On August 8, 2024, Sức khỏe & Đời sống, a Vietnamese news outlet, reported that Vietnam is drafting a significant amendment to the Special Consumption Tax Law. This new legislation aims to broaden the tax base by including modern tobacco products such as e-cigarettes alongside traditional tobacco items like cigarettes and cigars.
Scope of the Proposed Amendment
Inclusion of Modern Tobacco Products
The proposed amendment to the Special Consumption Tax Law will encompass new tobacco products, including e-cigarettes, their devices, and related liquids. This change is a response to increasing concerns about the health risks associated with e-cigarettes and aims to regulate them on par with traditional tobacco products.
Expanding to Other Goods and Services
Beyond tobacco, the amendment will extend to a wide range of goods and services, including:
- Goods: Alcohol, beer, automobiles, motorcycles, airplanes, yachts, gasoline, air conditioners, playing cards, and funeral supplies.
- Services: Nightclubs, massage parlors, karaoke, casinos, golf courses, lottery operations, and online gaming services.
Taxing Sugary Drinks
In line with global health trends, the amendment also proposes taxing sugary drinks, including soft drinks, to curb their consumption. This initiative is part of a public health campaign aimed at reducing obesity and related health issues, reflecting Vietnam’s commitment to promoting healthier lifestyles.
2025 Legislative Outlook
According to the 2025 legislative plan, the National Assembly is expected to pass 12 laws, including this crucial amendment to the Special Consumption Tax Law, during its ninth session in May 2025. Should it pass, the special consumption tax on e-cigarettes, sugary drinks, and other newly included items could be implemented later in 2025.
Taxpayer Obligations
Who Will Be Subject to the Tax?
The proposed law will apply to organizations and individuals engaged in the production or import of goods subject to the special consumption tax. Additionally, service providers listed under the law will also be liable for the tax.
Exporter Tax Responsibilities
The draft amendment includes a provision where exporters who purchase goods intended for export but sell them domestically instead will be required to pay the special consumption tax. This ensures that all domestic sales of taxable goods are adequately taxed, maintaining the integrity of the tax system.
Impact and Implications
Boosting Public Health and Revenue
By including e-cigarettes, sugary drinks, and other products under the special consumption tax, Vietnam is taking a strong stance on public health and fiscal responsibility. The tax is anticipated to reduce the consumption of products deemed harmful, such as e-cigarettes and sugary drinks, while also generating additional revenue for the government.
Industry Adjustments
Industries affected by this tax will need to re-evaluate their pricing, production, and distribution strategies. For manufacturers and importers of e-cigarettes, this could mean higher costs that are likely to be passed on to consumers. The beverage industry may also see price increases on sugary drinks, potentially leading to reduced demand.
Regulatory Compliance
Companies involved in producing, importing, or selling goods and services subject to the special consumption tax must ensure full compliance with the new regulations. This includes accurately reporting taxable items and services and paying the required taxes. Non-compliance could result in significant penalties and legal challenges.
Vietnam’s proposed amendment to the Special Consumption Tax Law marks a significant expansion of the country’s tax base, bringing e-cigarettes, sugary drinks, and other products under stricter regulation. If passed in 2025, the law will have wide-ranging effects on various industries, public health, and government revenue. Businesses and consumers should prepare for the potential impacts of these changes.
FAQs
What is the proposed amendment to the Special Consumption Tax Law in Vietnam?
The amendment proposes to extend the special consumption tax to include new tobacco products like e-cigarettes, sugary drinks, and a range of other goods and services.
When could the amendment take effect?
The amendment is expected to be passed by the National Assembly in May 2025 and could be implemented later that same year.
Who will be affected by the special consumption tax?
The tax will affect organizations and individuals that produce, import, or sell goods and services covered by the law, including e-cigarettes, sugary drinks, and other taxable items.
What goods and services are included under the special consumption tax?
The tax will cover traditional tobacco products, e-cigarettes, alcohol, beer, cars, motorcycles, airplanes, yachts, gasoline, air conditioners, playing cards, funeral supplies, nightclubs, massage parlors, karaoke, casinos, golf courses, lottery operations, and online gaming services.
