The Finance Ministry has insisted on levying a special consumption tax on sweetened beverages, except for dairy products, news website Vietnam Finance cites the ministry’s latest draft of the amended law on taxes.

The bottling chain at Suntory PepsiCo Vietnam

Last August, the ministry suggested sugary drinks be subject to a special consumption tax of 10%, and a value-added tax (VAT) of 12%, stoking strong objections from beverage makers and associations. Still, in this latest draft, the ministry has proposed sugar-sweetened beverages be subject to the excise tax.

If approved, the proposal may see the tax imposed on carbonated and non-carbonated soft drinks, energy drinks, sports drinks and bottled instant coffee and tea next year.

The ministry explains that about 25% of Vietnamese adults are overweight or obese. The obesity rate for children under five years old is also increasing fast, from 0.6% in 2000 to 5.3% in 2015. Notably, the percentage of obese kids in HCMC has risen to 10.8%, higher than the world average of 6.9%.

The ministry also cites a recommendation of the World Health Organization as saying that sugar-sweetened beverages have adverse effects on human health.

Around 40 countries have imposed special consumption tax on these kinds of drinks in a bid to reduce their consumption, according to the ministry.

For example, many Southeast Asian countries have already imposed excise tax on sugary drinks. The current rate is 20-25% in Thailand, 5-10% in Laos, 10% in Cambodia, and 5% in Myanmar. The Philippines and Indonesia are also considering imposing the tax.

Therefore, according to the ministry, the tax will help regulate the consumption of sweetened beverages in line with international practices.

SGT