The Ministry of Finance is considering draft amendments to the 2009 Excise Tax Law, levying excise tax on non-alcoholic carbonated drinks from July 1 next year.
In the latest draft of the revised Excise Tax Law recently released, the ministry proposed imposing excise tax at the rate of 10 percent on soft drinks, placing the item in the category of luxury services and products together with alcoholic beverages, automobiles, yachts, golf courses and massage.
Professional operations at Hanoi Tax Department__Photo: Hoang Hung/VNA
Explaining about the move, the ministry cited harmful effects of carbonated drinks, including diabetes and obesity, as the main cause. “Non-alcoholic carbonated drinks contain numerous artificial substances such as flavorings, colorings and preservatives which are harmful to consumer health if used daily or excessively. Therefore, it is necessary to orient proper use of this sort of drink to protect consumer health,” reads a Ministry of Finance’s report on the draft law.
Regarding text message polling services, the ministry said that these services are essentially betting services and, therefore, would be liable to exercise tax like betting services.
The ministry also proposes increasing tax rates of some commodity items currently liable to excise tax.
Accordingly, the tax rate applicable to beer and liquor with over 20 percent alcohol by volume would rise from 50 percent to 65 percent. Meanwhile, liquor with under 20 percent alcohol by volume would subject to the tax rate of 35 percent, instead of the current 25 percent.
Cigarette, cigar and other tobacco products would be subject to the tax rate of 75 percent of producers’ selling prices, instead of 65 percent as at present, from July 1, 2015, to December 31, 2017. The tax rate would rise to 85 percent from 2018.
Tax authorities estimate that with the country consuming nearly one billion liters of carbonated drinks per year, if the 10-percent tax rate is applied, it would earn the state coffers VND 1.5 trillion and 1.9 trillion by 2016 and 2018, respectively. Meanwhile, rising tax on beer and cigarette would bring VND 10.73 trillion and 18 trillion to the state budget by 2016 and 2018.-