Vietnam: Government drafts new regulations proposing phased increase in alcohol excise

Vietnam’s Finance Ministry has announced plans for a phased tax hike on alcohol, a decision which will likely be a crushing blow to the country’s already struggling beer sector, The Drinks Business reported on July 10.

The Vietnamese government has drafted new regulations proposing a phased increase in excise taxes for all alcoholic beverages, with particularly harsh measures set out for beer and liquor with an ABV of 20% and above.

“Levying high tax rates is necessary to help reduce consumption of alcoholic drinks,” the finance ministry said in the proposal.

“Alcoholic drinks and beer prices will increase by 20% in 2026, compared with 2025,” it said, according to Reuters. This does not account for a potential further increase of 2%-3%, depending on inflation.

The current tax law levies a 65% excise tax on liquors with an ABV of 20% or above. Drinks with an ABV below 20% have an excise tax of 35%, and beer has its own excise tax also at 65%. Under the new regulations, these would increase to 80%, 50% and 80% respectively in the short term by 2026, with a view to increase them to 100%, 70% and 100% respectively by 2030.

The draft proposal is now pending lawmakers’ approval.

The Ministry of Finance estimates that in the short term the increased taxes could bring in an additional VND2.4tn (US$94m), according to Food Navigator Asia.

However, the impact would be devastating for the country’s already weakened alcohol sector. Vietnam’s beer industry, dominated by four major brands – Dutch Heineken, Danish Carlsberg and local Sabeco and Habeco – has already been hit by the country’s strict drink and driving law, under which the alcohol content limit for drivers is zero since 2019.

Data from the Vietnam Beer Alcohol Beverage Association (VBA) show a year-on-year decline in beer profits of 23% in 2023 for the country. Brewing giant Heineken has decided to “temporarily suspend” its Quang Nam brewery in Vietnam, one of six it operates in the country, against a backdrop of declining beer sales.

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