Alcohol trade applies for deferment of cost of excise duties

The alcohol industry is applying for a deferment of the payment of excise duties until the alcohol ban is lifted, trade association the South African Liquor Brandowners Association (Salba) has said.

It stated in a January 12 media release that the industry pays the South African Revenue Service (Sars) an average of R2.5-billion a month in excise tax contributions for locally produced and imported products.

“Alcohol excise tax is imposed at the point of production, which means that alcohol companies have a liability to pay the excise tax on end products in their warehouses and which cannot be sold due to the current indefinite prohibition of sales,” explained Salba.

The industry was granted deferment of at least R5-billion in excise tax payments for July and August, when alcohol sales were banned with immediate effect.

Salba posited that the industry had since honoured these payments to Sars from October 2020 when sales were back in operation.

“The government did not indicate when alcohol sales will be allowed again. It is prudent that the industry applies all possible cost-preservation measures to keep it afloat: delaying excise tax payments is a significant factor. The industry and its entire value chain face an enormous financial crisis, and its capacity to make these payments is severely constrained,” Salba CEO Kurt Moore said.

Salba said the industry has requested government to enter into discussions on reasonable and viable alternatives to the ban. This strategy includes allowing limited sales for home consumption.