Proposal to Adjust Special Consumption Tax Rates on Certain Products and Goods

Together with the exemption of special consumption tax on air conditioners with a capacity of less than 18,000 BTU; exported goods that have paid special consumption tax but are returned by foreign customers upon import, the draft law on special consumption tax (amended) also adjusts tax rates for pick-up trucks and revises the method of applying tax rates for alcohol and beer starting from 2027.

Continuing the agenda of the 9th Session of the 15th National Assembly, on the morning of May 9, Mr. Phan Van Mai, Chairman of the National Assembly's Economic and Financial Committee, presented a report explaining, receiving, and revising the draft Law on Special Consumption Tax (amended); at the same time, the National Assembly discussed in the hall some contents that still had differing opinions on the draft law. This draft law had been presented to the National Assembly for discussion at the 8th Session.

PROPOSAL TO ADJUST TAX RATES ON ALCOHOL AND BEER ACCORDING TO OPTION 1 FROM 2027

Notably, according to the draft law on taxable objects, air conditioners have become a common necessity to meet the needs of the people. Therefore, following the opinions of the National Assembly delegates, the Standing Committee of the National Assembly agreed with the Government's proposal to revise the draft Law in the direction of stipulating that air conditioners with a capacity between 18,000 BTU and 90,000 BTU are subject to special consumption tax (no tax on air conditioners with a capacity of less than 18,000 BTU and over 90,000 BTU).

Regarding tax rates for alcohol, beer, and tobacco, to strongly impact the selling prices of harmful products, reduce consumption, and mitigate the serious consequences of alcohol abuse and the harmful effects of tobacco, the draft Law submitted to the National Assembly at the 8th Session had proposed two options for tax increases, recommending the adoption of Option 2 (the more thorough tax increase) for alcohol, beer, and tobacco.

However, according to Mr. Phan Van Mai, in the current socio-economic context, along with the goal of achieving a growth rate of 8% or higher, the Government recommended applying Option 1 with lower tax rates than Option 2, starting from 2027 to suit the new context and situation.

Therefore, the Standing Committee of the National Assembly requested the National Assembly to adjust the draft Law as recommended by the Government (content reflected in Article 8 of the draft Law).

Regarding pick-up trucks, the draft Law presented to the National Assembly at the 8th Session had raised the tax rate for this type of vehicle to 60% of the special consumption tax rate applied to cars with under 9 seats of corresponding capacity.

However, under current conditions, this regulation may significantly affect the business activities of enterprises as well as Vietnam's investment environment. Therefore, following the opinions of delegates, the Standing Committee of the National Assembly agreed with the Government's proposal to revise the draft Law by stipulating a 3% annual tax rate increase starting from 2027 for pick-up trucks (reducing the tax rate increase and extending the implementation timeline compared to the draft Law presented to the National Assembly).

Special Consumption Tax Rates on Certain Goods.

Regarding the inclusion of sugar-sweetened beverages in the taxable category, the proposal to tax sugar-sweetened beverages is the first step in implementing solutions to limit the production and consumption of products with high sugar content in foods and beverages, contributing to guiding production and consumption.

According to Mr. Mai, this is one of the main causes of overweight, obesity, and non-communicable diseases related to diet. Therefore, the Standing Committee of the National Assembly requested the National Assembly to maintain the draft Law, while recommending that the Government continue to study international experiences to consider the possibility of including other products containing sugar in the taxable category.

Additionally, because this category has just been added to the taxable objects, a roadmap is needed for businesses to adapt, adjust production and business plans, and gradually transition to low-sugar products. Therefore, following the opinions of delegates, the Standing Committee of the National Assembly agreed with the drafting agency’s proposal to revise the draft Law in the direction of stipulating the implementation roadmap: 8% tax rate from 2027, 10% tax rate from 2028.