For more than a decade, Vietnam has stepped up efforts to fight cigarette smuggling, dismantling numerous networks and hotspots. Yet, illicit cigarettes continue to infiltrate the domestic market—especially at small-scale retail outlets. This reality underscores the urgent need for a stronger legal framework and tougher penalties at the at the retail level.
Why Retail Is the Critical Battleground
Retail is the final link in the smuggling chain, but it is also the most critical. Without steady demand from convenience stores, roadside stalls, small cafés, or online platforms, smuggled cigarettes could not survive. That’s why, alongside border control and transport monitoring, cracking down on retail sales has become a practical necessity.
Strengthening Legal Deterrence
Vietnam’s legal framework for tobacco control has been continuously updated. A milestone came on September 30, 2014, when the Prime Minister issued Directive No. 30/CT-TTg to intensify the fight against cigarette smuggling.
But by mid-2025, legal reform became urgent. The revised Law on Handling Administrative Violations (effective July 1, 2025) introduced sweeping changes in enforcement authority, fine levels, and implementation procedures. This triggered a mandatory review of all related decrees to ensure consistency.
On August 6, 2025, Decision No. 1688/QĐ-TTg tasked the Ministry of Industry and Trade with drafting a new decree to replace Decree 98/2020/NĐ-CP on administrative penalties in trade, production, and the sale of banned or counterfeit goods. Earlier, in November 2024, the Deputy Prime Minister had already emphasized the need for a complete overhaul, not just amendments, to eliminate overlaps and address real-world shortcomings.
With e-commerce, marketplace management, and promotional activities evolving rapidly, Decree 98/2020/NĐ-CP has become outdated. A new decree is no longer optional—it is essential to restore legal order in trade.
Closing the Loopholes
Five years of implementing Decree 98/2020/NĐ-CP revealed systemic weaknesses.
- Fines too low to deter violations: Selling fewer than 50 packs of smuggled cigarettes—common at small shops—incurs fines of only 1–3 million VND. Profits often exceed this amount, making violations a “business expense.”
- Lagging behind online realities: Smuggled cigarettes are now sold via social media, delivery apps, and online marketplaces, but enforcement struggles to define and penalize these activities.
- Legal gaps: Some responsibilities are outlined without corresponding penalties, leaving enforcement toothless. Ambiguous definitions, such as those for counterfeit goods, cause confusion in practice.
These gaps allow retail outlets to remain a stable channel for smuggled goods, sustaining the entire smuggling chain. Tackling supply alone is insufficient—without curbing retail demand, illicit trade will persist. Conversely, if retailers fear heavy legal risks, smuggled goods lose their lifeline.
Tax Policy and Smuggling Risks
The urgency of reform is underscored by the revised Special Consumption Tax Law, passed in June 2025, which introduces a mixed tax system starting January 1, 2027. This system combines a 75% ad valorem tax with a rising specific tax, beginning at 2,000 VND per pack in 2027 and gradually increasing to 10,000 VND by 2031.
Experts warn that higher taxes must go hand-in-hand with anti-smuggling measures. Cheap illicit cigarettes undermine tax policy, drain state revenue, and endanger public health.
Coordinated Enforcement
Effective anti-smuggling requires strong coordination among police, border guards, customs, market regulators, and local authorities. Regular patrols, dismantling major networks, and strict retail inspections are vital. Stronger fines, combined with public awareness campaigns and community reporting, can amplify deterrence.
At a recent forum addressing cigarette smuggling, Nguyễn Chí Nhân, Secretary-General of Vietnam Tobacco Association (VTA), highlighted another alarming trend: the rise of new-generation tobacco products such as e-cigarettes and heated tobacco. Although these products will be banned starting January 1, 2025, they continue to spread, especially among youth, through social media and direct messaging apps.
“Smuggled cigarettes enjoy an unfair price advantage by evading taxes, compliance costs, and health warnings. This creates unhealthy competition, pressures legitimate businesses, and poses serious health risks,” Nhân emphasized.
Recommendations for Stronger Action
Mr. Nhân urged:
- Expanding special operations at border hotspots to dismantle transnational smuggling networks.
- Imposing strict criminal penalties on ringleaders, especially repeat offenders.
- Intensifying online enforcement to shut down illegal accounts, groups, and platforms.
- Ramping up retail inspections under Decree 90/2026/NĐ-CP (effective May 15, 2026), ensuring retailers face severe consequences for selling illicit goods.
He also called for tougher penalties for smuggling, transport, and storage, proportionate to the illicit profits gained. Beyond fines, supplementary measures—including confiscating goods and vehicles, suspending business licenses, or revoking permits—must be applied rigorously.
“An effective fight against smuggling requires a legal framework that is tight to manage, strong to deter, clear to enforce, and coordinated to act,” Mr. Nhân concluded./.
