Unsuitable excise affects alcohol producers

VBA President Nguyen Van Viet said that in 2014 Vietnam produced 3.14 billion liters of beer, a rise of 3.1 percent compared with 2013. The average output growth from 2012-2014 was 6.2 percent, much lower compared with the 2009-2011 period (12.18 percent). “In recent years, sales in the beverage sector have grown at a lower rate compared with output growth, leading to increased inventories,” he added.

Nguyen Van Viet attributed the lower growth to many factors. Specifically, purchasing power has decreased due to the global and domestic economic recession; the state has tightened controls over sales; and localities and state offices have seriously implemented the ban on drinking alcoholic beverages during working hours.

However, the VBA has claimed adjustments to the excise taxes applied to alcoholic beverages have proved to be unreasonable. In the past, under the Law on Excise Tax, excise taxes were calculated based on the prices offered by producers. However, under the draft decree guiding the implementation of amendments and supplements to some articles of the law, which was prepared by the Ministry of Finance, the excise tax was proposed to be calculated based on the prices offered by subsidiary/associated companies - this does not reflect market laws of supply and demand and will create difficulties for businesses.

The amended Law on Excise Tax that will take effect on January 1, 2016, stipulates that the excise taxes are calculated based on the prices at which goods are sold and services are provided, not including excise, environmental protection and value added taxes.” Therefore, the VBA has requested the Ministry of Finance to maintain the rule of calculating the excise tax based on the price offered by producers, and apply this rule in both cases: selling through subsidiary/associated companies, and selling through independent trading companies, based on the price offered by producers.

According to VBA, in the process of international economic integration, Vietnam’s participation in free trade agreements (FTAs) and the establishment of the ASEAN Economic Community (AEC) in the near future will create big pressures on the beverage sector while creating opportunities for many foreign groups to penetrate the domestic market. Notably, the import taxes applied to many kinds of goods will gradually decrease to zero percent under international integration roadmaps, leading to fiercer competition between beverage businesses.

Deputy Minister Ho Thi Kim Thoa said the Ministry of Industry and Trade would consider VBA’s tax policy-related proposals and submit necessary recommendations to the Ministry of Finance.

Thuy Ha