Amendments to beer tax won’t include a method that favours pricier brands

The Vietnamese government has decided not to implement a mixed tax regime on beer and alcohol products, according to the governments recently issued Resolution No 25/NQ-CP. The resolution specifies that no new provisions for a mixed tax calculation on beer and alcohol will be introduced at this time.

The new ruling comes after the Ministry of Finance’s submission of Report No 25/TTr-BTC on 6 February 2024, which recommended the introduction of a new mixed method to calculate the tax due under the proposed amendments to the Law on Special Consumption Tax (SCT) which regulates taxes on beer and alcohol.

According to the ministry, taxes on alcohol and beer in Vietnam are still low. Although the SCT on alcohol and beer products has increased from 2016 to 2018, Vietnam is still the highest beer consumer in Southeast Asia and the third in Asia after Japan and China.

Using the mixed method proposed by the ministry would have raised the special consumption tax on premium products from 65% to 75%, and on popular beer from 65% to 85%, disproportionately affecting low-income consumers. Instead, the absolute method will be used. This is simple to apply, and commonly used in many countries. It does not address effectively price changes during periods of inflation or deflation, however.

The resolution also details the legislative process for the amendment, with plans to introduce the finalised amendments to the National Assembly Standing Committee during the 7th session in May 2024. Subsequent discussions and approvals are scheduled for the 8th session in October and the 9th session in May 2025, respectively.