Vietnam: Government approves raising tax on beer and strong alcohol to 90% by 2031

Vietnam's lawmakers approved raising the tax on beer and strong alcoholic beverages on June 14 to 90 percent by 2031 from the current 65 percent, state media said.

The tax rate on liquor with more than 20 percent alcohol content and all beers will rise five percentage points yearly from 2027 before reaching 90 percent in 2031 under the National Assembly's new legislation.

Levies will also increase by five percentage points annually for other drinks with alcohol content below 20 percent, which are currently subject to a 35 percent tax, reaching 60 percent by 2031.

"The gradual annual tax increase is not intended to change behaviour but rather to help consumers adapt more easily," Hoang Van Cuong, a member of parliament, told the assembly in March.

Lawmakers also approved a new levy of eight percent on beverages containing more than five grams of sugar per 100 millilitres, taking effect in 2027 and increasing to 10 percent in 2028.

Beer sales in Vietnam took a hit following the introduction of a strict zero-alcohol rule for drivers in 2019.

However, Dan Martin, an International Business Advisor at Dezan Shira & Associates, said Vietnam's drinking culture has roots "that run far too deep to be uprooted by policy alone."

"Rather than spelling doom for the beer market, these measures represent more of a speed bump than a roadblock," he told Agence France-Presse.

Martin said that behavioural shifts were already underway, with more Vietnamese people consuming alcohol at home rather than at traditional venues such as bars.

The trend "isn't just consumers reacting to new rules," he said.

Vietnam ranked seventh globally in beer consumption in 2022, according to a report by Kirin Holdings, a Japanese beer company.

Nearly 41,000 Vietnamese people die each year due to alcohol consumption, according to the health ministry.