Vietnam considers 10% excise tax on sugary drinks
Vietnam is considering a 10% excise tax on sugary drinks per draft amendments to the excise tax law prepared by the Ministry of Finance.
The ministry has noted that the current legal framework, including excise tax law 2008 along with amendments and guiding documents, has yet to tax sugary drinks. It has proposed a 10% tax on drinks with sugar content of over five grams per 100 milliliters.
It said the proposed amendments will be part of efforts to implement the national nutritional strategy 2021-2030 and the national 2022-2025 strategy for preventing non-transmissible diseases.
Under national standard TCVN 12828:2019, the 10% excise tax will be levied on water-based beverages including flavored drinks (energy drinks, sport drinks, electrolytes drinks), caffeinated drinks, tea-based drinks, herbal drinks, drinks featuring fruit juice, and cereal drinks. It will not be levied on milk and dairy products, water-based nutritional products, bottled water, vegetable-fruit drinks and nectar, and cocoa-based products.
The ministry said it had considered two options in the drafting process - 10% and 20%. It estimated that under the 10% option, consumption can go down by 20% and tax revenues reach VND2.4 trillion ($94.3 million) a year.
The 20% option was not opted for because it was felt that it would negatively impact businesses at a time the economy is recovering.
According to the National Institute of Nutrition under the Ministry of Health, consumption of sugary drinks in Vietnam has been increasing significantly in recent years.
Per capita consumption rose from 47.65 liters in 2013 to 70.56 liters in 2020. In 2022, consumption of carbonated drinks rose 16.7% year-on-year and that of energy drinks, sports drinks and read-to-drink tea went up 25.5%, 35.6% and 9.8%, respectively.
In March 2023, EuroCham, AmCham, and Vietnam Beer-Alcohol-Beverage Association (VBA) said applying a excise tax on sugary drinks was not advisable. EuroCham noted that "sugared drink" was a very broad and ambiguous concept.
Gregory Testerman, then chairman of AmCham Vietnam in Ho Chi Minh City, observed that international experience has shown that an excise tax on sugary beverages has not proved effective in reducing obesity and diabetes, while causing significant social and economic impacts.
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