A production line at Coca-Cola Viet Nam. Authorities are collecting opinions on a new proposal to exempt non-alcoholic carbonated drinks from a 10 per cent excise tax. — VNS File Photo

HA NOI (Biz Hub) — Viet Nam's policy-making bodies may reconsider a proposal to exempt non-alcoholic carbonated drinks from the list of products subject to an excise tax rate of 10 per cent.

Previously, a draft amendment by the Ministry of Finance to the Excise Tax Law included fizzy soft drinks in a list of 16 products subject to the tax. The ministry claimed that as these drinks posed a health risk, the tax would help prevent the risk and substantially increase government revenue.

However, after putting the draft amendment up public review in February, the 10 per cent excise tax on soft drinks came under intensive public scrutiny.

Now, the amendment makers would like to hear what the public would think if they don't impose the tax.

At a meeting earlier this month, Deputy Head of Department of Tax Policy cum representative of the amendment-making board said that it has more than 100 comments on the subject.

The high level of public scrutiny indicated the importance of the tax policy, he said.

Therefore, the amendment-making board would add another proposal to exempt non-alcoholic carbonated drinks from the excise tax.

Deputy Head of the National Assembly's Committee on Financial and Budgetary Affairs Dinh Trinh Hai said decision makers would need to listen to more parties before ratifying the amendment.

Excise tax on carbonated drinks would be unfair and reflect poorly on the draft makers, said Nguyen Duc Kien, deputy head of the National Assembly's Economic Committee.

Kien said all soft drinks contained sugar or sweeteners, therefore if the ministry aimed to raise budget money with the tax, it should impose the tax on all canned drink products.

Vo Thi Lan Phuong, managing director of Vriens&Partners said that the draft amendment should include proposals to exempt or impose excise tax on soft drinks, regardless whether they were carbonated.

She said that the explanations by amendment makers on the health risks were not clear.

Deputy Head of Viet Nam Food Association, the Ministry of Health Nguyen Hung Long, said that carbon dioxide, preservatives, sweeteners and food colorants in carbonated drinks were already tested by the FAO/WHO Codex Committee.

These food addictives were proven not to cause health risks if the use of additives followed Codex standards.

From an economic stance, chairman of Viet Nam Tax Consultants Association Nguyen Thi Cuc said that the tax was not reasonable if the country was calling for foreign investment.

Foreign investors control about 80 per cent of the soft drink market in Viet Nam.

Cuc said that if Viet Nam must impose the tax for the sake of people's health, the policy-makers should set out guidelines to get enterprises prepared.

Another expert from Viet Nam Chamber of Commerce and Industry said that Viet Nam may be sued if it imposes the tax.

Some legal advisors told the meeting that Viet Nam could not use State rights to impose the tax without presenting transparent and reasonable rationales.

Instead, it needed to get taxpayers to agree with their tax policies. — VNS