Sugary drinks subject to excise tax in Vietnam from 2027

Sugary drinks in Vietnam will be subject to an 8% excise tax starting in early 2027 and 10% from 2028, according to the adjusted Excise Tax Law, passed by the parliament on Saturday.

Under the new law, beverages containing 5 grams of sugar per 100 milliliters will, for the first time, fall under this duty.

Products excluded from this tax include milk and dairy products; natural mineral water, bottled purified water; pure vegetable and fruit juices and nectars; and products made from cocoa. Fruit juices, coconut water, and liquid nutritional products are also not subject to the tax.

In a previous explanatory report, Phan Van Mai, Chairman of the National Assembly’s (NA) Economic and Financial Committee, stated that adding sugary drinks to the list of taxable items is necessary and aligns with international practices. It aims to guide production and consumption behavior and broaden the tax base.

Some opinions proposed that soft drinks using artificial sweeteners should also be taxed. However, according to the National Assembly’s Standing Committee, there is not yet sufficient basis or impact assessment to include artificially sweetened beverages in the taxable category.

Therefore, the committee recommended further study and careful evaluation, considering the goal of supporting business recovery, before reporting to the legislature at an appropriate time.

Also in the beverage category, the excise tax on alcohol and beer will increase in phases. Specifically, alcohol with 20% ABV (alcohol by volume) or higher will be taxed at 65% starting January 1, 2026, with a 5 percentage point increase each year from 2027 to 2030 to reach 90% by 2031.

Alcohol below 20% ABV will be levied at 35% starting early 2026, increasing by 5 percentage point annually over the next four years to 60% in 2031.

Similarly, the tax on beer will start at 65% from January 1, 2026, gradually rising to 90% by early 2031.

Meanwhile, tobacco products will continue to be taxed at 75%. From 2027, tobacco items such as cigarettes, cigars, and pipe tobacco will be subject to a fixed absolute rate instead of a percentage.

Cigars will be taxed at VND20,000 ($0.77) each in 2027, increasing to VND100,000 ($3.8) by 2031.

Cigarettes will be taxed at VND2,000 ($0.077) per pack from January 1, 2027, increasing by VND1,000 per year by 2031.

Shredded tobacco, pipe tobacco, or other forms will face a tax of VND20,000 per 100 grams or 100 ml, climbing to VND100,000 by 2031.

The National Assembly also okayed imposing excise tax on air conditioners with a capacity of between 24,000 and 90,000 BTU, at 10% starting January 1, 2026.

Air conditioners of 24,000 BTU and below and those of above 90,000 BTU are not subject to this tax.

Fossil gasoline will continue to be taxed at 10%, while biofuels E5 and E10 will enjoy preferential tax rates of 8% and 7%, respectively.

Previously, several parliament members had proposed excluding gasoline from this tax category and instead increasing the environmental protection tax.

Chairman of the Economic and Financial Committee Mai noted that in the long term, it is necessary to review and revise the excise tax and environmental protection tax in a coordinated way.

However, in the short term, fossil fuel-based gasoline should remain taxable to discourage its use and promote biofuel consumption and fuel efficiency, he argued,

The revised Excise Tax Law, which includes 11 amended articles, will take effect from January 1, 2026.