– on purchase of alcohol as raw material to make medicine
Local manufacturing companies involved in the production of pharmaceutical products are contending that the law does not require them to make an Excise Tax payment on the purchase of alcohol and are therefore demanding the removal of the burdensome tariff on their purchases.
The tax should only be applied to alcohol that is consumed and is commonly known as a “sin tax”.
Twins Manufacturing Chemists, which has been in existence for over 60 years, explained that the Excise Tax Act 2005 is only applicable to local manufacturers involved in the production of alcoholic beverages, tobacco products or petroleum products and not pharmaceutical products.
“People who are not manufacturing spirits and other alcoholic products, the category Twins and NEW GPC falls into, they are not using these alcohols to make spirits and alcoholic beverages, we are using it to make medicine, we should not have to pay the Excise Tax, that is our position on the whole matter,” Shafeez Ferouze of Twins Manufacturing stated.
According to the Guyana Revenue Authority (GRA) website, Excise Tax is charged on the following items: alcoholic beverages; tobacco products; petroleum products; and motor vehicles.
Ram and McRae’s Value Added Tax and Excise Tax handbook also explains that the principal classes of goods on which the Excise Tax is payable are alcoholic beverages, tobacco products, petroleum products, and new and used vehicles.
Local manufacturers are now bearing the brunt of an onerous 40 to 65 per cent increase in the Excise Tax on the purchase of alcohol.
Last year, several manufacturing companies expressed concerns over the alarmingly high Excise Tax charged on the alcohol they would usually purchase from Demerara Distillers Limited (DDL) and had consequently requested the Government’s intervention to alleviate the burden plaguing the local manufacturing sector.
Instead of getting relief from paying the 40 per cent in Excise Tax, manufacturers now have to pay an incredulous 65 per cent in Excise Tax for the neutral spirits they buy locally for use in the production of their goods and services.
The alcohol purchased by manufacturers is referred to as extra-neutral alcohol or neutral spirits and is measured in Litres of Pure Alcohol (LPA). At the purchase strength of 96 per cent alcohol v/v (volume-volume percentage), it is considered only suitable for industrial use or further processing.
According to a report in today’s Guyana Times, Twins Manufacturing Chemists explained that since the implementation of the Excise Tax, they have been lobbying but to no avail for relief, or at the very least, an explanation for the inconsistency with what is stipulated in the Act and what is being practiced.
“Since 2007, we’ve been behind this… the issue is the Excise Tax, it ought to be removed for local manufacturers who are not producing alcoholic beverages,” Feroze said, noting that they never received a single response.
With the current Administration, he lamented that instead of correcting the error, they have decided to raise the Excise Tax.
“Instead of reviewing and removing, they (the Government) are increasing and imposing the Excise Tax,” he stated.
He noted that if the manufacturing companies continue to pay the whopping Excise Tax on the purchase of the alcohol, then it will only be a matter of time before the costs are passed down to the consumers.
Strangely, it is exceedingly cheaper to import the same product from Trinidad and Tobago because both the Excise Tax and Value Added Tax are waived by the Guyana Revenue Authority (GRA) under the existing tax legislation as incentives for local manufacturing. But importation has to be done in bulk and this poses another cluster of challenges to local manufacturers.
Therefore, any local businesses desirous of using alcohol as a raw material will have to endure the onerous tax locally or import foreign alcohol – an alternative that is coincidentally inimical to the interests of another local manufacturer and the Guyanese economy.
---
