Legislature approves amendments to Law on Special Consumption Tax.
The National Assembly (NA) has approved the amended Law on Special Consumption Tax (SCT).
Many NA members had previously agreed that the SCT on wine and spirits over 20 proof would increase from the proposed 65 to 70 per cent and 35 to 40 per cent on those less than 20 proof. Some proposed an increase of up to 70 per cent on taxes imposed on beer while the government proposed 60 per cent. They also recommended there be a reasonable roadmap supporting enterprises operating in the industries.
According to the NA Standing Committee, the level of tax imposed on wine and beer in the amended law would not overly affect production and business in these industries. The agency assigned to adjust the amended law agreed with the increase but proposed to adjust its roadmap for beer from July 1, 2015 to June 1, 2016. The amended law also regulates a roadmap for wine. Specifically, for wine over 20 proof, a tax rate of 55 per cent will apply from January 1, 2016, 60 per cent from January 1, 2017, and 65 per cent from January 1, 2018. For wine less than 20 proof, a tax rate of 30 per cent will be applied from January 1, 2016 and 35 per cent from January 1, 2018.
The government also proposed tobacco products be subject to a tax rate of 70 per cent from January 1, 2016 and 75 per cent from January 1, 2019. Many members suggested higher increases on tobacco products than proposed by the government. However, the NA Standing Committee said that any increase should be in line with government proposals, as local tobacco enterprises have paid a rate of 1-2 per cent per packet into anti-tobacco and prevention funds as well as the SCT. Packs of tobacco products are required to print warnings about the harm of smoking and enterprises have applied regulations relating to restricted areas. Meanwhile, tobacco smuggling is increasing, with the volume accounting for 20 per cent of the market. Some prices are lower than for the same kind of legal products.
The NA Standing Committee proposed retaining the current tax rate on cars although some members said the current rate is too high and affects consumers and the automotive industry. According to the NA Standing Committee, the number of cars in Vietnam is growing while transportation infrastructure in urban areas can't cope. Most owners are high-income earners, mainly in urban areas. This is a necessary item to be regulated to limit traffic congestion and be in accordance with ASEAN regulations. Some also discussed a decrease on the tax rate for electric cars. Electric cars of less than nine seats are subject to a tax rate of 25 per cent, which is half that applied to petrol-fuelled vehicles, of 45, 50, or 60 per cent, depending on engine capacity.
- special consumption tax