VIETNAM CHAMBER OF COMMERCE AND INDUSTRY
Liên Đoàn Thương Mại Và Công Nghiệp Việt Nam
Thu, Nov 13, 2025, 09:51:00
In recent times, the Vietnamese business community, especially enterprises operating in the agriculture, forestry, and fishery sectors—which play a key role in the national economy—have actively implemented Law on Value Added Tax (VAT) No. 48/2024/QH15 and its guiding documents. However, after more than three months of enforcement, VCCI has received extensive feedback from key industry associations, such as the Vietnam Association of Seafood Exporters and Producers (VASEP), Coffee-Cacao, Pepper and Spice, Livestock, Food-Foodstuff, Wood and Forest Products, etc., regarding major obstacles arising in practice that are seriously affecting cash flow, competitiveness, and the ability to maintain the supply chain and export market share of Vietnamese agricultural products.
To promptly grasp the policy obstacles encountered by enterprises, VCCI proactively organized a dialogue conference with key agricultural sector enterprises on October 9, 2025, in Hanoi. Based on the consolidated opinions from over 300 delegates at the in-person and online workshop organized by VCCI, with the participation of representatives from Ministries, sectors, experts, and enterprises nationwide, VCCI respectfully reports to the Prime Minister on the major existing difficulties as follows:
According to Point d, Clause 2, Article 9 of the VAT Law No. 48/2024/QH15, products that are "not yet processed into other products or only undergo ordinary preliminary processing" are subject to a 5% tax rate. However, in reality, agricultural products such as coffee, pepper, cashew, shrimp, fish, raw wood materials, etc., mainly undergo only preliminary processing stages such as shelling, drying, husking, or curing, which do not generate genuine value added. Applying a 5% VAT rate to the above group of goods is inconsistent with the essence of Value Added Tax, which is meant to be levied only on the value added during the production and business process.
In particular, the "collect first – refund later" mechanism forces enterprises to advance a huge amount of capital for tax obligations, while the profit margins in these sectors are very low (only 1–3%). For example, the coffee industry has to temporarily pay nearly 10 trillion VND in VAT annually, while the pepper industry has to advance up to 85 million USD, causing severe financial pressure on enterprises. This increases the cost of exports, causing Vietnamese goods to lose competitive advantage compared to countries like Brazil, Indonesia, and India, where raw agricultural products are exempt or subject to a 0% tax rate.
The VAT Law stipulates that animal feed is a non-taxable object. However, many local tax authorities still apply a 5% tax to animal feed raw materials such as corn, rice bran, beer dregs, fish meal, etc., when sold in the commercial stage. This interpretation is not synchronized with the Livestock Law and Circular No. 21/2019/TT-BNNPTNT, increasing the production cost of domestic animal feed, creating a competitive disadvantage compared to imported goods (which are VAT-exempt), and simultaneously reducing the consumption of domestic agricultural raw materials.
Many enterprises report that tax refunds are delayed for months or even rejected for reasons beyond their control. Notably, the new regulation in the 2024 VAT Law requires the seller to have "declared and paid the tax" for the enterprise (the buyer) to receive a tax refund. This regulation is unreasonable as it shifts the responsibility of the seller to the buyer, who has already fully fulfilled their tax obligations. The responsibility for verification and inspection belongs to the tax authority, and the "good-faith" enterprise cannot be forced to bear the risk of the seller's tax obligation violation.
Furthermore, the regulation limiting the refund amount to no more than 10% of export revenue in the period is inconsistent with the seasonal nature of the agricultural sector, where enterprises often purchase in bulk at the beginning of the season but export gradually over many months. This results in most input tax not being fully refunded, affecting liquidity and the ability to purchase raw materials from farmers.
Currently, most input materials in the agricultural sector come from small-scale farming households—who do not have the function of issuing VAT invoices. This makes it difficult for enterprises to prove a legitimate origin for tax deduction or refund purposes. In addition, the requirement for traceability down to individual households is unfeasible, especially in sectors with fragmented supply chains such as wood, aquatic products, and forest products.
Besides, export enterprises using e-commerce platforms like Amazon and Alibaba currently face difficulties in obtaining tax refunds due to the lack of traditional contracts and documentation. The lack of provisions allowing the use of digital data, e-invoices, or alternative documents prevents many enterprises from obtaining tax refunds even though the goods have been legally exported.
