Vietnam: Proposal to increase alcohol tax by at least 10%

This proposal was included in the draft. Law on Special Consumption Tax (amended), Expected to consult the National Assembly in October and pass in May 2025.

Under current regulations, Vietnam applies a tax rate proportional to the selling price of manufacturers and importers. Accordingly, the special consumption tax rate for alcohol with an alcohol content of 20 degrees or more and beer is 65%, while alcohol with an alcohol content of less than 20 degrees is 35%. However, according to the World Health Organization (WHO), alcohol tax in Vietnam only accounts for about 30% of the retail price, while in other countries it accounts for 40-85% of the retail price. Therefore, WHO recommends increasing retail prices by at least 10%.

Therefore, the Ministry of Finance has proposed two options for increasing taxes on alcohol. Option 1: Selling price in 2026 will increase by 2-3% compared to 2025, in the following years selling price will increase by 2-3%/year compared to the previous year to ensure product price increases corresponding to inflation and income increase.

Option 2: Selling price in 2026 increases by 10% compared to 2025, in the following years selling price increases by 2-3%/year compared to the previous year to ensure product price increases corresponding to inflation and income increase.

Comparing the impacts of the two options, the Ministry of Finance is inclined towards option 2 because it believes that this option has a stronger effect of increasing prices and reducing the affordability of alcohol and beer products. This option also has a higher impact in reducing the rate of alcohol and beer consumption and reducing the related harms caused by their abuse.

At the workshop The need to increase excise tax on alcohol, tobacco, sugary drinks, organized by the Ministry of Health on the morning of September 20, Ms. Hoang Thi Thu Huong, Department of Legal Affairs, Ministry of Health, said that she also favors option 2, and acknowledged that taxes and prices of alcohol and beer in Vietnam are currently low. Recently, Vietnam has increased the special consumption tax rate on alcohol and beer according to the roadmap for 2016-2018, but purchasing power has still increased due to rapid income growth while prices have increased very slowly. Therefore, the use of alcohol and beer remains high.

Specifically, beer output increased from 3.526 billion liters (2015) to 4.593 billion liters (2019); wine also increased from 310.3 million liters to 331.7 million liters during the same period. In 2022, beer output will be 4.4 billion liters and wine output will be 315 million liters/year, according to the General Statistics Office.

A 2021 WHO survey found that more than 64% of men and nearly 10% of women consumed alcohol in the past 30 days. Harmful drinking is common, especially among men, at more than 28%.

Alcohol is the cause of more than 230 diseases and injuries, such as alcohol use disorder, liver damage, cirrhosis, worsening of hepatitis C virus damage, acute and chronic pancreatitis, cardiovascular disease, cancer, injuries due to violence and traffic accidents… Therefore, experts believe that it is necessary to continue to increase taxes to increase retail prices of alcohol and beer, limiting access to this product.

At the workshop, experts also proposed increasing taxes on cigarettes and sugary drinks. Ms. Dinh Thi Thu Thuy, Deputy Director of the Legal Department, Ministry of Health, said that the draft Law on Special Consumption Tax (amended) included these items, which is a welcome sign.

“This law is a huge conflict of interest between businesses, state management agencies protecting health care, and increasing revenue for the budget,” said Ms. Thuy, adding that the Ministry of Health continuously receives petitions about tax reduction and tax increase roadmap. However, the Ministry also receives proposals from WHO and many organizations about policies to further increase tax rates to ensure closeness to countries in the region and protect people’s health.