On June 14th, the Vietnamese parliament approved a proposal to increase the special consumption tax on alcoholic beverages from the current 65% to 90% by 2031, which will increase the challenges faced by the industry, although the maximum tax rate will not be as high as initially proposed.
According to this legislation, the tax rate on lager easy open end beer and spirits will rise to 70% by 2027, one year later than originally proposed, and will reach 90% by 2031.
Vietnam currently imposes a 65% tax on these products, and last year's initial proposal was to raise the tax rate to 100%.
The Vietnamese Ministry of Finance stated that the purpose of raising tax rates is to curb alcohol consumption. According to a report by consulting firm KPMG in 2024, Vietnam is the second largest beer market in Southeast Asia.
The Vietnamese beer industry is dominated by Dutch beer manufacturer Heineken, Danish beer manufacturer Carlsberg, and local beer manufacturers Saigon Beer and Hanoi Beer. The industry is already facing challenges from strict drunk driving laws introduced in 2019, which stipulate that drivers have zero alcohol content.
The chairman of the Vietnam Beer and Alcoholic Beverage Association stated that the industry's revenue has been declining over the past three years.
In response to weak demand and initial tax proposals, Heineken suspended its operations at a brewery in Vietnam last year.
On the same day, Vietnamese legislators also approved a new policy to impose an 8% tax on sugary drinks with a sugar content exceeding 5 grams/100 milliliters. The policy will take effect in 2027 and rise to 10% by 2028.
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