There are a number of taxes that foreign business owners in Vietnam should be aware of. One of these taxes is Vietnam’s special consumption tax which is particularly important for foreign proprietors of businesses like bars and nightclubs, hotels, and retail businesses broadly. With this in mind, this article runs through what this tax is, what it applies, and the key elements that apply to foreign business persons.
What is SCT in Vietnam?
Vietnam’s Special Consumption Tax–or SCT–though sometimes called an excise tax or Special Sales Tax is an indirect tax on luxury goods or goods that are harmful to people or the environment. For example, cigarettes or alcohol. It is codified in the Law on Special Consumption Tax issued in 2014.
How is the SCT applied in Vietnam?
For domestically produced goods the SCT rate is applied to the price of the item when it leaves the factory. For imported goods, it is calculated on the cost, insurance, and freight price–the CIF–plus an import duty if one is applicable.
What is the SCT rate in Vietnam?
According to the Law on Special Consumption Tax the current SCT rates are as follows. Note that rates on motor vehicles were increased as part of Law 106/2016/QH13 passed by the National Assembly on April 6, 2016.
| Description | % |
| Cigarettes, cigars and other tobacco products | 75 |
| Liquor | |
| Greater than 20° proof | 65 |
| Less than 20° proof | 35 |
| Beer | 65 |
| Petrol, diesel cars of 9 seats or less with a cylinder capacity of | |
| 1,500 cm3 or less | 35 |
| Between 1,500 cm3 and 2,000 cm3 | 40 |
| Between 2,000 cm3 and 2,500 cm3 | 50 |
| Between 2,500 cm3 and 3,000 cm3 | 60 |
| Between 3,000 cm3 and 4,000 cm3 | 90 |
| Between 4,000 cm3 and 5,000 cm3 | 110 |
| Between 5,000 cm3 and 6,000 cm3 | 130 |
| Over 6,000 cm3 | 150 |
| ICE passenger vehicles of 10 to 16 seats | 15 |
| ICE passenger vehicles of 17 to 24 seats | 10 |
| Other fuels | |
| Hybrid vehicles (percent of ICE rates) | 70 |
| Biofuel-powered motor vehicles (percent of ICE rates) | 50 |
| Electric passenger vehicles of 9 seats or fewer | 15 |
| Electric passenger vehicles of 10 to 16 seats | 10 |
| Electric passenger vehicles of 16 to 24 seats | 5 |
| Electric vehicles designed to carry people and cargo | 10 |
| Motorcycles | 75 |
| Aircraft | 30 |
| Yachts | 30 |
| Gasoline | |
| Standard | 10 |
| E5 | 8 |
| E10 | 7 |
| Air conditioners of 90,000 British thermal units (BTU) or less | 10 |
| Playing cards | 40 |
| Votive papers and objects | 70 |
| Services | |
| Dance halls | 40 |
| Massage parlours and karaoke bars | 30 |
| Casinos and prize-winning video games | 35 |
| Betting | 30 |
| Golf | 20 |
| Lottery | 15 |
^ICE: Internal Combustion Engine
Items exempt from SCT
Broadly speaking the SCT applies to goods consumed within Vietnam–so goods that are imported solely to be made into something else and then reexported are not taxed under the SCT.
That said, there are a few products that when consumed in Vietnam, are SCT-free. These include aircraft and yachts for business or security and defence purposes; ambulances, prisoner transport vehicles; funeral cars; vehicles that can carry 24 people or more; cars for entertainment purposes, for example, race cars.
What’s next?
Firstly, Vietnam’s Special Consumption Tax is just one of several taxes in Vietnam foreign firms should be aware of. Other important taxes in Vietnam include Vietnam’s Value-added Tax, Capital Gains Tax, Corporate Income Tax, Foreign Contractor Tax in Vietnam, and Personal Income Tax. By familiarising themselves with these taxes it may foreign firms to avoid running afoul of Vietnam’s tax department.
There has been some debate about raising the SCT in Vietnam, however, this move has struggled to gain legs in the context of the current economic challenges the country is facing. That said, big organisations like the World Health Organisation are pushing for greater taxation of cigarettes in Vietnam and there is talk of adding sugary drinks and vapes to the list of items that attract the special consumption tax. With this in mind, foreign firms operating in these sectors can best keep abreast of the latest developments by subscribing to the-shiv.