Preparing for Vietnam's Special Consumption Tax Changes in 2026: Key Compliance Highlights

Overview of the New Law

Effective January 1, 2026, Vietnam's revised Special Consumption Tax (SCT) framework marks a significant shift in how the country taxes health-sensitive goods, environmentally impactful products, and selected services. Anchored by the 2025 SCT Law and further clarified through two new directives, the new regime expands the scope of taxable items, refines exemptions, and introduces a dual tax calculation method, with direct implications for manufacturers, importers, and service providers operating in Vietnam.

Objectives of the Law

The 2025 Special Consumption Tax Law is designed to influence consumer behavior toward healthier choices, including reducing tobacco use, alcohol and beer consumption, and sugar intake, while strengthening enforcement against smuggling and counterfeit goods.

The law also seeks to support the development of green and clean industries, enhance environmental protection, increase state budget revenues, and advance tax administration reform through a more transparent, streamlined, and publicly accessible framework, thereby facilitating taxpayer compliance.

Following the approval of the revised SCT Law, Vietnam has issued Decree No. 360/2025/ND-CP ("Decree 360") and Circular No. 158/2025/TT-BTC. Both instruments, which take effect on January 1, 2026, provide detailed guidance on implementing the new Law, clarifying the taxable objects, exemptions, and compliance procedures for affected businesses.

Expanded Scope of Vietnam's Special Consumption Tax

Vietnam's special consumption tax is levied on various goods and services, including cigarettes, tobacco products, luxury cars, and playing cards. The list of subject goods and products under the new law has been expanded and clarified, especially to reflect the government's objectives in protecting the health and well-being of its citizens.

Goods and Services Subject to Vietnam's SCT from January 1, 2026

Taxable Goods:

Cigarettes as prescribed by the Law on Prevention and Control of Tobacco Harms ("PCTH Law")
Alcohol as prescribed by the PCTH Law
Beer as prescribed by the PCTH Law
Motor vehicles with less than 24 seats, including: passenger cars; four-wheeled passenger cars with engines; passenger pick-up cars; double-cabin cargo pick-up cars; VAN trucks with two or more rows of seats, with a fixed partition between the passenger compartment and the cargo compartment
Two-wheeled motorcycles, three-wheeled motorcycles with a cylinder capacity of over 125 cm³
Airplanes, helicopters, gliders, and yachts, excluding types prescribed at Point c, Clause 1, Article 3 of the Law on excise tax and prescribed at Clause 5, Article 4 of Decree 360
All types of gasoline
Air conditioners (AC) with a capacity of over 24,000 BTU to 90,000 BTU, except for those designed by the manufacturer to be installed only on means of transport, including cars, railway cars, ships, boats, and airplanes (If evaporators and condensers are sold or imported separately, they are still subject to SCT just like complete AC)
Playing cards
Joss paper, votive paper, excluding votive paper as children's toys, teaching aids
Soft drinks according to Vietnamese Standards (TCVN) with sugar content over 5g/100ml, specifically:
- Beverages under the Vietnam National Technical Standard (TCVN 12828:2019) on beverages
- Sugar content is determined as the total sugar indicated on product labels, in accordance with the regulations of the Minister of Health. If imported products have not been labeled in accordance with these regulations, importing entities are responsible for self-determination, declaration, calculation, and payment of tax in accordance with the regulations

Taxable Services:

Nightclub business and karaoke business in accordance with Decree No. 54/2019/ND-CP (amended by Decree No. 148/2024/ND-CP)
Massage business in accordance with specialized laws as a conditional business line
Casino business in accordance with Decree No. 03/2017/ND-CP
Electronic games with prizes, including jackpot games, slot machines, and similar machines in accordance with Decree No. 121/2021/ND-CP
Betting business, including sports betting, entertainment betting, and other forms of betting in accordance with Decree No. 06/2017/ND-CP (amended by Decree No. 151/2018/ND-CP)
Golf business in accordance with Decree No. 52/2020/ND-CP (amended by Decree No. 31/2021/ND-CP)
Lottery business in accordance with Decree No. 30/2007/ND-CP (amended by Decree No. 78/2012/ND-CP, and Decree No. 151/2018/ND-CP)

Important Note: Goods subject to the 2025 SCT Law are final products. Components and parts used for assembling these goods are not subject to SCT.

More Specified List of Non-Taxable Items

Regarding non-taxable objects, Article 4 of Decree 360 offers detailed clarifications based on the provisions of the SCT Law as follows:

New Non-Taxable Objects Include:

Exported goods on which SCT has already been paid, but which are subsequently returned by foreign buyers upon re-importation, provided that such goods have not been used, processed, or further manufactured
Automobiles that are not registered for circulation, do not participate in public traffic, and are operated exclusively within historical sites, hospitals, schools, or other special-purpose vehicles as prescribed by the Government
Aircraft, helicopters, and gliders used for medical evacuation, rescue and relief operations, and agricultural production

Implications for Businesses

The changes in the SCT framework have direct implications for:

Manufacturers: Need to reassess product portfolios to identify newly taxable items
Importers: Must prepare for declaration and tax calculation on newly taxable items, especially sugary soft drinks
Service Providers: Businesses in entertainment, sports, and service sectors need to review tax obligations
Retailers: Need to adjust selling prices to reflect new taxes

Preparation Steps

To comply with the new law, businesses should:

Review current product/service portfolios against the new taxable list
Update accounting and invoicing systems
Train staff on new regulations
Consult tax advisors if needed
Monitor additional guidance from tax authorities

Tax Calculation Methods

The new law introduces dual calculation methods:

Ad valorem method: Tax based on percentage of taxable price
Specific method: Tax based on quantity of goods

Businesses need to understand which method applies to their products and ensure proper calculation and declaration.

Compliance Timeline

Key dates to remember:

January 1, 2026: Effective date of the 2025 SCT Law, Decree 360, and Circular 158
Q4 2025: Recommended preparation period for system updates and staff training
December 31, 2025: Last day under old regulations

Enhanced Transparency and Administration

The new framework aims to:

Streamline tax administration processes
Increase transparency in tax obligations
Make compliance easier for taxpayers
Strengthen enforcement mechanisms
Support digital transformation in tax collection

Support for Green Industries

The law supports environmental objectives by:

Exempting certain eco-friendly products
Taxing environmentally harmful goods
Encouraging shift to cleaner alternatives
Supporting government climate goals

Recommendations for SMEs

Small and medium enterprises should:

Assess Impact: Determine if your products/services fall under new taxable categories
Budget Accordingly: Factor in potential price increases due to tax
Seek Professional Advice: Consult tax professionals for complex situations
Update Systems: Ensure accounting software can handle new tax calculations
Monitor Updates: Stay informed about additional implementing regulations
Plan Cash Flow: Account for tax payment obligations in financial planning
Document Everything: Maintain proper records for tax compliance

Thorough preparation before January 1, 2026, will help businesses transition smoothly to the new tax regime and avoid compliance issues. The expanded scope and refined exemptions require careful attention from all affected entities, particularly those in manufacturing, import, and service sectors.