Vietnam’s National Assembly made headlines by greenlighting a significant increase in the special consumption tax on alcoholic beverages, lifting it from 65% to a staggering 90% by the year 2031. This bold initiative, revealed on Saturday, is part of a strategy to reduce alcohol consumption, however, it casts a shadow over an industry already facing considerable hurdles.
The new legislation outlines a gradual escalation of tax rates on beer and spirits, which will hit 70% by 2027—delayed from initial plans—and reach the ultimate rate of 90% in 2031. Currently, Vietnam maintains a 65% tax on alcoholic beverages. An earlier proposal even contemplated taxes soaring to 100%, indicating the government’s firm stance on the matter.
The finance ministry has articulated that the primary goal of these increased taxes is to mitigate alcohol consumption. Vietnam stands as the second-largest beer market in Southeast Asia, according to a 2024 KPMG report.
Notably, the local beer industry, dominated by giants like Dutch brewer Heineken, Denmark’s Carlsberg, and domestic players such as Sabeco and Habeco, has already been grappling with tribulations since the introduction of strict drink-driving regulations in 2019, which instituted a zero-alcohol limit for drivers. As a result, the head of the Beer and Alcoholic Beverage Association has reported a steady decline in industry revenues over the past three years, emphasizing the sector’s precarious state.
In a simultaneous move on Saturday, lawmakers also enacted an 8% levy on sugary drinks containing more than 5g of sugar per 100ml, set to launch in 2027 and increase to 10% in 2028, expanding the government’s fiscal reach into other dietary concerns as well.
With all these changes, one can only wonder: will the rising taxes put a cork in beer consumption, or will the Vietnamese spirit of resilience remain uncorked?
What is the new tax rate on alcoholic beverages in Vietnam?
The special consumption tax on alcoholic drinks is set to rise from 65% to 90% by 2031.
When will the tax rate on beer and strong liquors reach 70%?
The tax rate will increase to 70% by 2027.
What new levy was also approved alongside the alcohol tax?
An 8% tax on sugary drinks exceeding 5g of sugar per 100ml was approved, to take effect in 2027, with a rise to 10% in 2028.
