Vietnam: Proposal to impose a 40% special consumption tax on soft drinks

According to the draft Law on Special Consumption Tax (amended), expected to be consulted by the National Assembly in October and approved in May 2025, the Ministry of Finance proposes to impose special consumption tax on soft drinks with high content of sugar above 5 grams in 100ml is 10%.

According to the Ministry of Finance, this is a new item proposed to be added to the taxable area, so they proposed a 10% rate to encourage businesses to produce and import low-sugar products, raise awareness, and adjust behavior. of consumers.

“Expanding the scope to fully cover needs to be carefully researched based on evidence and convincing arguments suitable to Vietnam’s conditions,” the Ministry of Finance stated.

However, the Ministry of Health proposed to impose a 40% tax on the above items. “The 10% level only increases retail prices by 5%, not enough to change consumer behavior,” said Ms. Hoang Thi Thu Huong, Legal Department, Ministry of Health, giving the example of soft drink products. thirst is currently priced at 10,000 VND/1 bottle, the selling price is 10,500 VND/1 bottle after applying 10% tax.

Similarly, the World Health Organization (WHO) recommends that to reduce the consumption of sugary drinks, the retail price of sugary drinks needs to increase by 20% or more, equivalent to the special consumption tax rate on Factory and import prices must be 40%. This solution will contribute to improving community health, increasing budget revenue, helping to reduce health care costs for related diseases, and reducing long-term labor productivity loss.

In Vietnam, research conducted by HealthBridge Canada and WHO shows that if the above tax rate is applied, budget revenue will be about 17.4 trillion VND. Research conducted by the University of Public Health also estimates that a 40% tax rate will lead to a reduction in consumption and a 2% reduction in the overweight rate and 1.5% obesity rate, which can be prevented. more than 81,000 cases of type 2 diabetes and saved 24.55 million USD in medical costs.

Mr. Nguyen Tuan Lam, WHO expert in Vietnam, also said that the United Nations health agency recommended that the Ministry of Finance consider setting a roadmap to increase the special consumption tax rate to 40% by 2030 to reduce the possibility of affordability for these products.

The number of countries imposing special consumption taxes on sugary drinks has increased rapidly over the past 15 years, from 35 countries (2009) to 104 countries (2023), including 6 countries in the Southeast. Asia, including: Thailand, Philippines, Cambodia, Malaysia, Laos, Brunei.

In Thailand, after 2 years of implementing a special consumption tax policy on sugary drinks, the average daily consumption of this item has decreased by nearly 3%; Carbonated water consumption decreased by nearly 18%. In Mexico, consumption of sugary drinks decreased by 6% in the first year (2014) and by 10% in the following year.

In Vietnam, the consumption of sugary drinks has increased sharply in recent years. Total consumption of sugary drinks has increased rapidly from 1.59 billion liters in 2009 to 6.67 billion liters in 2023 (an increase of 420%). Consuming a lot of soft drinks – the most popular sugary drinks, has been identified as one of the causes of overweight, obesity and metabolic disorders in both adults and children. This increases the incidence of type 2 diabetes, hypertension as well as complications of cardiovascular disease, stroke and death.

The Ministry of Health is also proposing to increase alcohol tax by at least 10% and increase tobacco tax to limit smokers and protect public health.