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Vietnam To Hike Sin Taxes

by Mary Swire,, Hong Kong

01 October 2014

On September 25, Vietnam's National Assembly Standing Committee (NASC) approved the Government's proposal to raise the special consumption tax (SCT) on cigarettes, beer and spirits, from January 1, 2016.

In line with the Government's policy of reducing smoking in the country, the proposal is to increase the SCT on tobacco products to 70 percent tax from January 1, 2016 and to 75 percent tax from January 1, 2018, from the current level of 65 percent.

In addition, in recognition of the harm to public health from alcohol consumption, the SCT on beer would be hiked from 50 percent to 55 percent from January 1, 2016, and then to 60 percent from January 1, 2017, and 65 percent from January 1, 2018. The tax on wine over 20 percent proof and spirits could also increase at the beginning of 2016 to 65 percent, up from 50 percent, while SCT on under 20 percent proof wine would then be subject to a 35 percent rate, up 10 percent.

While Vietnam was said to have a need of reducing, for example, its high percentage of smokers and the third largest per-capita beer consumption in Asia, after China and Japan, NASC members were also concerned at providing measures that would counteract the effect on smuggling and low-quality counterfeit products following such tax increases.

The proposals would produce significant additional tax revenue for the Government, and are due to be discussed further at a session of the National Assembly later his year and to take effect in the middle of 2015.

TAGS: individuals | tax | business | sales tax | public health | excise duty | tax rates | Vietnam

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