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Vietnam plans raising special consumption tax on alcoholic drinks to 100% by 2030

Vietnam plans raising special consumption tax on alcoholic drinks to 100% by 2030

Sunday, June 16, 2024, 08:40 GMT+7
Vietnam plans raising special consumption tax on alcoholic drinks to 100% by 2030
Drinkers clink their glasses of beer at a restaurant in Ho Chi Minh City. Photo: Quang Dinh / Tuoi Tre

HANOI -- Vietnam's Finance Ministry has proposed to hike a special consumption tax on alcoholic drinks to 100 percent by 2030, the ministry said, a move that may further hurt the country's beverage industry.

Under the draft proposal which is pending lawmakers' approval, the special consumption tax on beer and strong liquor will be raised to 70 percent - 80 percent by 2026 and gradually increase it to 90 percent - 100 percent in 2030, compared with the current 65 percent.

"Alcoholic drinks and beer prices will increase by 20 percent in 2026, compared with 2025," the finance ministry said in the proposal, adding that prices would continue to increase by two percent - three percent, depending on inflation.

"Levying high tax rates is necessary to help reduce consumption of alcoholic drinks," it added.

Vietnam's beer industry, dominated by four major brands - Dutch Heineken, Danish Carlsberg and local Sabeco and Habeco - has already been hit by the country's strict drink and driving law, under which the alcohol content limit for drivers is zero since 2019.

Heineken Vietnam Brewery, the country's beer market leader with a 37.6-percent share, recorded a 24-percent decline in total consumption last year, according to a May report from FPT Securities.

Sabeco accounting for 34.4 percent of the market, also posted a 12.6-percent fall in consumption. On the contrary, Carlsberg's domestic consumption rose by eight percent, it added.

Last year, the beer industry's revenue decreased 11 percent and profits decreased by 23 percent, according to estimations of the Beer - Alcohol - Beverage Association.

Shares in Sabeco fell by 3.66 percent on Friday morning after the ministry's proposal.

A Sabeco spokesperson declined to comment but said it would contribute the company's opinion to the Beer - Alcohol - Beverage Association as a member of the Association.

Carlsberg and Heneiken did not immediately respond to Reuters' requests for comment.

The finance ministry also proposed a hike in special consumption tax on soft drinks and cigarettes.



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