VIETNAM – Vietnam has drafted new regulations proposing a phased increase in excise taxes on alcoholic beverages to 100% by 2030 and a 10% tax on sugar-sweetened beverages.
These measures aim to curb overconsumption and boost national income.
Known for its very affordable prices for alcoholic beverages, Vietnam’s local government believes that these low prices have led to high consumption among consumers.
The government now sees it necessary to increase these drinks’ taxes to ensure public health is not compromised.
“Higher taxes are necessary to reduce alcohol consumption in Vietnam,” announced the Ministry of Finance in a formal statement outlining the new draft regulations.
Currently, the tax law imposes a 65 percent excise duty on spirits of 20% ABV and above, 35 percent for drinks below 20% ABV, and 65 percent for beer. Under the new regulations, these would increase to 80 percent, 50 percent, and 80 percent, respectively, by 2026.
The plan is to gradually increase these taxes to 100 percent, 70 percent, and ultimately 100 percent by 2030, in line with the World Health Organization (WHO) recommendations to increase retail prices for alcohol by 10 percent.
These price increases do not take into account any inflationary pressures, which could lead to a further increase of 2% or more.
The changes will be made in the context of Vietnam’s special consumption tax, likely affecting not only alcohol but also sugar-sweetened beverages and tobacco products.
“We also propose to introduce a 10% excise duty on sugar-sweetened beverages to discourage excessive sugar consumption by consumers,” the Ministry added.
“The additional tax and 10% higher prices would encourage consumers to choose products with less or no added sugar, thereby improving public health.”
This tax would affect most beverages in the country, including juices, bottled teas, energy drinks, electrolyte drinks, soft drinks, sports drinks, herbal drinks, grain drinks, and more that contain added sugar.
Milk and dairy products, nutritional supplements, bottled water, pure vegetable and fruit drinks, and cocoa-based products are exceptions to this tax.
“Vietnam’s annual consumption of sugary drinks has grown 1.5 times in seven years to 70.5 liters in 2020, and our percentage of overweight and obese children and teenagers has also doubled to 19 percent, well above the ASEAN region average of 17.3 percent,” said the Ministry.
According to Statista, revenue in the Beverages Market is projected to reach US$872.50 million in 2024.
Revenue is expected to show an annual growth rate (CAGR 2024-2029) of 10.26%, resulting in a projected market volume of US$1,422.00 million by 2029.
Liked this article? Subscribe to Food Business Africa News, our regular email newsletters with the latest news insights from Africa and the World’s food and agro industry. HERE
