Adding goods item subjected to special consumption tax

Adding beverages according to Vietnamese Standards (TCVN) with sugar content above 5g/100ml to be subject to special consumption tax. Photo: H.Anh

Amending taxable objects to expand the tax base

According to the Ministry of Finance, besides the important results achieved after 16 years of implementing the Special Consumption Tax (SCT) Law, through the process of summarizing and evaluating the implementation of the SCT Law in the past period, along with the current and future socio-economic development context, the SCT tax policy has exposed a number of shortcomings and limitations.

One of the biggest limitations is that the scope of SCT subjects is still narrow compared to international practice. The current SCT Law has 10 groups of goods and 6 groups of services subject to SCT.

In the draft Law, in order to expand the tax base, in line with related specialized laws and legalize the stable regulations being implemented in sub-law documents (decrees, circulars), for goods subject to SCT, the Ministry of Finance proposes to amend the regulations clearly specify the goods "cigarettes, cigars and other products from tobacco plants used for smoking, inhaling, chewing, sniffing, holding" into "tobacco as prescribed by the Law on Prevention and Control of Tobacco Harm, including cigarettes; cigars; tobacco leaves; tobacco or other forms; other products from tobacco plants used for smoking, inhaling, chewing, sniffing, holding" to be in line with the Law on Prevention and Control of Tobacco Harm. Accordingly, the Draft also amends the regulations to clearly specify the goods "wine" into "wine as prescribed by the Law on Prevention and Control of Alcohol Harm, including other food alcoholic beverages fermented from fruits, cereals; beverages made from food alcohol" to be in line with the Law on Prevention and Control of Alcohol Harm.

Adding sugary beverages to taxable objects

In the draft Law, the drafting body also amends and supplements the regulations on the goods "automobiles under 24 seats, including automobiles that carry both people and goods, of the type with two or more rows of seats and a fixed partition between the passenger compartment and the cargo compartment" to "vehicles with engines under 24 seats, including: passenger cars; four-wheeled passenger cars with 12 engines; pick-up trucks; double-cabin pick-up trucks; vehicles that carry both people and goods with two or more rows of seats, with a fixed partition between the passenger compartment and the cargo compartment" to be in line with Vietnamese automobile standards and regulations on four-wheeled passenger cars with engines of the Ministry of Transport.

In addition, the regulation "aircraft" is also replaced with the regulation "aircraft, helicopters, gliders" and supplemented with clear instructions on the items of aircraft, helicopters, gliders and yachts subject to SCT, which are used for civilian purposes to clarify the scope of SCT subjects, which are motorized aircraft and are high-end goods serving the personal consumption purposes of high-income people in society.

It is noteworthy that the draft Law adds soft drinks according to Vietnamese Standards (TCVN) with a sugar content of over 5g/100ml to the scope of SCT subjects to implement the guidelines and directions of the Party and State on protecting people's health, recommendations of the World Health Organization (WHO), the United Nations Children's Fund (UNICEF) and the Ministry of Health on the reality of diseases related to sugary soft drinks in Vietnam, timely prevent and minimize the alarming situation of overweight and obesity in children and adolescents in order to prevent and minimize the risk of non-communicable diseases and the burden of health care, raise awareness and limit consumption of sugary soft drinks, bring benefits to community health, especially for young people, the future generation of the nation, in line with international practice.

In this regard, the Ministry of Finance added that many countries have gradually added sugary soft drinks to the scope of SCT subjects. In 2012, there were only about 15 countries, but now there are about 85 countries in the world that apply SCT to sugary soft drinks and have brought about both awareness and action effects from consumers as well as manufacturers in reducing the amount of sugar in soft drinks as well as reducing consumption of sugary soft drinks. In ASEAN, 6 out of 10 countries have levied SCT on sugary soft drinks. Many countries tax sugary soft drinks based on the sugar content criterion of over 5g of sugar/100ml.