VIETNAM CHAMBER OF COMMERCE AND INDUSTRY
Liên Đoàn Thương Mại Và Công Nghiệp Việt Nam
Wed, Mar 19, 2025, 08:05:00
Workshop titled "Consultation on Finalizing the Draft Law on Special Consumption Tax (SCT)
Speaking on behalf of businesses, Mr. Nguyen Hoang Giang, General Director of Saigon Beer Trading Company Limited representing Saigon Beer - Alcohol - Beverage Corporation (SABECO), noted that the draft law proposes two options for increasing SCT on alcohol and beer, both involving significant and continuous hikes.
The revised draft of the Special Consumption Tax Law was reviewed by the National Assembly during its 8th session in November 2024. Under option 1, the tax will increase by 5 percent in the first year and an additional 5 percent annually, reaching 90 percent by 2030. Under option 2, the tax will rise by 15 percent in the first year and 5 percent each following year, reaching 100 percent by 2030.
However, in recent years, particularly after the Covid-19 pandemic, the beverage industry, including alcohol and beer businesses, has faced considerable challenges. Given the industry's role in meeting domestic demand, supporting tourism and services, generating millions of direct and indirect jobs in the supply chain, and contributing over VND60 trillion to the State budget annually—of which SCT accounts for VND40 trillion—Mr. Nguyen Hoang Giang urged caution in tax policy to avoid further burdening businesses and hindering economic growth.
He proposed that for the beer and alcohol sector, tax increases should follow option 1 but be delayed until 2028 instead of 2026 as outlined in the draft. As for the soft drinks sector, he suggested that sugary beverages should not yet be included under SCT.
Mr. Nguyen Chi Nhan, Secretary-General of the Vietnam Tobacco Association (VTA), supported raising SCT on tobacco to curb consumption for public health reasons but recommended a gradual approach to avoid market disruption. He suggested increasing taxes by VND2,000 per pack of cigarettes every two years.
From an expert perspective, Dr. Vo Tri Thanh, Director of the Institute for Brand and Competitive Strategy, argued that higher taxes on alcohol and tobacco do not necessarily change consumer behavior; instead, they may drive demand toward illegal alternatives. He pointed out that existing regulations have already reduced consumption, and other measures should be considered rather than simply raising taxes.
Dr. Can Van Luc, a member of the National Financial and Monetary Policy Advisory Council, echoed this view, stating that increasing SCT on beverages may not effectively regulate consumer behavior. He criticized the draft law for applying a uniform tax rate regardless of alcohol content and suggested that tax rates be based on alcohol concentration and sugar levels to ensure fairness.
He emphasized the need for a carefully planned tax increase schedule to avoid excessive burdens that could push consumers toward more harmful alternatives. He recommended postponing the new SCT framework until January 1, 2028, and adopting option 1 to allow businesses sufficient time to adjust.
