Vietnam considers imposing luxury tax on soft drinks

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A woman drinks a bottle of Coke on a Hanoi street. Vietnam is considering imposing a ten percent tax on carbonated beverages, as they are known to be a health hazard. PHOTO: BLOOMBERG

As Vietnam continues to levy a special 25-50 percent tax on beer and alcohol, the Vietnam Beer, Alcohol and Beverage Association (VBA) recently proposed that the state administration impose a similar 10 percent tax on carbonated beverages.

In a proposal sent to the National Assembly, Vietnam's legislature, and the Ministry of Industry and Trade and the Ministry of Finance, VBA called such tax "rational," adding that it is "applied by many countries," Tuoi Tre (Youth) newspaper reported Tuesday (July 9).

Carbonated beverages contain a level of acidity that is 100,000 times higher than normal water, which can lead to obesity, the paper cited a VBA's document distributed at one of its seminars as saying.

According to the document, the reaction of the drinks' saturated carbon dioxide (CO2) with acid in the body creates pressure on the stomach and intestines; and even is especially harmful to those who suffer from ulcers.

In its proposal, VBA also proposed that the relevant authorities cease allowing companies that continually post losses to start new investments or expand current ventures. It claimed that companies like Coca-Cola Vietnam have dispersed their profits abroad and falsified reported earnings to evade corporate income taxes.

The standard corporate income tax in Vietnam is 25 percent. Last June, the National Assembly also passed an amended version of the corporate income tax law that will slash corporate income taxes to 22 percent starting next year and 20 percent in 2016.

The new rate of 20 percent, however, was applied at the beginning of July for companies with total revenues of VND20 billion (US$941,400) or less.

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