods, it is the time of customs declaration registration.

Thus, the point of determining VAT for goods sales is the point of transfer of ownership or use rights of goods to the buyer, regardless of whether payment has been received.