The Government of Vietnam's Ministry of Finance (MoF) plans to implement a 10% consumption tax on drinks with sugar content above 5g/100ml, including caffeinated drinks, herbal drinks, and sports drinks. The new Special Consumption Tax (SCT) will not apply to milk and dairy products, natural mineral water, vegetable-fruit drinks nectar, and cocoa-based products. The SCT aims to reduce obesity, diabetes, and other non-communicable diseases by decreasing the consumption of sugary beverages. These efforts align with the Communist Party of Vietnam and the state’s guidelines on health priorities as well as recommendations from the World Health Organization and UNICEF. The MoF projects that the new SCT will contribute an additional VND2.4 trillion (94.3 million USD) in taxes and a 20% decline in consumption of sugary drinks. As consumers shift away from sugary products and companies comply with sugar rate below the tax threshold, tax revenue from the SCT is expected to decrease.
Many beverage companies express concerns about the new SCT, calling it a discriminatory tax policy that will reverberate throughout their supply chains, including sugarcane sourcing, retail, and packaging. The MoF asserts that the SCT aligns with global trends as over 100 countries have similar taxes. The latest draft legislation has been sent to the Ministry of Justice for appraisal with 74 unanimous opinions in favor and 26 other opinions.
