Industry representatives and beer producers are urging the government to delay any increase to special consumption tax to 2026, as the industry needs more time to recover from low growth after the pandemic.
The Ministry of Finance fresh draft report mentioned that a proposed special consumption tax (SCT) could be upped by 10% with the aim of protecting people’s health. However, the industry is yet to recover with many businesses in the food services segment reporting a 50-60% reduction in revenues. With the new tax, it could cripple these businesses further.
To support these businesses, the government in April had released Decree No.12/2023/ND-CP on extension of VAT, corporate income tax, personal income tax, and land rental fees applicable for the 2023 tax year. As such, the new SCT rate on alcoholic drink could be in conflict with the above government efforts.
According to the Vietnam Beer-Alcohol-Beverage Association, the beer industry has made a significant contribution to the government budget. Beer and alcohol businesses contribute about US$2.6 billion per year to the budget, meeting domestic consumption needs and creating thousands of jobs. Given the challenges posed by post-pandemic recovery, lower than expected economic growth, and increase in input costs, the Association recommended maintaining the current SCT rate for beer and alcoholic products for at least 3 to 5 years.
And should there be any adjustments to SCT, it should be made gradually over time based on the socioeconomic situation.