The Vietnamese government has chosen to maintain the relative tax calculation method instead of implementing the mixed tax regime for beer and alcohol products.
In an effort to align tax policies with global standards and the country's commitments upon joining the World Trade Organization (WTO), the initial proposed change to a mixed tax calculation raised concerns from businesses and experts.
There had been a debate over the most equitable and efficient tax structure for alcohol products. Experts note that relative, absolute, and mixed tax calculations each have their own advantages and disadvantages. Particularly, the absolute tax calculation method is preferred for its simplicity and straightforward implementation.
However, this method tends to favor higher-priced products, resulting in lower tax burdens relative to the sales price for luxury and imported brands. This could negatively impact Vietnamese beer producers dominating the lower-priced market segments.
Maintaining the current tax calculation method spares the beverage industry from potential upheaval, crucially benefiting local beer producers by avoiding increased production costs and reduced competitiveness. Additionally, it prevents disproportionate tax burdens on low-income consumers and maintains balance in favor of popular beer varieties. The newly announced decision has been widely welcomed by the industry.