Many exporting enterprises are held jointly liable due to suppliers' invoice fraud or failure to fulfill tax obligations. In some cases, enterprises that have made full payments and possess legal documentation are still subject to tax clawbacks or refund denials. This situation seriously damages the international reputation of Vietnamese enterprises, especially as markets like the EU require supply chain transparency (EUDR).
In addition, the current administrative penalty level (5 to 8 million VND) is applied even for minor, technical errors, causing undue pressure on small enterprises and newly converted business households.
To promptly remove the difficulties and obstacles in the implementation process of VAT Law No. 48/2024/QH15, and simultaneously ensure that tax policy promotes production, boosts agricultural exports, and stabilizes the domestic supply chain, VCCI respectfully proposes the following recommendations to the Prime Minister:
Firstly, it is necessary to urgently review and amend regulations related to the scope of VAT liability for agricultural, forestry, and fishery products that are unprocessed or only undergo ordinary preliminary processing. Applying the 5% tax rate to this group of goods is currently creating an unreasonable financial burden for enterprises and does not reflect the true nature of VAT—which should only be levied on the value added in the production chain. VCCI proposes considering restoring (or temporarily restoring) the provision "not subject to tax declaration and calculation" for preliminarily processed agricultural products, as previously applied in Decree No. 209/2013/ND-CP. Concurrently, we recommend the Government assign the Ministry of Agriculture and Environment to take the lead, in coordination with relevant Ministries and sectors, in issuing a specific list of "ordinary preliminary processed products" for each commodity sector, ensuring consistency in interpretation and application among localities.
Secondly, synchronized solutions are needed to strongly reform VAT refund procedures, aiming to simplify the process, enhance transparency, and minimize risks for enterprises. VCCI requests the Government to direct the Ministry of Finance to establish an automated refund mechanism for valid dossiers with no signs of fraud, similar to models implemented in some countries like India. Furthermore, an interconnected electronic data system must be developed between tax authorities, customs, and enterprises to support fast and accurate verification and reconciliation. Digitizing the refund process will not only save time and costs for enterprises but also help management agencies increase supervision efficiency, reduce staffing pressure, and prevent tax fraud more effectively.
Thirdly, the regulation related to the conditions for tax refund needs to be adjusted to eliminate the requirement that enterprises are only eligible for a refund when the supplier has declared and paid the tax. This is an unreasonable condition, leading to enterprises being denied refunds due to a third party's error, despite having fully complied with payment obligations, document storage, and valid declaration. The responsibility for managing the seller's tax obligations must belong to the tax authority; the risk cannot be transferred to the buyer. This regulation is currently causing frustration in the business community and poses a potential risk of undermining confidence in the tax legal system.
Fourthly, specific legal guidance must be promptly issued to address obstacles in transactions between enterprises and farming households—the key production force that lacks a proper mechanism to formally participate in the modern supply chain. Specifically, VCCI proposes allowing enterprises to use purchase schedules without invoices (according to the template regulated in Circular No. 78/2021/TT-BTC) as an alternative document for tax deduction and refund purposes. Concurrently, clear guidance is needed on cases of VAT exemption for small farming households, ensuring no administrative barriers are created that hinder the domestic raw material purchasing process.
Fifthly, in the context of digital economy and e-commerce development, especially the trend of exporting goods via online platforms like Amazon and Alibaba, a suitable legal mechanism must be promptly developed to support enterprises in executing tax refund procedures. VCCI recommends the Government direct the Ministry of Finance to study and issue regulations allowing the use of electronic documents and digital transaction data as the basis for verification in export tax refunds. This solution is not only consistent with current practice but also helps Vietnam keep up with global trade trends, enhancing the competitiveness of exported goods.
Sixthly, the entire system of administrative violation penalties in the tax field must be reviewed to classify the severity of violations and apply reasonable, humane forms of handling, especially for small and micro-enterprises and newly converted business households. The current penalty level of 5 to 8 million VND for technical, administrative errors—such as late declaration or incorrect contract codes—is too high and creates undue pressure. VCCI proposes applying a lenient mechanism for first-time violations and exempting penalties for minor errors below a threshold of 50,000 VND to encourage voluntary compliance, instead of causing apprehension among taxpayers.
The Vietnam Chamber of Commerce and Industry respectfully requests the Prime Minister to consider, direct relevant ministries and sectors to study, incorporate, and promptly issue appropriate and timely adjustment solutions, contributing to the removal of difficulties for enterprises in the agricultural sector, and ensuring the goals of sustainable development and deep international integration of the Vietnamese economy.
Sincerely thank you./.
