The Ministry of Finance proposed that from 2026, the special consumption tax on cigarettes will remain at the current rate of 75% and the absolute tax rate for each pack of cigarettes will be 5,000 VND, and in 2030 it will be 10,000 VND.
Proposal to keep 75% tax and add absolute tax
The draft revised Law on Special Consumption Tax is being consulted, the Ministry of Finance proposes to increase special consumption tax with cigarette very high. In addition to the current proportional tax, cigarettes will be subject to an additional absolute tax.
According to the Ministry of Finance, the special consumption tax on cigarettes is currently 75%. However, the World Health Organization estimates that the tobacco tax rate on the selling price is only 38.8%, so the selling price of cigarettes in Vietnam is still very low compared to countries such as Singapore at 69%, Thailand at 70%...
The rate of adult smokers is quite high, accounting for over 42%.
To ensure public health and reduce tobacco consumption, the Ministry of Finance proposes to increase excise tax on tobacco.
Accordingly, in the draft revised Law on Consumption Tax, the Ministry of Finance proposed two options.
Option 1: In 2026, the tax rate will remain at 75% and an additional VND2,000/bag will be added. From 2027 to 2030, the tax will increase by VND2,000/bag each year. By 2030, the absolute tax rate will be VND10,000/bag.
Option 2: In 2026, when the revised Law on Special Consumption Tax officially takes effect, along with maintaining the current tax rate of 75% on the selling price, the absolute tax rate on cigarettes will be 5,000 VND/pack.
Each year after that, the tax will increase by 1,000 VND/bag. By 2030, the tax will increase to 10,000 VND/bag.
To reduce cigarette consumption, the Ministry of Finance is leaning towards option 2.
Regarding the harmful effects of tobacco, Mr. Nguyen Nhu Quynh - Director of the Institute of Strategy and Financial Policy - said that Vietnam is among the 15 countries with the highest number of smokers in the world.
Nationwide, there are about 15.3 million smokers and 33 million people affected by passive smoking. Every year, about 40,000 people die from it. tobacco related diseases
Consideration should be given to the increase in tobacco tax and the implementation roadmap.
Speaking at a seminar on tobacco consumption tax recently held by the Vietnam Tax Consulting Association, Mr. Nguyen Chi Nhan - General Secretary of the Vietnam Tobacco Association - said that both options proposed by the Ministry of Finance are too sudden for businesses. This will have a negative impact on the tobacco industry.
Therefore, Mr. Nhan proposed to increase the special consumption tax on cigarettes by 1,000 VND/pack in 2026. Each year after that, it will increase by 500 VND/pack and by 2030, it will be 3,000 VND/pack.
Ms. Dinh Thi Quynh Van - Chairman of PwC Vietnam - said that the market share of legal cigarettes in the low-cost segment accounts for 75%. So what happens if Vietnam increases taxes on cigarettes sharply?
"The risk of smuggled cigarettes will increase after the sharp increase in cigarette taxes. This is not a problem unique to Vietnam. Therefore, the Ministry of Finance needs to carefully assess to have a roadmap for increasing taxes in line with the gradually acceptable market level.
"In addition to increasing taxes, authorities need to apply more effective anti-smuggling measures on cigarettes," Ms. Van recommended, citing the experience of countries such as the UK, Germany, Malaysia, etc. that have increased taxes on cigarettes quite high.
After the tax increase, legal cigarette consumption dropped sharply but illegal cigarettes increased. Cigarette smuggling become serious.
Sharing the above opinions, Ms. Nguyen Thi Cuc - President of the Vietnam Tax Consulting Association - suggested that the Ministry of Finance should carefully study the plan and roadmap for increasing special consumption tax on tobacco.
According to her, the tax increase needs to ensure harmony between public health benefits, stable business production and the state budget.
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