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MoF considers excise taxes on soft drinks

Released at: 14:50, 17/08/2017

MoF considers excise taxes on soft drinks

Photo: Internet Archive

Measure aimed at curbing consumption of sugar-based beverages.

by Quynh Nguyen

The Ministry of Finance (MoF) has proposed the addition of soft drinks to the list of goods subject to special consumption tax, including carbonated soft drinks, non-carbonated soft drinks, energy tea drinks, and instant coffee.

The proposal was introduced by the ministry at a press conference on August 15 announcing the orientation in amending certain articles in the Law on Taxation.  

The MoF has submitted to the government two plans on special consumption taxes: one with a tax rate of 10 per cent from 2019 and the other with a tax rate of 20 per cent. “The imposition of the tax aims to regulate the consumption of sugar-based beverages according to international practice,” it explained.

The ministry also pointed to a World Health Organization (WHO) report that shows the abuse of soft drinks leads to obesity. The proportion of overweight and obese adults in Vietnam now stands at 25 per cent of the population.

Obesity rates among children under five years old are also increasing rapidly and this puts them at future risk from cardiovascular disease, hypertension, stroke, atherosclerosis, and other ailments.

The MoF seeks to follow the practice of many countries by imposing excise taxes to limit the consumption of sugar-based drinks. In Thailand, for example, non-alcoholic carbonated soft drinks are subject to a tax rate of 25 per cent and carbonated soft drinks 20 per cent. Laos imposes 5 to 10 per cent on soft drinks and Cambodia 10 per cent.

A study by the Vietinbank Securities Company found in the 2009-2013 period, the industry grew at 19.35 per cent and had 130 producers, with 2 million liters being exported. Growth is expected to reach 14.2 per cent from 2014 to 2018 with 135 producers.

Vietnam’s economy has faced difficulties due to the prolonged financial crisis and customers have tightened their purse strings. However, the population has reached 90 million, with a majority being young people who regularly consume soft drinks. Such factors attract soft drink producers to the local market, it said.

According to Canadean, a world-class research company on the international soft drink and alcoholic beverage industries, growth in Vietnam's alcoholic beverage market has averaged 6.4 per cent per year over the last decade and 5.7 per cent over the last five years.

The Vietnam Beer Alcohol Beverage Association said that many Vietnamese soft drink producers have upgraded their production capacity to compete with foreign rivals and have also focused on soft drink lines that improve the health of customers and increase market share.

Meanwhile, foreign investors such as Coca-Cola, Pepsi, and Nestle, with its LaVie water, have also increased their share in Vietnam or conducted merger and acquisition activities with local firms to bolster their market share.

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