Beverage businesses seek delay in special consumption tax increase

The Vietnam Alcohol, Beer, and Beverage Association (VBA) held a meeting on March 15 to discuss how to overcome difficulties and find solutions to help businesses recover.

According to VBA chairman Nguyen Van Viet, the beverage industry makes an important contribution to socioeconomic development.

"Each year, the entire industry contributes about VND60 trillion ($2.53 billion) to the state budget, and creates millions of jobs for direct and indirect workers. The industry's quality and diverse products meet more and more domestic consumer needs and serve exports. It is also an important link in the chain of related industries such as commerce, transportation, and restaurants, promoting the development of service tourism and pioneering in community activities and social security," he said

He elaborated that the beverage industry has encountered many difficulties due to Covid-19 and conflicts around the world. Businesses have tried to find ways to overcome difficulties to increase resilience, stabilise production, and create jobs, but the beverage industry has been experiencing a sharp decline in revenue and profits, resulting in other industries also being affected.

At the conference, experts and business representatives said that the impact of Covid-19 is increasingly showing its long-term impacts by causing people to tighten spending and prioritise essential items. Meanwhile, around the world, prices of raw materials, fuel, and transportation have increased, leading to increased production costs.

Therefore, it will be difficult for businesses to find opportunities to recover if there are no breakthrough policies and supporting solutions from the National Assembly and the government to resolve fundamental difficulties.

In this situation, amendments to the Law on Special Consumption Tax (SCT) have been attracting their attention. According to research by the Central Institute for Economic Management (CIEM), a 10 per cent tax increase on beer could cause output to decrease significantly (28.3 per cent). This could lead to significant economic losses for not only the beer industry but also state budget revenue.

Experts said that policies should be continued to reduce taxes and fees. The amendments to policies in the near future should be carefully considered and evaluated in the current context.

Dau Anh Tuan, head of the legal department at the Vietnam Confederation of Commerce and Industry (VCCI), said that the current state of the economy and business health is very worrying.

Vuong Nguyen Duy, public affairs manager at Heineken Vietnam shared that the economic situation in 2024 is not expected to change, so increasing the SCT at this time is inappropriate.

“However, we need to take a more comprehensive look at the issue and contribute ideas to amending a tax or a law for the development of the entire industry, the environment, and society for long-term prosperity and sustainability. We believe that the current difficulties are just one factor, and there are many other important factors that need to be considered properly," Vuong added.

Echoing views of experts and businesses, Nguyen Thi Minh Thao, CIEM’s head of the Business Environment and Competitiveness Research Department, said that the drafting agency should comprehensively assess the impact of expanding taxable subjects and increasing SCT.

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