Last week the Government said Cabinet had approved imposing the 15% VAT increase on the price of cigarettes.
The production tax on cigarettes had also been increased by Rs. 5 per cigarette since last week.
Meanwhile, the Finance Ministry said that a beer manufacturing company in the country which was fully affected by the recent flood has been provided the opportunity to import beer with taxes and other levies applicable to that of locally produced beer.
“There is no truth in the reports that was spread that this manufacturing company has been given concession for imports which would making a revenue loss of Rs 6 billion to the state,” the Finance Ministry added.
The manufacturing plant and machineries of the M/s Lion Brewery Company at Biyagama was completely damaged due to the recent flood in the area. This company which pays excise and other levies of over Rs 25 billion annually to the government had made a request to the treasury for a tax concession for up to a period of three months until the new plant and machineries are installed for it to commence its normal production.
The company was manufacturing beer locally which was subject to an excise duty of Rs 190 per litre for alcohol volume less than 5 percent and Rs 315 per litre for alcohol volume more than 5 percent. Their annual production exceeds 106 million litre and the amount of taxes paid to the Treasury in 2015 was Rs 25.7 billion.
“Since their manufacturing plant was fully destroyed they were unable to manufacture beer locally and they could not afford to import and sell the goods at the current market price given the fact that the import duties alone exceed the market price. The company had made a request for a waiver on excise duty and other levies to import consignment required for a period of three months. As of now the all inclusive levies for import of Beer exceeds Rs 700 per litre in addition to CIF cost of Rs 100 per litre. Accordingly, the import cost will exceed the market price compelling the company to give up the production. This will also make revenue loss to the government to the tune of over Rs 5 billion within the period of three months if the company is unable to maintain its market share,” the Finance Ministry added.
Therefore considering all these facets the Government in order to match the market price, permitted the company to import beer, required for a period of three months and impose taxes and other levies equal to that of locally manufactured beer at the point of importation instead of import taxes and other levies. (Colombo Gazette)