Vietnam Fertilizer Association gives opinions on fertilizer export tax

Vietnam Fertilizer Association received Official Dispatch No. 12161/BTC-CST dated August 8, 2025 from the Ministry of Finance requesting the Association to provide information on the fertilizer market.

DAP fertilizer products of Dinh Vu (Hai Phong) are being prepared for export to countries and territories around the world . Photo: VNA

Dr. Phung Ha, Chairman of the Vietnam Fertilizer Association, said that the Vietnam Fertilizer Association has received Official Dispatch No. 12161/BTC-CST dated August 8, 2025 from the Ministry of Finance requesting the Association to provide information on the fertilizer market in general and on the three fertilizer products: urea, superphosphate and SOP; at the same time, have specific opinions on the current fertilizer export tax rate so that the Ministry of Finance has a basis to handle the petition of fertilizer enterprises.

Responding to Official Dispatch No. 12161/BTC-CST dated August 8, 2025 of the Ministry of Finance, the Vietnam Fertilizer Association stated that, in general, the viewpoint of the Ministry of Finance when drafting the Decree amending and supplementing a number of articles of Decree No. 26/2023/ND-CP dated May 31, 2023 on Export Tariff Schedule and Preferential Import Tariff Schedule is to contribute to reducing domestic fertilizer prices; stabilize supply, while creating favorable conditions, ensuring strict management, and avoiding fraud during implementation.

The Ministry of Finance has submitted to the Government "applying lower export tax rates to domestically produced goods that are sufficient for demand or in surplus, to facilitate customs agencies and businesses in the implementation process, contributing to removing difficulties for production and business activities, encouraging businesses to invest in machinery to produce goods with high export value, ensuring fairness with similarly processed goods".

Regarding export tax rates for some types of fertilizers, Vietnam's current demand for urea ranges from 1.7 to 2 million tons/year while the total production capacity of 4 domestic urea factories (including Phu My Fertilizer, Ca Mau Fertilizer, Ha Bac Fertilizer, Ninh Binh Fertilizer) is about 2.6 million tons, so urea production output has exceeded demand for many years.

When there is excess capacity, manufacturing enterprises will have to export to balance domestic supply and demand. If they cannot export, they will be forced to reduce the factory's production output. Recently, urea exports from Vietnam have faced fierce competition from urea sources from some countries such as Indonesia, Malaysia, Brunei, etc., where manufacturers do not have to pay the 5% export tax like Vietnam.

Therefore, the current export tax rate of 5% reduces business opportunities, reduces production and business efficiency of domestic manufacturers, and reduces the competitiveness of urea manufacturers in Vietnam with other countries in the region and the world.

The application of a 5% export tax rate on urea is inconsistent with the Ministry of Finance's view of "applying a lower export tax rate to domestically produced products that are sufficient for demand or in surplus". Therefore, the Vietnam Fertilizer Association believes that the Ministry of Finance should consider submitting to the Government a 0% export tax rate on urea to help resolve the above shortcomings in tax policy to support manufacturers and at the same time support farmers.

Regarding the export tax rate of superphosphate fertilizer (SSP), on May 31, 2023, the Government issued Decree No. 26/2023/ND-CP on "Export tax schedule, Preferential import tax schedule", effective from July 15, 2023. Accordingly, the export tax rate of superphosphate fertilizer is applied at a fixed rate of 5% without taking into account the ratio of mineral resources plus energy costs lower than 51% of the production cost of this product as previously prescribed.

Currently, the total production capacity of superphosphate fertilizer of factories in Vietnam (including Lam Thao Superphosphate Factory under Lam Thao Superphosphate and Chemical Company, Apromaco Lao Cai Superphosphate Factory under Agricultural Materials Company, Long Thanh Superphosphate Factory under Southern Fertilizer Company, Duc Giang Superphosphate under Duc Giang Chemical Company) is about 1.5 million tons/year. Currently, the direct domestic consumption of superphosphate according to statistics of the fertilizer industry is less than 500 thousand tons/year. Thus, the production capacity is in excess of up to a million tons/year, and there needs to be an export outlet for SSP production enterprises to operate effectively.

Regarding domestically produced single phosphate fertilizers, in addition to superphosphate with a production capacity of about 1.5 million tons/year, the amount of fused phosphate of 3 factories (including Van Dien, Ninh Binh, Lao Cai) has a production capacity of about 600 thousand tons/year. The total output of two types of phosphate, superphosphate and fused phosphate can reach 2.1 million tons/year. However, the demand for single phosphate in our country has a clear downward trend (currently about 850 - 900 thousand tons/year) because people have gradually switched to using complex fertilizers DAP, MAP and NPK.

Overall balance, the production capacity compared to the domestic demand for superphosphate fertilizer is in excess, so the export of superphosphate needs to be encouraged to increase the value of national products, create jobs for workers, earn foreign currency for the country, and pay taxes to localities. Therefore, the Vietnam Fertilizer Association proposes to consider adjusting the export tax rate of superphosphate fertilizer to 0% as before.

Regarding the export tax rate of potassium sulfate fertilizer (K2SO4, trade name SOP), at present, the annual domestic consumption demand is about 900 thousand - 1 million tons of potassium fertilizer; mainly KCl (MOP) and a small amount of K2SO4 (SOP).

In Vietnam, SOP Phu My Company is the only enterprise in Vietnam and the second in Southeast Asia to produce potassium sulfate with a capacity of 25 - 30 thousand tons/year, a fairly large investment, while this company supplies about 60% to the domestic market, the rest is exported because farmers are not familiar with using SOP (usually using MOP), on the other hand, the raw materials for SOP production are potassium chloride and sulfuric acid, which are completely imported. In June 2025, Lam Thao Super Phosphate and Chemical Company started the project to build an SOP fertilizer production line with a capacity of 20 thousand tons/year.

To encourage domestic enterprises to invest in producing completely new types of fertilizer with superior features, suitable for many types of crops, while Vietnamese farmers are not yet used to using them, the Vietnam Fertilizer Association proposed applying a 0% export tax on SOP fertilizer products.

PV (synthesis)

Source: https://baohaiphong.vn/hiep-hoi-phan-bon-viet-nam-gop-y-kien-ve-thue-xuat-khau-phan-bon-520727.html