Main changes: From July 1, 2025, fertilizers will be subject to output value-added tax (VAT) at a rate of 5%, according to the draft revised VAT Law.

Impact on domestic fertilizer production enterprises:

• • Profit support: Enterprises can deduct input VAT (usually accounting for 50-80% of production costs), helping to reduce production costs and increase competitiveness with imported fertilizers.
  • Reducing selling prices: Although imposing output VAT can increase selling prices, improved profits will create conditions for domestic businesses to reduce prices and increase competitiveness.

Beneficiaries:

• • Enterprises producing simple fertilizers (urea, phosphate) and DAP such as DCM, DPM, DDV, LAS will receive input VAT refunds, helping to improve profits.
  • Enterprises producing NPK fertilizer benefit little because the main raw material is single fertilizer and is not much affected by VAT.

Impact on consumers and the market:

• • Consumers can benefit from more competitive domestic fertilizer prices.
  • Fertilizer importing businesses are not much affected because the input and output tax rates are both 5%.

Expectations: The new tax law can support profit growth of domestic fertilizer production enterprises by 2025, in the context of flat fertilizer prices and saturated capacity.