Vietnam to hike tax on alcoholic drinks to 90%

The Vietnamese parliament has approved a proposal to increase tax on “beer and strong liquor” to an unprecedented 90% by 2031. db reports.

On Saturday 14 June Vietnam’s National Assembly waved through a policy change that will see the tax on many alcoholic beverages leap from the current 65% to 90%.

According to Vietnam’s finance ministry the higher taxes are “necessary to help reduce consumption of alcoholic drinks” and will be rolled out in a staggered approach, rising to 70% by 2027 before climbing again to 90% in 2031.

“The gradual annual tax increase is not intended to change behaviour but rather to help consumers adapt more easily,” said member of parliament Hoang Van Cuong.

Although the Vietnam alcohol tax increase is steep, it is slightly less than the originally proposed tax of 100% and will be actioned a year later than the initially suggested 2030.

Beer unfairly targeted ?

Under the new law, drinks with an alcohol content of more than 20% will eventually shoulder the new 90% tax, while those with an ABV of less than 20% will see their rates rise from 35% to 60% by 2031. However, brewers and beer fans are questioning why beer has been lumped in with the higher ABV category when the alcohol content of the products is considerably less than that of spirits.

Vietnam is Southeast Asia’s second-largest beer market, according to a 2024 report by consultancy KPMG, but sales have been in significant decline. Data from the Vietnam Beer Alcohol Beverage Association (VBA) shows a year-on-year fall of 23% in 2023. The dip has had serious ramifications including Heineken deciding to “temporarily suspend” operations at its Quang Nam brewery in Vietnam, one of six it operates in the country.

Following the initial proposal for increased Vietnam alcohol tax last year, shares in beer company Sabeco (which accounts for 34.4% of Vietnam’s beer market) fell by 3.66%. Sabeco brews Saigon beer, the leading Vietnamese beer brand, which sold around 320.8 million litres in 2024.

What does this mean for wine ?

Starting from February 1, 2025, the excise tax on wine is already determined by its alcohol by volume (ABV). There is also a 50% Most Favoured Nation (MFN) tariff applied for preferred global partners. However, Vietnam has gradually reduced tariffs for the EU, Australia and Chile through free trade agreements, with European wine set to enter duty-free by 2027. It is unknown whether this will still be the case following the latest announcement.

In contrast to many other countries around the world, wine consumption is on the up in Vietnam, with its wine market projected to reach US$382.2 million from 2024 to 2029, growing at a compound annual growth rate (CAGR) of 11.5%, according to the latest data from Strategy Helix Group.

WHO weighs in

It’s not only alcoholic drinks that have been targeted by the rule change. Drinks with a high sugar content will also be hit with a new 8% tariff from 2027, rising to 10% in 2028. This applies to any drink containing more than 5g of sugar per 100ml and is intended to combat rising health risks such as obesity and diabetes.

The World Health Organisation (WHO) claim that through the latest Vietnam alcohol tax reform, the country has “seized a historic moment to protect its youth and community health from harm from alcohol, tobacco and sugary drinks.”

“Reducing consumption of these unhealthy products will improve population health, and in doing so, workforce participation and productivity,” said Dr Angela Prat, WHO representative in Vietnam.

According to Food Navigator Asia, the increased alcohol taxes could add an extra VND2.4tn (US$94m) to the country’s coffers.

By Sarah Neish – Thedrinksbusiness.com – 16 June 2025