Fertilizer VAT to Be Levied from September 1 as Decided: How Big an Impact on Fertilizer Production and Sales?
The news of resuming the collection of fertilizer VAT, which has attracted widespread attention since last year, will have its answer revealed in the coming days!
It is said that all fertilizers will uniformly resume being subject to the tax, and the implementation start date is most likely to be set on September 1, 2015. In particular, there are rumors that the government document on the fertilizer VAT policy is highly likely to be published tomorrow.
It is understood that the VAT rate is 6%. For example, if a certain fertilizer has an ex-factory price of 1000 yuan/ton, then the VAT levied per ton is 1000*0.6=60 yuan, and the fertilizer cost invisibly increases by 60 yuan/ton. The higher the unit price, the heavier the tax. Faced with the sudden VAT levy, what do people in the fertilizer industry think?
Zhong Xuliang, Director of the International Department of Hubei Yihua Group: In the long run, it is unfavorable to enterprises!
The fertilizer VAT will undoubtedly raise the ex-factory price of each ton of urea by 40~50 yuan, and in the long run it is unfavorable to enterprises. However, levying fertilizer VAT also has a positive side for the urea industry, because in recent years urea production capacity has been seriously excessive and market competition has been fierce. Many urea manufacturers have competed to reduce costs in order to improve market competitiveness, causing prices to decline, so levying fertilizer VAT will play a positive role in supporting market prices.
Zhang Tiancai of PetroChina Company Limited: Resuming the levy can accelerate the adjustment of the industrial structure
Resuming the VAT levy can contribute to promoting enterprises to adapt to market demand and accelerate the adjustment of the industrial structure.
Xu Dingguo, Market Manager of Yunnan Yuntianhua International Chemical Co., Ltd.: The long-term impact is hard to judge
The introduction of the policy has little impact on compound fertilizer and phosphate fertilizer enterprises, because these large enterprises have a certain budget for tax increases every year. Because the policy details are not yet clear, the long-term impact of the VAT levy on fertilizer enterprises is temporarily difficult to judge.
Zhang Hanqing, Deputy General Manager of Jiangsu Huachang Chemical Co., Ltd.: If all enterprises are the same, then it is not a problem
In the short term, the sudden levy of VAT may cause fertilizer enterprises' social inventory to increase and enterprise costs to rise. But in the long run, since the policy has been issued, if all enterprises face the same problem, then it is no longer a problem, and moreover the VAT portion will also be issued with VAT invoices.
Li Shuyu, Manager of Heilongjiang Beifeng International Trade Co., Ltd.: Whether prices will rise accordingly is still uncertain
At the policy level, if VAT is levied, enterprises have to accept it even if they do not want to, and the current levy details have not yet been published. Overall, after VAT is levied, fertilizer product costs will increase, but under the current market environment, whether prices will rise accordingly is still uncertain. After costs increase, it is fine if the market can accept it; if the market cannot accept it, manufacturers and circulation links still have to bear it. The same applies to exports: it is fine if foreign buyers can accept it; if foreign buyers cannot accept it, in the final analysis it is still the manufacturers who bear it.
Guo Qiang, Deputy General Manager of the Potassium Fertilizer Department of Sinofert Holdings Limited: The costs of both domestic and imported potassium fertilizer will increase
Guo Qiang, Deputy General Manager of the Potassium Fertilizer Department of Sinofert Holdings Limited: After VAT is levied, the costs of both domestic potassium fertilizer and imported potassium fertilizer will increase. However, the impact on domestic potassium fertilizer will be smaller than on imported potassium fertilizer, because some links in the production process of domestic potassium fertilizer have already been subject to taxation, which will provide a certain offset against the increased VAT on the product.
Wu, an independent observer of the fertilizer industry and an expert surnamed Wu: Can this money be subsidized to farmers?
Resuming the levy of fertilizer VAT is a need of fertilizer market-oriented reform, and these preferential policies have to some extent intensified overcapacity. After resuming VAT, fertilizer product costs will be higher, but the state can subsidize this money to farmers and guide enterprises to do a good job in agrochemical services.