News

Special Consumption Tax may be levied on sugary drinks

Summary

Updated on : 17-08-2017

VCN- This is one of the remarkable contents of projects of amending and supplementing a number of articles of Law on Value added tax, Law on Special consumption tax, Law on Corporate income tax, Law on Personal income tax and Law on Natural resources tax, which was announced by the Ministry of Finance on 15th August 2017.

Mr. Pham Dinh Thi- Director of Tax policy Department- Ministry of Finance said that sugary drinks are popular with many people. However, the use of sugary drinks would increase energy to the body, causing the weight gain, obesity and other bad effects on health including cardiovascular disease and diabetes.

In Vietnam, the rate of adults who are overweight and obese accounts for 25% of the population. The rate of less than 5-year children who were obese increased rapidly from 0.6% in 2000 to 5.3% in 2015, in Ho Chi Minh City, the rate was 10.8%, (especially in the central region up to 12%) higher than the average rate of the Asian and developing countries (while the global average rate was 6.9%).

According to statistics in 2010, the obesity rate of children from 5 to 19 years old was also quite high. The average rate of this group was 8.5%; 18.2% in the city; 7.9% in rural areas. However, in big cities like Ho Chi Minh, this rate was very high at 34.5%.

Overweight and obesity are causes for many non-communicable diseases such as cardiovascular diseases, hypertension, stroke, atherosclerosis and coronary artery, and risk of type 2 diabetes and some cancers like gallbladder, breast, colon, prostate, and kidney.

According to research by the World Health Organization (WHO), the overuse of sugary drinks will lead to obesity and diabetes. According to the Victorian Health Promotion Foundation, (Australia), many studies have shown that the use of sugary drinks will cause the weight gain, obesity and other bad effects on health including cardiovascular disease and diabetes.

Therefore, in order to orient and restrict the consumption of sugary drinks, countries in the region have levied Special Consumption Tax on the sugary drink. Specifically, Thailand regulates that the SCT levied on fizzy soft drinks is 25% or US$ 0.024 per 440cc- bottle; on fizzy soft drink is 20% or US$ 0.011 per 440cc-bottle; Laos regulates that SCT levied on fizzy soft drinks is 5% and energy drink is 10%; Cambodia regulates that SCT levied on sugary drinks is 10%.

According to the ASEAN Secretariat, other three ASEAN countries are expecting and considering to impose the Special Consumption Tax on the sugary drinks: Myanmar expects to impose a tax rate of 5%; Philippines expects to impose a tax rate of 10 pesos per liter; Indonesia expects to impose a tax rate of Rs 3,000 per liter on fizzy soft drink.

Hence, most countries in the region have levied Special Consumption Tax on the sugary drinks. European countries levy higher tax rate such as France € 0.72 per liter, Finland € 0,075 per liter, Hungary € 0.04 per bottle or 1 can, Netherlands $US 0.09 per liter and etc.

According to Mr. Thi, from the above studies and also to regulate the consumption of the sugary drink in accordance with international practice, the Ministry of Finance proposed to add sugary drinks including fizzy drinks, still drinks, energy drinks, sports drinks, tea, instant coffee which are produced by industrial lines, excluding 100% natural fruit juice, vegetable fruit juice, milk and milk products to commodities subject to Special Consumption Tax .

Regarding to tax rates, the Ministry of Finance expects to impose a 10% tax rate from 2019. However, it also provides the second plan to impose the tax rate of 20% from 2019 to consult widely.

By Hong Van/Ngoc Loan