The Ministry of Finance suggests applying a reduced VAT rate of 12% on fertilizers, down from 20% at present, and the same rate of 12% on primary agricultural production, up from 8%, IPN reports.

Under the draft 2021 fiscal and customs policies document that was proposed for public debates, as the reduced VAT rate of 8% is applied both on internal supplies and on the import of agricultural products, only the objective of accessibility of agricultural products is achieved, not yet the objective of enhancing the competitiveness of national production.

The Ministry of Finance said the current VAT regime applying to primary agricultural production should be revised so as to ensure the development and increased competiveness of national producers.

“After analyzing the policy options, including the international practice, it was proposed applying a reduced VAT rate of 12% on fertilizers and the same rate on primary agricultural production. The measures will help transform the VAT sums accumulated in accounts in 2010 from disadvantages into short- and medium-term advantages for the national agricultural producers,” says the document.

A positive effect of the measure is the rise in the size of VAT refunded on the export of agricultural production from 8% to 12% of exports.

The net budgetary impact of the measure was estimated at 134 million lei.