On 8 August, the EuroCham Wine & Spirits Sector Committee (WSSC) participated in a Seminar on the Draft Law on Special Consumption Tax (amended) and Beverage Industry, hosted by the Vietnam Chamber of Commerce and Industry (VCCI) in collaboration with the Vietnam Beer-Alcohol-Beverage Association (VBA). The seminar featured notable attendees, including Mr. Nguyen Hai Nam, Standing Member of the National Assembly’s Economic Committee, underscoring the significance of the proposed amendments. Economic experts such as Madam Nguyen Thi Cuc, Chairwoman of Vietnam Tax Consulting Association (VTCA), and Dr. Nguyen Quoc Viet, Vice Director of the Vietnam Institute for Economic and Policy Research (VEPR), provided valuable insights into the potential economic ramifications.
In her opening remarks, Ms. Trinh Thi Van Giang, representing WSSC, delivered a presentation that highlighted the significant concerns of the industry regarding the proposed amendments to the Special Consumption Tax (SCT). She emphasized the need for a balanced approach to taxation, one that considers the economic impact on the industry and the broader Vietnamese economy.
Ms. Giang acknowledged the government’s dual objectives of protecting consumer health and increasing state budget revenue. However, she argued that the high SCT rate and the application of the ad valorem method would not effectively achieve these goals.
The WSSC representative went on to highlight the significant contributions of the international wine and spirits industry to Vietnam’s economy. In 2022 alone, the sector contributed $282 million to the country’s GDP, supported the creation of over 65,000 jobs, and generated $252 million in tax revenue.
Furthermore, Ms. Giang emphasized the potential unintended consequences of the SCT hike, including the rise of illicit trade and the associated risks to public health. She cited examples from other countries, such as the UK and Australia, where similar tax increases have led to budget deficits and a shift towards cheaper, unrecorded product consumption.
To address these concerns, the EuroCham WSSC put forth three key recommendations:
- Delay SCT increase to no earlier than January 1, 2027, to allow the industry and associated sectors sufficient time to adapt.
- Conduct a comprehensive assessment of the economic context and explore measures to tackle the problem of unrecorded products in Vietnam.
- Consider incorporating a hybrid tax method as a more balanced and suitable approach for the alcoholic beverage industry.
