Vietnam to implement cigarette excise tax from 2027, gradual hike to follow

HANOI, Jan 14 (Reuters) – Vietnam will introduce an absolute excise tax on cigarettes starting in 2027, with rates increasing incrementally to 10,000 dong ($0.38) per pack by 2031 as part ‍of a campaign to curb smoking, state media reported late on Tuesday.

The amended Special Consumption Tax law, passed last year, will adopt a mixed tax regime starting from 2027, combining the existing 75% base rate with an absolute levy starting at 2,000 dong per pack and rising ‌over the following four years.

“The tax on tobacco ‌for the 2012-2025 period is very low and had no impact on reducing consumption, while Vietnam’s per capita income has steadily increased every year,” Phan Thi Hai, deputy director of the Tobacco Harm Prevention Fund, ​was quoted as saying by Suc Khoe Doi Song, the official newspaper of the health ministry.

Vietnam has raised tobacco taxes twice ‍since 2013, but officials say the ​increases have had little impact on smoking.

The health ministry ​reported that the current tax burden on tobacco represents only 36.8% ‍of retail prices, well below the 70-75% level recommended by the World Health Organization, and also much lower than the rates seen in neighboring ASEAN countries, including Thailand at 78.6% and Singapore at 67.1%.

The health ministry on Tuesday proposed further changes to ‍the Tobacco Harm Prevention Law, including the expansion of smoke-free areas, the tightening of retail restrictions, the enlarging of health warnings to cover 85% ‍of cigarette packets, ‍and imposing advertising and marketing bans to restrict ​youth access.

Vietnam health officials estimate that approximately 100,000 ​deaths occur ⁠annually as a direct or indirect result of ‌smoking.

The health ministry last year said Vietnam had more than 15 million smokers in 2024, ranking it among the world’s top tobacco-consuming countries.

The ministry warned that the affordability of cigarettes remained a significant barrier to reducing tobacco use, particularly among men.

($1 = 26,294 dong)

(Reporting by Phuong Nguyen; Editing ⁠by David Stanway)