Beer prices will rise dramatically due to higher tax

The current 60% tax on beer will be increased to 65% from January 1, 2018. In addition, the Ministry of Finance has recently proposed to raise Value Added Tax (VAT) on beer to 12% from the beginning of 2019.

Beer prices will surely increase

Euromonitor, a market research company, has recently reported that Special Consumption Tax (SCT) and VAT account for 35% of beer prices and will continue to increase in coming years.

Beer price is expected to increase significantly due to higher tax. The Director of Sapporo Vietnam Co., Ltd. Mikio Masawaki said that when the SCT on beer will increase to 65% next year, the company will carefully observe the market situation to adjust prices.

Although firms have not yet announced the specific number, some analysts say tax increases will affect brewery business and increase production costs. The price of beer is about 7% higher than the current price, not to mention the other costs.

However, the increase in beer prices will certainly affect the purchasing power of consumers and sales output, so businesses will raise prices at a reasonable level.

More tax burdens to come

In fact, besides current taxes, a bottle of beer is also subjected to many other costs such as sales and production. The draft Law on alcohol harm prevention stipulates that enterprises must contribute 1 to 2% of the price with SCT to the public health promotion fund.

Prior to this proposal, Mr. Mikio Masawaki, Director of Sapporo Vietnam Co., Ltd., said that if this proposal is implemented, this will be a new cost burden for businesses.

Meanwhile, Nguyen Van Viet, Chairman of the Vietnam Beer Alcohol Beverage Association, expressed his concern that if the proposal comes into effect, it will increase the problem of smuggling and counterfeit goods, which causes difficulties for domestic brewers and negatively affects naitonal revenues.