Finance ministry keeps proposing special consumption tax on sugary drinks

By Huong Dung
Tue, May 16, 2023 | 2:29 pm GMT+7

Vietnam’s Ministry of Finance has retained its proposal on imposing the special consumption tax (SCT) on sugary drinks, excluding milk and nutritional drinks, in the latest draft amended SCT Law.

The ministry also changed the term "sugared drinks" to "sugary beverages according to Vietnamese standard" after acquiring comments from businesses.

Under Vietnamese standard TCVN 12828:2019, sugary beverages include carbonated drinks, energy drinks, electrolyte drinks, energy and sports drinks, Alkaline ionized drinks and drinks containing tea, coffee and fruit juices.

Milk and dairy products are not classified as those under this standard. They are nutritional drinks and thus not subject to this tax, it noted.

In addition, liquid foods for nutritional purposes, natural mineral water and bottled water, vegetable and fruit juices and nectars, and cocoa products are also excluded from the taxable list.

The ministry stressed the need to impose the SCT on sugary beverages as many studies on the harmful effects of sugary beverages on human health have been recognized by domestic and international health organizations. Furthermore, the consumption of sugary beverages in Vietnam has been increasing.

Citing data from the World Health Organization (WHO) as showing that approximately 85 countries have implemented an SCT on sugary beverages, the ministry said some countries like Mexico and Thailand have reported positive results from the measure.

Soft drinks on sale in a supermarket. Photo courtesy of Brands Vietnam magazine.

Soft drinks on sale in a supermarket. Photo courtesy of Brands Vietnam magazine.

The ministry also said it will study SCT rates for sugary drinks based on sugar content after the draft law is approved by the National Assembly in order to encourage businesses to produce and import low-sugar drinks.

Earlier, several organizations like the Food and Foodstuff Association of Ho Chi Minh City, Vietnam Dairy Association, Vietnam Beer-Alcohol-Beverage Association (VBA), EuroCham and AmCham have suggested excluding sugary beverages from the taxable list, saying imposing the SCT on sugary drinks is not suitable.

EuroCham noted the term "sugared drinks" is a very broad and ambiguous concept, which can be understood as all sugary and drinkable products.

"The term not only overlaps with the group of "non-alcoholic beverages" in the draft, but also includes healthy products such as milk and nutritional products for kids, and nutritious goods for elderly people and pregnant women, among others," Gabor Fluit, chairman of EuroCham Vietnam, said during his presentation at Vietnam Business Forum (VBF) in March.

Fluit also argued that a June 2018 report by the Independent High-level Commission of the WHO on Non-Communicable Diseases (including obesity) only recommends a tax on alcohol and tobacco, while promoting a reasonable diet and exercise.

Gregory Testerman, chairman of AmCham Vietnam in HCMC, told the forum that international experience indicates that an SCT on sugary beverages has not proved effective in reducing obesity and diabetes, while it has caused significant social and economic impacts.

"Given the availability of many high-calorized foods in the market and the lack of physical activity among school-age children, sugar sweetened beverages are not the main cause of obesity," he said.

"Meanwhile, the tax would hurt the beverage industry, which has already suffered from the Covid-19 pandemic and is struggling to recover. In addition, other related sectors such as sugar and sugarcane, retail, packaging, and logistics could be hurt by the tax," Testerman added.

The beverage industry is a key part of Vietnam’s economy, with a revenue of VND200 trillion ($8.48 billion) and tax payment of VND60 trillion ($2.54 billion) yearly, said Nguyen Ngoc Bao, vice head of the National Assembly’s Economic Committee, at the VBA’s 2022 conference in February.

Comments (0)
  • Read More
KRX trading system to go live on Monday: A 'pivotal milestone' for Vietnam's market status upgrade

KRX trading system to go live on Monday: A 'pivotal milestone' for Vietnam's market status upgrade

The official launch of the new KRX trading system on May 5, after more than a decade of preparations, will mark a pivotal turning point for Vietnam’s stock market status upgrade, said Nguyen Duy Hung, chairman of leading broker Saigon Securities Inc. (SSI).

Finance - Sun, May 4, 2025 | 10:02 pm GMT+7

Vietnam distributor of Chinese EVs reports big profit growth in Q1

Vietnam distributor of Chinese EVs reports big profit growth in Q1

Vietnam’s TMT Motors Corporation (HoSE: TMT), the distributor of Chinese electric vehicle brand Wuling, reported VND33.76 billion ($1.3 million) in Q1 after-tax profit, about 125 times higher than Q1/2024.

Companies - Sun, May 4, 2025 | 7:38 pm GMT+7

Vietnamese EV maker VinFast signs loans worth $190 mln for Indonesia plant

Vietnamese EV maker VinFast signs loans worth $190 mln for Indonesia plant

VinFast, the electric vehicle arm of Vietnam's leading private conglomerate Vingroup, has secured a long-term syndicated loan agreement worth IDR1.85 trillion ($110 million) and an $80 million accordion facility from two Indonesian banks to finance the construction of its plant in Indonesia.

Companies - Sun, May 4, 2025 | 12:55 pm GMT+7

Vietnam's logistics major Transimex targets 20% profit growth in 2025

Vietnam's logistics major Transimex targets 20% profit growth in 2025

Transimex, a top logistics firm in Vietnam, targets net profit of over VND204 billion ($7.8 million) for 2025, up 20% year-on-year, on revenue of over VND3.36 trillion ($129.2 million), up 1%.

