Alcohol industry seeks deferment of R5bn in excise tax due to renewed ban

MEDIA RELEASE

Alcohol Industry

Monday, 20 July 2020 — The renewed prohibition of alcohol sales with immediate effect has resulted in the South African alcohol industry having no choice but to apply for a deferment of the payment of over R5 billion in excise duties for July and August 2020.
The total excise due for July is estimated to be R2 514 366 945. For August, the estimated excise would be R2 585 935 368. Total Excise Payments Due to SARS over these two months is R5 100 302 313.
The South African liquor industry spokesperson, Sibani Mngadi, explained that alcohol excise tax is imposed at the point of production. “This means that our industry have a liability to pay excise tax on end products that are in warehouses, and cannot be sold as a result of the prohibition of sales with immediate effect announced last Sunday,” said Mngadi

The industry and its entire value chain are facing an enormous financial crisis, and its capacity to make these payments is severely constrained. The sustainability of the sector, now and in the post-COVID-19 era, is dependent on this deferment if job losses are to be avoided.
The industry will play an invaluable role in helping SA’s economy recover post-COVID-19. Currently, it supports more than 35 000 township-based businesses (such as taverns), more than 10 000 off-site consumption retailers, and more than 22 500 labour-intensive firms (such as restaurants, hotels, wine estates).

“However, the Government’s nationwide ban on the sale of alcohol has far-reaching repercussions. A more targeted and nuanced approach is required, and the industry has appealed to the Government to enter into discussions on reasonable and viable alternatives,” Mngadi added.
The industry shares with the Government its concerns regarding the increase in COVID-19 infections and will continue to support efforts to curb this unprecedented health emergency. We reiterate our commitment to partner with the Government to create a social compact that drives behavioural change regarding the use and consumption of alcohol.

We will continue to offer our unanimous support in making our assets available to Government in fighting this pandemic together.

Ends.

NOTE
The South African alcohol industry includes but is not limited to the National Liquor Traders Council, South African Liquor Brandowners Association (SALBA), the Beer Association of South Africa (BASA), Vinpro, the National Liquor Traders Council, and manufacturers.
Issued by FTI Consulting on behalf of the Liquor Industry. For interviews, or further information, please contact:
salba@fticonsulting.com