Sugary beverages to be taxed as NA revises excise law

Sugary beverages to be taxed as NA revises excise law

For the first time, sugar-sweetened beverages in Vietnam will be subject to a special consumption tax (SCT), following a law passed by the National Assembly on June 14 with almost 94 per cent approval

The revised Law on Special Consumption Tax will take effect from January 1, 2026. Under the new ruling, non-alcoholic drinks containing more than 5 grams of sugar per 100ml will face an 8 per cent tax, deferred until January 1, 2027, rising to 10 per cent in 2028. The measure excludes milk and dairy products, nutritional liquids, natural mineral and bottled drinking water, and 100 per cent vegetable or fruit juices.

"This is a necessary step aligned with international practices to guide production and consumption patterns, while also expanding the tax base," said Phan Van Mai, chairman of the National Assembly’s Committee for Economic and Financial Affairs.

In a broader move to restructure Vietnam’s excise tax regime, the law also outlines a gradual tax increase on alcoholic beverages and beer. Beer and spirits with an Alcohol by Volume (ABV) of 20 per cent or higher will be taxed at 65 per cent from 2026, increasing annually by 5 percentage points to reach 90 per cent in 2031. Spirits with less than 20 per cent ABV will start at 35 per cent and follow a similar trajectory to hit 60 per cent by 2031.

Tobacco remains subject to a 75 per cent SCT rate. However, starting from 2027, a new absolute tax will apply VND2,000 per pack of cigarettes, climbing annually to VND10,000 by 2031. Cigar products will see a fixed tax of VND20,000 per unit in 2027, increasing fivefold to VND100,000 by 2031. Other tobacco forms, such as shredded or pipe tobacco, will follow a similar scale from VND20,000 to VND100,000 per 100 grams or 100ml.

The law also introduces excise tax for mid-range air conditioners. Units with a cooling capacity between 24,000 and 90,000 BTU will be taxed at 10 per cent from January 1, 2026. Units below 24,000 BTU or above 90,000 BTU remain exempt.

Fossil fuels retain their existing tax rates, with conventional petrol at 10 per cent. Biofuels will continue to enjoy preferential treatment, with E5 taxed at 8 per cent and E10 at 7 per cent.

The revised SCT law is a significant step in aligning Vietnam’s tax policy with global health and environmental standards, while also reinforcing fiscal resilience through a broader tax base.

VIR