Companies - Sun, May 4, 2025 | 12:23 pm GMT+7

Vietnam's retail giant Petrolimex seeks foreign partnership in green energy technologies

Vietnam's retail giant Petrolimex seeks foreign partnership in green energy technologies

Vietnam's biggest gasoline retailer Petrolimex has started selling biofuels and is actively seeking opportunities to partner with international players to invest in green energy technologies. Chau Anh reports.

Companies - Sun, May 4, 2025 | 9:37 am GMT+7

Vietnam's major tire maker Danang Rubber to be supplier of EV maker VinFast

Vietnam's major tire maker Danang Rubber to be supplier of EV maker VinFast

Danang Rubber JSC (DRC), a subsidiary of Vietnam’s state-owned chemical giant Vinachem, will develop a dedicated line of electric vehicle (EV) tires while rolling out products to support its new partnership with the country's leading EV manufacturer VinFast.

Economy - Sun, May 4, 2025 | 8:00 am GMT+7

Vietnam’s VN-Index world’s second-worst performer in Apr amid US tariff turmoil

Vietnam’s VN-Index world’s second-worst performer in Apr amid US tariff turmoil

Vietnam’s benchmark VN-Index dropped by more than 80 points, or 6.2%, in April, ranking as the second-worst performing stock index globally, according to data compiled by IndexQ.

Finance - Sat, May 3, 2025 | 6:48 pm GMT+7

American International School Vietnam chairwoman arrested for disrupting public order

American International School Vietnam chairwoman arrested for disrupting public order

Ho Chi Minh City police's investigative agency on Thursday initiated legal proceedings against and detained chairwoman of American International School Vietnam (AISVN) Nguyen Thi Ut Em for "disturbing public order.”

Companies - Sat, May 3, 2025 | 5:07 pm GMT+7

Nike, Adidas ask President Trump for tariff exemption over business shutdown concerns

Nike, Adidas ask President Trump for tariff exemption over business shutdown concerns

Major footwear and apparel brands, including Nike and Adidas which outsource a large portion of their output from Vietnam, are asking U.S. President Donald Trump for a tariff exemption due to concerns over looming cost surges and business shutdown.

Economy - Sat, May 3, 2025 | 1:12 pm GMT+7

Vietnam's Novaland wins lawsuit against Korean giant Taekwang Vina over HCMC project

Vietnam's Novaland wins lawsuit against Korean giant Taekwang Vina over HCMC project

Vietnam's leading developer Novaland has won a legal dispute with South Korea’s Taekwang Vina regarding a major real estate project in Thu Duc city, Ho Chi Minh City.

Companies - Sat, May 3, 2025 | 11:20 am GMT+7

Vietnamese approves two-year sandbox trial of P2P lending

Vietnamese approves two-year sandbox trial of P2P lending

Vietnam will roll out a two-year sandbox trial of peer-to-peer (P2P) lending, credit scoring, and data sharing via open application programming interfaces, starting July 1, according to a newly-issued government decree.

Banking & Finance - Sat, May 3, 2025 | 8:17 am GMT+7

Hyundai Vietnam joint venture to spend $100 mln on shipbuilding capacity expansion

Hyundai Vietnam joint venture to spend $100 mln on shipbuilding capacity expansion

Hyundai Vietnam Shipbuilding Co., Ltd. (HVS), a joint venture between South Korea and Vietnam, is set to invest an extra $100 million in expanding its shipbuilding capacity in Vietnam.

Industries - Fri, May 2, 2025 | 8:03 pm GMT+7

Vietnam's economic hub HCMC moves closer to establishing int’l financial center

Vietnam's economic hub HCMC moves closer to establishing int’l financial center

After more than two decades of planning, the vision of establishing an international financial center in Ho Chi Minh City is finally gaining real momentum as the Politburo has officially endorsed the proposal, drawing significant attention from investors.

Southeast Asia - Fri, May 2, 2025 | 6:04 pm GMT+7

Vietnam cuts LNG import tariff to boost clean energy transition

Vietnam cuts LNG import tariff to boost clean energy transition

The Vietnamese Government has reduced the preferential import tariff on LNG from 5% to 2% under a decree issued on March 31, which marks a key step in accelerating the country’s shift from fossil fuels to cleaner energy.

Southeast Asia - Fri, May 2, 2025 | 3:26 pm GMT+7

Vietnam races against time to have EC’s 'yellow card' lifted before Sept 15

Vietnam races against time to have EC’s 'yellow card' lifted before Sept 15

Vietnam's Ministry of Agriculture and Environment has proposed Prime Minister Pham Minh Chinh issue an action plan to address the European Commission's (EC) “yellow card” warning and prepare for the fifth EC inspection.

Southeast Asia - Fri, May 2, 2025 | 3:21 pm GMT+7

Vietnam's property market sees mixed prospects in Q2: analysts

Vietnam's property market sees mixed prospects in Q2: analysts

Vietnam’s real estate market is expected to see positive developments in Q2, with developers launching new projects, but uncertainties from U.S. trade policies may influence market sentiment and consumer confidence, said analysts.

Real Estate - Fri, May 2, 2025 | 3:14 pm GMT+7