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HANOI (Reuters) -Vietnam’s National Assembly on Saturday approved a proposal to raise the special consumption tax on alcoholic beverages to 90% by 2031 from the current 65%, a move that will add to challenges facing the industry even though the top rate won’t be as high as first flagged.
Under the legislation, the tax rate on beer and strong liquor will rise to 70% by 2027, a year later than initially proposed, before reaching 90% in 2031.
Vietnam currently imposes a 65% tax on these products and the initial proposal last year had the tax rising to as high as 100%.
The finance ministry has said the aim of the higher taxes is to curb alcohol consumption. Vietnam is Southeast Asia’s second-largest beer market, according to a report by consultancy KPMG in 2024.
Vietnam’s beer industry, led by Dutch brewer Heineken (AS:HEIN), Denmark’s Carlsberg (CSE:CARLb), and local brewers Sabeco and Habeco, has already faced challenges from stringent drink-driving laws introduced in 2019, which set a zero-alcohol limit for drivers.
The country’s Beer and Alcoholic Beverage Association chief has said industry revenue has declined for the past three years.
In response to weakening demand and the initial proposal for the tax hike, Heineken last year suspended operations at one of its Vietnam breweries.
On Saturday, the lawmakers also approved a new levy of eight percent on sugary drinks exceeding 5g/100ml of sugar that will take effect in 2027 and rise to 10% in 2028.