The Vietnam National Assembly has recently approved a proposal to raise the special consumption tax on alcoholic beverages to 90% by 2031, up from the current 65%. This decision, although not as high as initially suggested, will pose challenges for the industry moving forward.

According to the new legislation, the tax rate on beer and strong liquor will incrementally increase to 70% by 2027, a year later than originally planned, before reaching 90% in 2031. Vietnam currently imposes a 65% tax on these products, with an earlier proposal aiming for a tax hike of up to 100%.

The primary goal of these higher taxes, as stated by the finance ministry, is to reduce alcohol consumption in the country. Vietnam is considered the second-largest beer market in Southeast Asia, based on a report by consultancy KPMG in 2024.

Vietnam's beer industry, dominated by companies like Heineken, Carlsberg, Sabeco, and Habeco, has been grappling with challenges such as strict drink-driving laws implemented in 2019, which established a zero-alcohol limit for drivers. The industry has experienced a decline in revenue over the past three years.

In response to the declining demand and the proposed tax increase, Heineken halted operations at one of its breweries in Vietnam last year. Additionally, lawmakers also approved a new levy of 8% on sugary drinks that exceed 5g/100ml of sugar, starting in 2027 and rising to 10% in 2028.