On June 14, Vietnam’s Ministry of Finance (MOF) submitted to the government a draft law proposing amendments to the excise tax on alcohol, sugary drinks, and tobacco. These amendments are part of multiple efforts to incentivize a healthier lifestyle among the country’s citizens.MOF’s proposed amendments to excise tax are not just a standalone initiative but a crucial part of Vietnam’s comprehensive efforts to implement the National Nutrition Strategy for 2021-2030 with a vision to 2045, and the National Plan for prevention and control of non-communicable diseases and mental disorders for 2022-2025.This alignment underscores the government’s strong commitment to its citizens’ health and well-being with a strategic approach.Upgrades needed after reassessing the current excise tax lawLaw No. 27/2008/QH12 on excise tax (hereinafter “2008 Excise Tax Law”) has been effective from April 1, 2009.The law underwent four amendments in 2014, 2016, and 2022 to address practical inadequacies and align with tax management regulations during those periods.An overall reassessment by the MOF shows that, despite certain achievements, the 2008 law has revealed several shortcomings and limitations:Narrower taxable objects than international norms;Lack of clarity on taxable and non-taxable object regulations and the product descriptions in the excise tariff, leading to implementation problems;Inefficient excise tax rates on products like tobacco, alcohol, and automobiles. The rates are too low to effectively limit the consumption of these products or regulate the earnings of high-income individuals in society;Inability to achieve some of the goals outlined in the 2011-2020 Tax Reform Strategy, particularly those related to research on a mixed tax method for goods harmful to human health and the environment;Absence of regulations on tax refunds for items whose production is encouraged and consumption is environmentally friendly.AlcoholSpirits with alcohol content of 20 degrees and above - 2008 Excise Tax Law (65 percent) - Proposed hikes in excise tax (80 percent; Gradually increasing to 100 percent)Spirits with alcohol content below 20 degrees - 2008 Excise Tax Law (35 percent) - Proposed hikes in excise tax (50 percent; Gradually increasing to 70 percent)Beers - 2008 Excise Tax Law (65 percent) - Proposed hikes in excise tax (80 percent; Gradually increasing to 100 percent)Note: The Ministry of Finance’s proposed raise in excise taxes between 2026-2030 are aligned with WHO recommendations to increase the retail price by 10 percent.Sweetened beveragesThe MOF suggests imposing a 10 percent excise tax on sugary drinks to halt excessive consumption. The ministry argues that consumers might choose other products with less or no added sugar rather than continue with those whose prices are up by 10 percent.Per the national standard TCVN 12828:2019, the proposed tax rate will be levied on water-based beverages, including flavored drinks (energy drinks, sports drinks, electrolytes drinks), caffeinated drinks, tea-based drinks, herbal drinks, drinks featuring fruit juice, and cereal drinks.The increased excise tax will not apply to milk and dairy products, water-based nutritional products, bottled water, vegetable-fruit drinks and nectar, and cocoa-based products.TobaccoThe draft law prescribes that cigarettes, shredded tobacco, cigars, snuff, and other forms of tobacco should be subject to excise tax. It recommends a temporary 75-percent excise tax rate for tobacco, a 10 percent increase from the current rate of 65 percent.Then, during the 2026-2030 period, tax rates for different types of tobacco will be increased:Tax on cigarettes will rise slowly by VND 5,000-10,000 (US$0.2-0.4) per pack;Tax on cigars by VND 50,000-100,000 (US$2-4) per item; and Tax on shredded tobacco and other forms by VND 50,000-100,000 (US$2-4) per 100 grams or milliliters.ConclusionThe draft excise tax law proposed by the MOF indicates an irreversible shift among Vietnam’s policymakers to reduce the consumption of unhealthy products. Considering the economic implications of the move, businesses should take this determination into account in their decision-making processes. One of the most plausible solutions is to invest in research and develop healthier products to meet the new market demands. (ICE HO CHI MINH CITY)

Fonte notizia: Vietnam Briefing