HCMC – The Vietnam Chamber of Commerce and Industry (VCCI) has proposed postponing the planned increase in special consumption tax (SCT) until 2028, advocating for a gradual 5% rise every two years to help businesses adjust and minimize economic disruptions.
In its feedback submitted to the National Assembly’s Economic and Financial Committee, VCCI raised concerns that the steep and abrupt tax hikes outlined in the proposed amendments could severely impact businesses and supply chains. A rapid increase, it warned, could strain financial stability, slow technological investments, and lower product quality, potentially leading to production cuts, financial losses, or even bankruptcies affecting millions of workers.
Additionally, higher taxes could encourage smuggling, reduce government revenues, and increase the burden on market monitoring agencies, posing risks to consumers.
VCCI argued that there is no conclusive evidence that a sharp SCT hike would significantly curb consumption, suggesting that consumers might instead turn to unofficial markets or cut spending in other areas.
From a macroeconomic perspective, VCCI noted that while tax revenues might rise in the short term, an expanding informal market and a shrinking formal sector could erode long-term budget revenues and reduce the sector’s contribution to GDP.
The draft amendments to the SCT Law, prepared by the Ministry of Finance, propose phased increases from 2026 to 2030 to limit the consumption of harmful goods while boosting state revenues.
For alcoholic beverages, two scenarios were outlined. The first suggests raising the tax rate from 65% to 70% in 2026, with annual 5% increases reaching 90% by 2030. The second, more aggressive option proposes an 80% tax rate in 2026, rising to 100% by 2030.
VCCI recommended a more cautious approach, emphasizing the need for a balance between public health objectives and economic stability. It also called for stricter measures to prevent smuggling and counterfeit products.
Regarding tobacco products, the draft law proposes shifting to a fixed tax instead of a percentage-based levy, with a rate of VND2,000 per pack in 2026, increasing to VND4,000 in 2028 and VND6,000 in 2030. While VCCI supported tax hikes to discourage smoking, it urged a well-planned tax roadmap to prevent illicit trade and recommended tailored taxation for e-cigarettes based on scientific studies.
For soft drinks, VCCI suggested a careful evaluation based on scientific research and international practices to promote public health while minimizing adverse effects on the industry. It emphasized that taxation should be paired with public awareness campaigns to reduce sugar consumption responsibly.
