VAFI speaks out on the Draft Law on Special Consumption Tax.

The Vietnam Association of Financial Investors (VAFI) has recently sent an official document to the Prime Minister, the Ministry of Finance, and the Ministry of Justice to provide feedback on the Special Consumption Tax Bill. In this document, VAFI supports the Party, Government, and National Assembly's policy of increasing the special consumption tax to at least 10% higher the selling price of beer products, as recommended by the WHO, in order to protect public health and increase budget revenue. However, VAFI also emphasizes that the tax increase must ensure a transparent and fair competitive environment for all businesses in the beer industry.

VAFI speaks out about draft law on special consumption tax (Figure 1) — The increase in excise tax, as part of a phased approach, impacts business operations but serves the common good of the country.

VAFI stated that it has accessed the Ministry of Finance 's proposal for the Law on Special Consumption Tax and Government Resolution 115 dated July 28, 2023. Accordingly, two options for adjusting and increasing the Special Consumption Tax have been proposed:

- Option 1 is to maintain the current tax calculation method and increase the Special Consumption Tax rate according to a roadmap consistent with WHO recommendations;

- Option 2 involves adjusting the tax upwards by applying a mixed tax calculation method (applying both a relative tax based on a percentage and adding an absolute tax rate for alcoholic beverages).

With these two options, the drafting agency, the Ministry of Finance, proposes choosing Option 1 to ensure competitiveness in the context of differences in quality and price of alcoholic beverages, and also to ensure budget revenue. VAFI agrees with the Ministry of Finance on this choice.

According to VAFI's calculations, using 6 scenarios with 6 absolute tax rates from highest to lowest, corresponding to weighted average prices of existing beer products on the Vietnamese market, all 6 scenarios show that...

Heineken will always have the lowest effective tax percentage because its selling price is much higher than all other brands. According to VAFI's calculations, Heineken will be the biggest beneficiary of the addition of an absolute tax, and whatever benefit Heineken receives will cause other businesses in the industry to suffer losses, even facing bankruptcy. Therefore, VAFI asserts that the proposal to add an absolute tax on alcoholic beverages is inappropriate, unfeasible, and does not create equality and fairness among businesses. On the contrary, it creates a unique competitive advantage and preferential treatment for Heineken.

At the end of the document sent to the Prime Minister , VAFI further argued that the idea of changing the mixed tax calculation method by adding the aforementioned absolute tax rate is contrary to the provisions of Articles 6 and 8 of the 2018 Competition Law and seriously affects national interests (while only giving an advantage to a single market-dominating enterprise).

VAFI speaks out about draft law on special consumption tax (Figure 2)

Businesses in general, and the alcoholic beverage industry in particular, have been facing immense difficulties, stemming from the impact of the Covid-19 pandemic and now the deflation of the domestic and international economies. At this time, although aware of the negative impact of the planned increase in Special Consumption Tax on business operations, for the common good of the country and the health of the Vietnamese people, business leaders agree with this policy. However, they also have a legitimate desire for equal and fair treatment for all businesses in the industry. They do not want any business to be given a monopoly advantage in the market, undermining legitimate competition in Vietnam, for any ulterior motive.

According to Tuoitrethudo.com.vn

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