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Taxes pressuring beer & alcohol companies

Released at: 07:48, 21/09/2015

Taxes pressuring beer & alcohol companies

Increases on excise taxes of 5 per cent from 2016 will see Vietnam's beer and alcohol makers and distributors put at the mercy of imports.

by Tue Lam

Excise tax increases of 5 per cent in 2016 and amendments to certain other articles relating to taxes proposed by the Ministry of Finance will put great pressure on beer and alcohol enterprises, according to Mr. Nguyen Van Viet, Chairman of the Vietnam Beer Alcohol Beverage Association.

For the past three years rising taxes have seen the industry’s tax obligations increase from VND14.7 trillion ($646.8 million) in 2012 to VND18.2 trillion ($855 million) in 2013 and VND19.9 trillion ($875.6 million) in 2014.

Excise tax rising 5 per cent every year from 2016 will see Vietnam be among 20 countries with the highest excise tax on beer and alcohol in the world. Enterprises will struggle to compete, Mr. Viet said, with competition from imported products, especially beer from Laos, the Philippines and Thailand.

In recent years Vietnam’s beer and alcohol industry has seen relatively high growth rates, but beer consumption in the country is not as high as many believe. Around 3.2 billion liters of beer are consumed annually, or 35 liters per person, which is far lower than Laos, for example, with 50 liters and China with 40 liters.

If the government wishes to limit alcohol use it should employ a number of measures, Mr. Viet said, not just tax policy. “People’s spending is limited while demand for beer and alcohol remains high, so instead of producing beer and wine of high quality and low alcohol content, enterprises are forced to manufacture products of lower quality to match the market.”

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