Local brewer decries double taxation
Local brewer, Kgalagadi Breweries Limited (KBL) has expressed concern at having to pay ‘tax on top of another’.
Writing in the company’s latest annual report, Thabo Matthews, Sechaba Brewery Holdings Limited chairperson noted the company is taxed twice.
Sechaba Brewery, a listed entity, is the parent company of KBL with a 49.9 percent whereas the remaining 50.1 percent belongs to Belgian brewer, ABInBev.
In September last year, government amended the Alcohol Levy rate, slashing the levy rate on alcoholic beverages by 20 percent, from 55 percent to 35 percent.
The move was celebrated by many in the industry, as well as in bars up and down the country.
However, KBL now says the calculation of levy on locally produced alcoholic beverages is still based on total cost of production and excise duty payable in terms of Customs and Excise Duty Act.
According to the board chair, this means KBL continues to pay a tax on top of another tax adding that the ‘anomaly’ continues to have a sizeable impact on the company’s financial performance.
Since the reduction of the controversial levy, which was first introduced over 10 years ago, KBL early this year delivered impressive financial results with profits growing significantly by 97 percent compared to the previous year.
The massive growth was due to a one-off refund of the alcohol levy that was charged on the excise for part of the years 2017 and 2018.
Excluding this refund, the St Louis Lager brewer’s profit after tax grew by 39 percent from the previous reporting period.
The levy was first introduced by former President Ian Khama and was gradually increased over the course of his tenure until it reached a peak of 55 percent.
This, Khama explained, was in an effort to curb what he labelled ‘excessive alcohol consumption’.
His efforts would prove futile as the former KBL Managing Director, Renaud Beauchamp revealed back in December that alcohol consumption had in actual fact skyrocketed as consumers resorted to beverages with stronger alcohol content.
During the year, not only did KBL register double-digit growth, it also managed to grow its volume, increase revenue and gain market share.
According to Sechaba brewery board chair, total volume grew by five percent compared to the previous year, boosted by the increase in clear beer volumes which grew by an overall 13 percent.