Taxman has extended payments of overdue excise duties to the liquor industry following COVID-19 lockdown regulations, which culminated in the government enacting a fourth total banning of alcohol sales in June.
In a statement, the South African Liquor Brandowners Association (SALBA) confirmed its members are liable for R2.5 billion in excise taxes that should have been paid in June, saying it welcome South African Revenue Service (SARS) proposed 90-day extension to made their payment in October.
As of this month, SALBA claims its members, including major alcohol makers Distell, Heineken, Diageo, Pernod Ricard and DGB, have begun paying their excise tax obligations to SARS.
“The alcohol industry is liable for paying excise taxes on products kept in warehouses and cannot be distributed since alcohol sales are prohibited. With the fourth sales ban, we only had a few options left, including holding back on the monthly taxes we owe SARS,” said SALBA Chairperson Sibani Mngadi.
He said SALBA is grateful to SARS for delaying the payment of excise taxes, and the industry will begin honouring its obligations.
“For the sector to contribute to the recovery of the economy, it needs to be stable in the short to medium term. “The government also needs stable tax revenue streams from which the tax on alcoholic beverages is a significant source,” said Mngadi.
Mngadi described the industry as a lucrative business that supports roughly 1 million jobs in the value chain, generates substantial export sales, and contributes significantly to GDP, saying it pays SARS an average of R2.5 billion in excise tax contributions per month.
According to the sector, the liquor industry contributes R72 billion to the Government’s coffers. In 2019, the sector contributed 3.4 percent (R173 billion) of the country’s nominal Gross Domestic Product.
Meanwhile, Kurt Moore, the chief executive officer of SALBA, expressed his commitment to working with SARS and other law enforcement agencies to deal with increased illicit alcohol trade.
“A collaboration between the alcohol industry and law enforcement agencies has led to major breakthroughs in exposing the activities of syndicates that illegally sell booze and robbing the government and country of much-needed revenues. We are committed to assisting SARS and SA Police Service in every way we can to keep a lid on the problem of illicit trade,” said Moore.
According to Euromonitor International, illicit alcohol now constitutes 22 percent of the total volume of alcohol purchased, as alcohol sales are banned.
Alcohol accounts for 48 percent of the illicit market, mainly through smuggling, followed by homebrews at 24 percent and sugar-fermented ales at 22 percent.