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The Seminar

It is proposed to increase the excise tax rate on alcohol and beer

On June 21, 2023, the Ministry of Finance submitted a proposal to the Government to develop a draft Law on Excise Tax (amended). This is the result of the process of researching and concretizing the policies of the Party and State to orientate policy proposals, summarize and evaluate the practical implementation of the Law on Excise Tax in recent years with the advice of ministries and central and local agencies and enterprises.

The Ministry of Finance proposes to amend five main contents of the Law on Excise Tax, including: expanding the tax base and bringing into the taxable category goods and services such as sugary drinks, barley drinks, and alcohol-free drinks, new tobacco products, online video game service business; supplementing regulations on tax bases and tax calculation methods; regulations on tax schedule and excise tax rates (additional), including the adjustment of excise tax rates for tobacco, alcohol and beer; detaling description of taxable items in the excise tax schedule; stipulating the content of a number of laws, ensuring the consistency between the Law on Excise Tax and relevant specialized laws.

According to Dr. Nguyen Anh Tuan, Head of the seminar, the draft Law on Excise Tax (amended) proposed by the Ministry of Finance has supported and appreciated by many businesses and experts.

However, there are still many different opinions regarding a number of specific regulations such as tax calculation methods, tax rates for alcohol and beer products, and excise tax on barley drinks, sugary drinks and alcohol-free drinks.

Especially, for alcohol and beer products, many agree with the proposal of the Ministry of Finance on keeping the current percentage tax calculation method. However, there are also opinions that it is necessary to apply the flat and mixed tax calculation method as in many countries around the world.

Regarding the excise tax rate for alcohol and beer, the Ministry of Finance proposes to increase the excise tax rate to increase the selling price of alcohol and beer by at least 10% as recommended by the World Health Organization (WHO) and the roadmap to increase taxes is according to income growth and inflation.

Amendment of the Law on Excise Tax is necessary

According to Ms. Le Thuy Linh, Deputy Head of the Tax Policy Department (Ministry of Finance), the amendment of the Law on Excise Tax is necessary, but how to amend and the roadmap still needs to continue to be discussed. The Ministry of Finance continues to gather comments to submit to competent authorities for consideration and approval.

In fact, many countries are applying excise tax on alcohol and beer products to regulate production and consumption, and limit the abuse of alcoholic drinks to protect consumers' health.

The proposal to amend the Law on Excise Tax follows the guidelines of the Party and the State in Resolutions No. 07-NQ/TW dated November 18, 2016 of the Politburo on policies and solutions for restructuring of State budget, public debt management to ensure a safe and sustainable national finance; 10-year socio-economic development strategy (2021-2030); Resolution 43/2022/QH15 of the National Assembly on fiscal and monetary policies to support the socio-economic recovery and development program; Decision 02/QD-TTg of the Prime Minister approving the national nutrition strategy for the 2021-2030 period with a vision to 2045; Decision No. 155/QD-TTg of the Prime Minister approving the national plan for prevention and control of non-communicable diseases and mental health disorders for the 2022-2025 period.

In particular, Resolution No. 20-NQ/TW dated October 25, 2017 of the Party Central Committee on strengthening the protection, care and improvement of people's health in the new situation set out the task of “Increasing excise tax on goods harmful to health such as alcoholic and carbonated drinks”.

According to Dr. Can Van Luc, this is the right time to evaluate and review the Bill on Excise Tax Law, the principle of amendment is to harmonize the interests of the State, people and businesses. Vietnam is still ranked 2nd in Southeast Asia, 3rd in Asia in terms of average alcohol consumption per person according to the data of 2021, and currently the excise tax is applied from 35% to 65% on alcohol (depending kind of alcohol), and 65% on beer. The proposal to increase tax as the draft is appropriate, but the roadmap and time should be taken into account.