November 22, 2017 19:46

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Soft drinks may be levied Special Consumption Tax

10:10 | 17/08/2017

VCN- This is one of 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.

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The Ministry of Finance proposes to impose Special consumption tax rate of 10% on industrially produced soft drinks.

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 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 abuse of soft drinks will lead to obesity and diabetes. According to the Victorian Health Promotion Foundation, (Australia), many studies have shown that the use of soft 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 soft drinks. Specifically, Thailand regulates that the SCT levied on fizzy drinks without alcohol is 25% or US$ 0.024 per 440cc- bottle; on fizzy drinks is 20% or US$ 0.011 per 440cc-bottle; Laos regulates that SCT levied on fizzy drinks without alcohol is 5% and energy drink is 10%; Cambodia regulates that SCT levied on soft drinks is 10%.

According to the ASEAN Secretariat, other three ASEAN countries is expecting and considering to impose the Special Consumption Tax on the soft 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.

special consumption tax may be levied on sugary drinks Add more conditions for special consumption tax deduction

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Hence, most countries in the region have levied Special Consumption Tax on the soft 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 soft drinks in accordance with international practice, the Ministry of Finance proposed to add soft drinks including fizzy drink, still drink, energy drink, sports drink, tea, instant coffee which are procedure by industrial production lines, excluding fruit juice, 100% natural 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