Rising concerns over proposal to impose Consumption Tax on Soft Drink

Value added tax increase and special consumption tax levy on soft drink might do more harm than good, with small and medium firms (SMEs) suffering the most and may stop operation, said Mr. Herbert Cochran, Director of Vietnam Trade Facilitation Alliance (VTFA) in Hanoi.
Speaking at a workshop on challenges of policy and regulatory changes for foreign investors in Vietnam, he said that low income consumers would be affected and the Government’s tax revenue might not increase but reduce. This mirrors what happens in Indonesia and Denmark.
In addition, imposing special consumption tax on soft drink would create a discrimination in the food and beverage industry.
He proposed the government to seriously consider all implicit social and economic impacts of the tax policy change, reconsider proposals to raise taxes or levy new taxes to maintain the confidence of investors in the Vietnam market.
Adam Sitkoff, Executive Director of the American Chamber of Commerce (AmCham) in Hanoi, said that AmCham members were optimistic about business development prospects in Vietnam but expressed anxiety about recent policy and regulatory changes which were not suitable with international practice.
For instance, special consumption tax levy on soft drink was an uncommon and unstimulated regulation, he said. Only 4 nations in the Asia Pacific region now impose the tax which has a negative impact on the economy and did not in any way help to protect the consumers’ health.