Vietnam’s Fertiliser Export Tax Policy Needs Urgent Reform to Boost Global Competitiveness

Vietnam's current fertiliser tax policy requires urgent adjustment to enhance the competitiveness of its domestic industry and boost exports, according to industry experts. The nation presently levies a 5% export tax on urea and superphosphate, a policy that significantly disadvantages Vietnamese firms in the global market. This is particularly critical as major fertiliser-exporting countries, including those in the Middle East, China, Indonesia, and Malaysia, have reduced their export taxes to zero since early 2025 to support their domestic businesses.

The primary cause of this issue stems from the inflexibility of Vietnam's import-export tax policy for fertilisers. Nguyen Van Phung, a senior tax expert, highlighted the highly seasonal nature of the domestic fertiliser market, where demand fluctuates sharply. During peak periods, demand can exceed supply, necessitating imports, while off-peak seasons often result in surplus domestic supply that requires export markets. However, the existing tax management has failed to adapt to these market fluctuations. Delays in adjusting the 5% export tax rate during times of abundant supply have caused businesses to miss crucial export opportunities, leading to accumulated inventories and lost revenue.

The consequences of this rigid policy are multi-faceted, impacting the economy and the fertiliser industry directly. Economically, the export tax elevates production costs for Vietnamese companies, severely weakening their position against international competitors who benefit from zero export taxes. This directly translates to missed export opportunities, hindering the industry's growth potential and potentially leading to a decline in state revenue if businesses struggle to compete. From an industry-specific perspective, the policy impedes the ability of Vietnamese fertiliser producers to clear inventories during periods of oversupply and stabilise their production, thus undermining the overall efficiency and competitiveness of the sector.

Experts advocate for a more responsive and flexible tax policy mechanism. They emphasize that taxation should not only serve as a source of state revenue but also as a vital tool for market regulation. This would involve strategically using export taxes to curb exports when domestic supply is tight to prioritize local consumption, and conversely, reducing or eliminating taxes when supply is abundant to stimulate exports, clear stockpiles, and stabilize the market. Such adjustments are deemed crucial for Vietnam to maintain a balance between domestic supply and demand while bolstering its presence in the international fertiliser market.